How to Take Advantage of Low Rates

With mortgage rates continuing to linger around record lows, potential homebuyers and homeowners considering refinancing should act now before they miss the boat, experts say.

According to Freddie Mac, the average rate for 30-year fixed-rate mortgages is 3.39% as of Nov. 1. These rates will continue to stay low for the foreseeable future with the National Association of Realtors expecting the rate to hold steady around 4.1% a year from now.

Mortgage rates determine what your payments will be at any given rate—making the difference on whether you should rent or buy. Experts agree that now’s a good time to refinance or buy if you’re looking at a minimum five-year timeframe.

What determines a mortgage rate?

“Mortgage rates are set by supply and demand—how much supply there is for mortgages and how willing banks are to lend,” says Jed Kolko, Trulia’s chief economist. When the economy’s doing well, interest rates tend to be higher. “The Federal Reserve can affect rates directly by expanding the money supply or by buying mortgage-backed securities.” 

The Fed sets the federal funds rate—what rate banks pay to the Fed when they borrow money—explains David Stiff, chief economist and vice president of Quantitative Research at Fiserv. At the moment, the Fed is keeping rates low until the labor market improves, which some experts expect to be when unemployment is below 6%.

“Lenders originate loans that are packaged into securities guaranteed by Freddie and Fannie and then sold throughout the world,” says Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association. A lender looks at the yields for mortgage-backed securities to set quotes to borrowers. Historically, mortgage rates are 1.5% to 2.0% higher than the 10-year Treasury as they reflect a borrower’s credit risk and that mortgages can prepay, unlike Treasuries, as well as the guarantee fee and cost of originating the loan.

“The Fed has committed to buying mortgage-backed securities until employment has improved,” says Fratantoni. Even if the Fed continues to buy these, mortgage rates will begin to drift up next year.

Banks compete with each other for business when they set rates at levels where they can still make profits, says Kolko.

Mortgages rates and purchases.

What affects the affordability of purchasing a home is more a question of a three-legged stool—what’s happening to mortgage rates, home prices and household income, says Fratantoni.

“We’ve already seen home prices start to stabilize; we’ve hit bottom but the recovery is expected to be uneven,” says Stiff. He says markets that experienced the largest home price crashes, like Phoenix, Florida and parts of California, will experience double-digit appreciation because many buyers are trying to catch prices at their very bottom.

“[Mortgage rates] are a very important factor in affordability—as rates go down, your buying power goes up, everything else being constant,” says Erin Lantz, director of mortgages at Zillow. Even though rates are low, lending guidelines are very restrictive. “If you’ve bad credit or a spotty employment history, it could be hard to get a mortgage,” says Lantz.

When it comes to issuing loans, lenders want a solid credit history, a 20% down payment on average and strong employment history for the last two years, as well as a consistent and well-documented last two years of your financial history, says Lantz. “Mortgage rates are low and you can afford more but you have to be approved and lenders scrutinize borrowers much more.”

Since consumer’s buying power can’t get much better, changes in interest rates won’t have an impact, says Walter Molony, spokesperson for the National Association of Realtors. “What would be a real game changer is loosening credit standards and reverting to underwriting from a decade ago.” Since only the highest credit worthy borrowers are able to get loans today, returning to safe and sensible lending standards would cause home sales to rise 10% to 15% over current levels. For every two homes that are sold, one job in related services is created.

Refinancing Your Mortgage

Low mortgages rates are an incentive to refinance, says Lantz. “The challenge is you have to have enough equity in your home—about 20%.” If you don’t have enough equity, the Home Affordable Refinance Program (HARP) can help you benefit from low rates.

“If you’re underwater, home price increases may turn negative equity into positive equity and you’ll have a chance to refinance that you didn’t have before,” says Stiff.

To refinance, compare the rate and payment on your current loan and your potential new loan, as well as the cost of doing the refinance, says Fratantoni. “If you can save enough each month so that in six months you can pay off the cost of the refinance, it’s a good deal.”

When people refinance to a lower rate, they spend less on their mortgage and have more money left over to buy other things, which will help to stimulate the economy, says Kolko. “The lower rates make it more worthwhile for people to refinance.”

