Mortgage Rates Are Inching Up

On April 14, 2011 Inman News™ reports that mortgage rates are continuing to climb at a gradual rate  for the fourth consecutive week.  For the week ending April 14, rates on 30-year fixed-rate mortgage averaged 4.91 percent with an average 0.6 point, up from 4.87 percent last week and 5.07 percent a year ago.

Freddie Mac records from 1971 indicate rates for a 30-year fixed-rate mortgage were4.17 percent during the week ending Nov. 11. This year, rates on 30-year fixed-rate loans have ranged from 4.71 percent in early January to a high for the year of 5.05 percent during the week ending Feb. 10.  This data may confirm that 30-year fixed-rate mortgage rates have already reached the lowest rates we are going to see for some time now.

“Although rates on 30-year fixed mortgages have risen four weeks in a row, they have remained below 5 percent for eight straight weeks now, helping to maintain affordability in the housing market” said Freddie Mac Chief Economist Frank Nothaft.

Thankfully rates do remain low and have not seen a significant increase in many months, but please consider the “First-Time Home Buyer Credit” before you continue to wait for the prices of homes to drop further before you buy. 

Many Buyers kept waiting for home prices to drop further, thinking the first time buyer tax credit would be there when they were ready to pull the trigger on their home pruchase.  Unfortunately in waiting for the price of homes to continue dropping, many Buyers priced themselves out of a home.  When the government didn’t extend the credit to first-time buyers, many of them didn’t have enough money to qualify for the same loan amount and were forced to start looking in a lesser price range.  Of course, after tasting champagne, boxed wine doesn’t quite taste so good and neither did the homes they were now looking at in comparison to the homes they had once qualified for with the credit.

The same may prove true if interest rates go up.  Consider what your mortgage payment is going to be with today’s rate, approximately 5% in comparison to what your payment would be at let’s say 7% for the same loan amount.  While home prices continue to go down with no guarantees as to when they will stabilize, the risk you run by waiting to purchase is that an increase in your mortgage rate may put you into a signifcantly different price range and therefore a different caliber of property. It is probably more likely that the increase in rate over the 30 year life of the loan is going to end up costing you significantly more than you may potentially save by holding out for a decrease in the price of the property. Too, please consider that trying to “time” the market is not as easy as one may think. The only way we know we’ve hit bottom happens when prices go up again.  Historically, there’s a VERY tiny window in which few get lucky and buy when the price of their home was truly at the very bottom.

Experts are predicting that the bottom of the housing market for many vacation destinations like South Lake Tahoe is near and if that proves to be true, like first time buyers that missed out on the tax credit, buyers who could have had a 5% rate may find themselves with a higher rate and less house.

As I always say, “I don’t have a crystal ball” but interest rates have been at too good to be true levels for some time now and I can only think that they are not going to be this low for much longer.

If you have questions regarding getting pre-approved for a home loan and/or  South Lake Tahoe real estate, as always, please feel free to contact Mackenzie with your individual/specific questions regarding your South Lake Tahoe home!

Search ALL Lake Tahoe Homes by visiting www.MakeTahoeMine.com or Google … “Make Tahoe Mine”

Before You Buy Checklist

Finding a home that you can see yourself in for the next five to twenty-five years is a great feeling. Don’t let that feeling cloud your judgment and leave you with unexpected issues after the closing.

Here are a few ideas from Century21.com to consider before you buy:1. Hire an expert to do your own home inspections and attend them if possible.2. Evaluate possible repairs/immediate improvements. Ask the seller to repair them or include the cost into your bidding. 3. Purchase an environmental report. 4. Know all of the vital systems that connect to the house (electrical, sewage, heating, air conditioning, garbage disposal, and water.) Investigate the ins and outs of these systems. 5. Perform an energy audit. Confirm that your budget will match what your new home is going to cost on a monthly basis. 6. Examine potential neighborhoods with a 24 hour perspective. Are there any dogs howling late at night? Again be sure there are no regular surprises. 7. Do multiple practice commutes. One day is not enough time to judge the next 5+ years of driving to work. 8. Consider your furniture, electronics and appliances. Will they fit into the new home or will you need to purchase new home furnishings? 9. Know the local political landscape. Are there any issues you should know about? Make sure you understand how utilities, schools and public services are funded. 10. Research the local area to understand its economics, climate, and variables that will be part of your long-term lifestyle. If you’re considering a move, or hear that any family, friends, neighbors or colleagues are, please feel free to contact me.

© 2011 Century 21 Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity.

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As always, please feel free to contact Mackenzie with your individual/specific questions regarding your South Lake Tahoe home!

Search ALL Lake Tahoe Homes by visiting www.MakeTahoeMine.com or Google … “Make Tahoe Mine”

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Seller Financing

In recent months I have had a few of my clients, both Buyers and sellers propose the idea of “Seller Financing”.  In those discussions it became clear to me that both Buyers and Sellers have not thought this idea through all the way.  While it may seem like a win-win scenario, there are risks involved.

If you’ve been considering Seller financing, you may want to keep in mind the following as discussed in a recent article by Tara Nelson, Trulia.com contributor…

• Most sellers who have a mortgage they obtained in the last 10 years or so also have a due on sale clause which requires them to pay it off when they sell the property. Financing the sale themselves, vs. requiring the buyer to obtain mortgage or other financing to pay for the property, prevents them from having the cash to pay their mortgage off, as required.  And the vast majority of those who don’t have a mortgage of recent vintage need the proceeds from the sale of their homes to buy their next home or invest in their next property. 
• What’s more, even the few sellers who don’t need the cash often don’t want to take on the long-term risk and hassle involved with having to collect payments from a buyer for 10, 15, or 30 years.  The sellers who can and will agree to seller financing usually want a premium price and interest rate for it – and the smart ones will require some type of credit check and a deeper down payment than a traditional lender.
• And finally, seller financing, as sweet as it sounds, poses risks for buyers, too.  If the seller keeps a bank mortgage on the property and fails to make the payment, the seller-financed buyer could end up losing the home they’ve paid for to foreclosure. Best targets for seller-financing are investor sellers who are looking to avoid capital gains, and best practice is to get a local real estate attorney involved in drafting and recording the transfer and financing documentation.

As always, please feel free to contact Mackenzie with your individual/specific questions regarding your South Lake Tahoe home!

Search ALL Lake Tahoe Homes by visiting www.MakeTahoeMine.com or Google … “Make Tahoe Mine”