“Instead of lowering your payment, you can refinance into a shorter-term mortgage to pay it off quicker,” says Lantz. A shorter term can give you more financial flexibility in the future as you’ll pay less in mortgage interest overtime.

Depending on your old rate, you may be able to refinance into a lower interest rate and shorten the term while keeping the same or slightly higher monthly payment, says Fratantoni.

Qualifying for a Loan

“People need to look at their credit scores and how that affects their ability to buy a home,” says Molony. You can impact your credit score by paying bills on time and all or some of the principal due while not taking on any additional debt. If you’re looking to buy a new car or make another large purchase, wait until after you buy a home.

Experts also advice checking your credit report for errors and making sure your paperwork’s in order. “Low risk borrowers will get more favorable terms, like lower interest rates with less points,” says Molony.

“As the economic recovery starts to accelerate and home price appreciation picks up, banks will feel that it’s less risky to lend,” says Stiff. As credit standards loosen, consumers who can’t refinance their mortgages or purchase homes because of their credit will be able to qualify for a mortgage.

Until then, shop around—banks do compete, says Kolko. “You can get quotes from multiple lenders to see who will give you the best rate.”

Mathes is Realtor of the Year in Mat-Su – Mat

Realtor Duane

Realtor Duane


Posted: Saturday, November 3, 2012 8:17 pm


Mathes is Realtor of the Year in Mat-Su


0 comments

Duane Mathes, an associate at RE/MAX Dynamic of the Valley in Wasilla, was named the recipient of the 2012 Realtor of the Year awarded by the Valley Board of Realtors. This award is given to the individual who has displayed a strong sense of Realtor spirit, high principles, ethics and good real estate practices, leadership qualities with the local, state and national association of Realtors, involvement in civic activities and strong business accomplishments.


 

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Saturday, November 3, 2012 8:17 pm.

How to Take Advantage of Low Interest Rates

With mortgage rates continuing to linger around record lows, potential homebuyers and homeowners considering refinancing should act now before they miss the boat, experts say.

According to Freddie Mac, the average rate for 30-year fixed-rate mortgages is 3.39% as of Nov. 1. These rates will continue to stay low for the foreseeable future with the National Association of Realtors expecting the rate to hold steady around 4.1% a year from now.

Mortgage rates determine what your payments will be at any given rate—making the difference on whether you should rent or buy. Experts agree that now’s a good time to refinance or buy if you’re looking at a minimum five-year timeframe.

What determines a mortgage rate?

“Mortgage rates are set by supply and demand—how much supply there is for mortgages and how willing banks are to lend,” says Jed Kolko, Trulia’s chief economist. When the economy’s doing well, interest rates tend to be higher. “The Federal Reserve can affect rates directly by expanding the money supply or by buying mortgage-backed securities.” 

The Fed sets the federal funds rate—what rate banks pay to the Fed when they borrow money—explains David Stiff, chief economist and vice president of Quantitative Research at Fiserv. At the moment, the Fed is keeping rates low until the labor market improves, which some experts expect to be when unemployment is below 6%.

“Lenders originate loans that are packaged into securities guaranteed by Freddie and Fannie and then sold throughout the world,” says Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association. A lender looks at the yields for mortgage-backed securities to set quotes to borrowers. Historically, mortgage rates are 1.5% to 2.0% higher than the 10-year Treasury as they reflect a borrower’s credit risk and that mortgages can prepay, unlike Treasuries, as well as the guarantee fee and cost of originating the loan.

“The Fed has committed to buying mortgage-backed securities until employment has improved,” says Fratantoni. Even if the Fed continues to buy these, mortgage rates will begin to drift up next year.

Banks compete with each other for business when they set rates at levels where they can still make profits, says Kolko.

Mortgages rates and purchases.

What affects the affordability of purchasing a home is more a question of a three-legged stool—what’s happening to mortgage rates, home prices and household income, says Fratantoni.

“We’ve already seen home prices start to stabilize; we’ve hit bottom but the recovery is expected to be uneven,” says Stiff. He says markets that experienced the largest home price crashes, like Phoenix, Florida and parts of California, will experience double-digit appreciation because many buyers are trying to catch prices at their very bottom.

“[Mortgage rates] are a very important factor in affordability—as rates go down, your buying power goes up, everything else being constant,” says Erin Lantz, director of mortgages at Zillow. Even though rates are low, lending guidelines are very restrictive. “If you’ve bad credit or a spotty employment history, it could be hard to get a mortgage,” says Lantz.

When it comes to issuing loans, lenders want a solid credit history, a 20% down payment on average and strong employment history for the last two years, as well as a consistent and well-documented last two years of your financial history, says Lantz. “Mortgage rates are low and you can afford more but you have to be approved and lenders scrutinize borrowers much more.”

Since consumer’s buying power can’t get much better, changes in interest rates won’t have an impact, says Walter Molony, spokesperson for the National Association of Realtors. “What would be a real game changer is loosening credit standards and reverting to underwriting from a decade ago.” Since only the highest credit worthy borrowers are able to get loans today, returning to safe and sensible lending standards would cause home sales to rise 10% to 15% over current levels. For every two homes that are sold, one job in related services is created.

Refinancing Your Mortgage

Low mortgages rates are an incentive to refinance, says Lantz. “The challenge is you have to have enough equity in your home—about 20%.” If you don’t have enough equity, the Home Affordable Refinance Program (HARP) can help you benefit from low rates.

“If you’re underwater, home price increases may turn negative equity into positive equity and you’ll have a chance to refinance that you didn’t have before,” says Stiff.

To refinance, compare the rate and payment on your current loan and your potential new loan, as well as the cost of doing the refinance, says Fratantoni. “If you can save enough each month so that in six months you can pay off the cost of the refinance, it’s a good deal.”

When people refinance to a lower rate, they spend less on their mortgage and have more money left over to buy other things, which will help to stimulate the economy, says Kolko. “The lower rates make it more worthwhile for people to refinance.”

“Instead of lowering your payment, you can refinance into a shorter-term mortgage to pay it off quicker,” says Lantz. A shorter term can give you more financial flexibility in the future as you’ll pay less in mortgage interest overtime.

Depending on your old rate, you may be able to refinance into a lower interest rate and shorten the term while keeping the same or slightly higher monthly payment, says Fratantoni.

Qualifying for a Loan

“People need to look at their credit scores and how that affects their ability to buy a home,” says Molony. You can impact your credit score by paying bills on time and all or some of the principal due while not taking on any additional debt. If you’re looking to buy a new car or make another large purchase, wait until after you buy a home.

Experts also advice checking your credit report for errors and making sure your paperwork’s in order. “Low risk borrowers will get more favorable terms, like lower interest rates with less points,” says Molony.

“As the economic recovery starts to accelerate and home price appreciation picks up, banks will feel that it’s less risky to lend,” says Stiff. As credit standards loosen, consumers who can’t refinance their mortgages or purchase homes because of their credit will be able to qualify for a mortgage.

Until then, shop around—banks do compete, says Kolko. “You can get quotes from multiple lenders to see who will give you the best rate.”

Local Realtors association names national builder as ‘Affiliate of the Year’

A local Realtors association has named D.R. Horton home builders as Affiliate of the Year.

The Coastal Carolinas Association of Realtors presented D.R. Horton with the Affiliate of the Year award at its Oct. 22 conference held at the Marina Inn at Grande Dunes. John Caprio accepted the award and a $250 check to be given to a charity of the company’s choosing.

The Affiliate of the Year award is given to a Coastal Carolinas Association of Realtors affiliate who consistently shows support of the association and its members. D.R. Horton has demonstrated that kind of support with its sponsorship of various CCAR events and its willingness to support the Grand Strand real estate industry, CCAR officials said.

NAR Reports That Realtor Property Resource is Now Available to All Realtors

(Source: NAR) — Today the National Association of Realtors® launched its Realtors Property Resource® application nationwide. All Realtors® will have access to RPR, regardless of multiple listing service status with the site. Members whose MLSs and associations have partnered with RPR will have the benefit of additional functionality with the RPR tools and features, as the addition of  local market data provided by their MLS will enhance some reports, trends and analytics, as well as display their own listings and those from their company.

“The Realtors Property Resource® is yet another remarkable way Realtors® bring value to their clients. The site is home to hundreds of data sets on millions of properties, exclusively for Realtors®,” said NAR President Moe Veissi, broker-owner of Veissi Associates, Inc., in Miami. “RPR will save Realtors® time and money while increasing efficiency. This cutting-edge technology works on any web-enabled device and will provide robust data sets that can be searched, refined and printed for use with clients.”

RPR is a dues-funded, Realtor®-only national database of property information and is free of charge for NAR’s Realtor® members. The system is comprised of robust parcel-centric data sets covering more than 147 million parcels, including:

Public records and tax assessment data
Liens, stand-alone mortgages and refinancing loans
Largest nationwide database of real estate-owned (REO) properties
Advanced geospatial imagery, dynamic heat maps and historical property photos
School district data, reviews and test scores
Neighborhood boundaries and demographic information including points of interest
Federal Emergency Management Agency (FEMA) flood maps

RPR has contracted with 425 MLSs across the U.S. representing more than 65 percent of Realtors®. MLS and associations may still partner with RPR to include MLS data in the system. The implementation process takes about 8-12 weeks, and there is no cost to implement the data.

For more information contact Jeff Young at jyoung@narrpr.com or Reggie Nicolay at reggie@narrpr.com, or visit http://blog.narrpr.com.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Source: NAR

Sandy to Slow October Home Sales in the U.S. Northeast

Existing-home sales, a market
indicator followed by economists and analysts, probably will
slow in the U.S. Northeast for the rest of 2012 as superstorm
Sandy disrupts deals, the National Association of Realtors said.

“Closings may be delayed, and a lot occur at the end of
the month,” Walter Molony, a spokesman for the group, which is
scheduled to report October sales on Nov. 19, said in a
telephone interview from Washington. “In theory, you wouldn’t
see the impact just in October sales. You’d see it in subsequent
months.”

Sandy made landfall on Oct. 29, knocking out power,
communications and transportation services in parts of New
Jersey, New York, Pennsylvania, Delaware and other northeastern
states. Some local multiple listing services that supply data to
the Chicago-based Realtors association may be incapacitated,
while sales elsewhere won’t be completed because of bank and
other business disruptions, Molony said.

An index of pending home sales for September jumped 26
percent in the Northeast, the biggest gain of any region, the
Realtors association reported Oct. 25. Contracts to buy existing
homes increased 15 percent nationwide, the 17th consecutive
increase from a year earlier.

Existing homes sold at an annual pace of 4.75 million
nationwide in September, up 11 percent from a year earlier and
the 15th consecutive increase on an annual basis, according to
the group. The Northeast accounted for 12 percent of U.S. sales
in September.

Sandy inflicted as much as $50 billion in damage, according
to Eqecat Inc., a provider of catastrophic risk models. Homes
accounted for about 55 percent of the insured property hurt by
the storm. About 34 percent of the damage occurred in New York,
30 percent in New Jersey, 20 percent in Pennsylvania and the
remainder in other states hit by Sandy, Eqecat reported
yesterday.

To contact the reporter on this story:
John Gittelsohn in Los Angeles at
johngitt@bloomberg.net

To contact the editor responsible for this story:
Kara Wetzel at
kwetzel@bloomberg.net

Sandy to Slow October Home Sales in the US Northeast

Existing-home sales, a market
indicator followed by economists and analysts, probably will
slow in the U.S. Northeast for the rest of 2012 as superstorm
Sandy disrupts deals, the National Association of Realtors said.

“Closings may be delayed, and a lot occur at the end of
the month,” Walter Molony, a spokesman for the group, which is
scheduled to report October sales on Nov. 19, said in a
telephone interview from Washington. “In theory, you wouldn’t
see the impact just in October sales. You’d see it in subsequent
months.”

Sandy made landfall on Oct. 29, knocking out power,
communications and transportation services in parts of New
Jersey, New York, Pennsylvania, Delaware and other northeastern
states. Some local multiple listing services that supply data to
the Chicago-based Realtors association may be incapacitated,
while sales elsewhere won’t be completed because of bank and
other business disruptions, Molony said.

An index of pending home sales for September jumped 26
percent in the Northeast, the biggest gain of any region, the
Realtors association reported Oct. 25. Contracts to buy existing
homes increased 15 percent nationwide, the 17th consecutive
increase from a year earlier.

Existing homes sold at an annual pace of 4.75 million
nationwide in September, up 11 percent from a year earlier and
the 15th consecutive increase on an annual basis, according to
the group. The Northeast accounted for 12 percent of U.S. sales
in September.

Sandy inflicted as much as $50 billion in damage, according
to Eqecat Inc., a provider of catastrophic risk models. Homes
accounted for about 55 percent of the insured property hurt by
the storm. About 34 percent of the damage occurred in New York,
30 percent in New Jersey, 20 percent in Pennsylvania and the
remainder in other states hit by Sandy, Eqecat reported
yesterday.

To contact the reporter on this story:
John Gittelsohn in Los Angeles at
johngitt@bloomberg.net

To contact the editor responsible for this story:
Kara Wetzel at
kwetzel@bloomberg.net

Report: 32% of homebuyers are first-timers

Nearly one in three homebuyers in September were first-timers to the housing market, reported the National Association of Realtors on Wednesday in its Realtors Confidence Index.

That’s up from 31 percent recorded in August and down from the historical norm of 40 percent, based on research from the trade group. The share of first-time buyers peaked in 2009, when it was 50 percent.

The change can be explained by the stricter guidelines to obtain mortgages, lengthy short sales and a high rate of investor purchases that often involve cash, the report said.

“Unsuccessful first-time buyers typically continue their property search, sometimes making a number of bids before securing a property,” it continued to state.

Related: 6 tips for first-time homebuyers

Common complaints from Realtors include: “Banks are not lending,” banks are “taking way too long to give approval,” and banks are “requesting more paperwork and records.”

Locally, it appears first-time homebuyer interest is strong, if a recent workshop hosted by the San Diego Association of Realtors is any indication. Nearly 150 people came out to the Oct. 20 event to learn about financing options, types of sales and tips to be a more appealing buyer.

Figures from the National Association of Realtors are based on more than 3,400 responses from surveyed Realtors from Sept. 24 to Oct. 1.

Have story tips, a hot property listing or a question? Email me: lily.leung@utsandiego.com | Tweet me: @LilyShumLeung | Subscribe to this blog.

Keri Mottola joins Walter R. Breyer Real Estate

ORADELL – Walter R. Breyer Real Estate recently announced that Keri Mottola has joined the real estate firm, located at 431 Kinderkamack Road in Oradell.

During her 10-year career in real estate, Mottola has established herself as a leader in the Oradell area real estate community. She is a member of the National Association of Realtors (NAR), New Jersey Multiple Listing Service, and the Real Source Board of Realtors.

“Keri is a perfect fit for our office where attention to detail and client satisfaction holds the highest priority,” said Walter Breyer.

To contact Motolla, call 201-232-5485 or 201-262-5100. For more information, visit www.breyerrealty.com.

Area Realtors launch new property database

EAGLE COUNTY, Colorado — The Vail Board of Realtors has launched a new database of comprehensive property information developed by the Realtors Property Resource, LLC, a company owned by the National Association of Realtors. The service is available only to Realtors.

“We’re among the first associations in the country to bring this tool to our members,” association executive Amy Reid said. “We decided to partner with RPR because we believe that now, more than ever, consumers need Realtors to help them navigate all the many sources of information and get expert advice on real estate property values and trends in this volatile market.”

The system is a compilation of many sets of data, and creates analytics and statistics from that data, available for use only by the Realtors, according to RPR CEO Dale Ross.

“Home ownership continues to be, and will always be, an American dream, and Realtors in the Vail Valley are now the best informed and educated about the complexities of their local market. That makes them even more valuable resources for homebuyers and sellers,” Ross said.

For more information, go to www.vbr.net.