Archives for June 2016

BREXIT: What’s the FIXIT for U.S. Home Buyers and Sellers?

Brexit

 

Now that much of the dust has settled and the panic has waned, let’s take a look at what impact Britain’s exit from the European Union may have on the U.S. housing market.

The most immediate impact of Brexit will be on mortgage interest rates. Interest rates have remained at historic lows for the last several years. Contrary to what many experts believed, rates have remained low throughout the first half of 2016.

Possible impact of Brexit on mortgage rates?

In a recent article, the Washington Post explained:

Brexit has spawned the recent bout of volatility in global financial markets. That has anxious investors scurrying for safety — and few assets are safer than U.S. Treasuries. High demand for government debt pulls down interest rates.

That all translates into ultra-low mortgage rates for American households. And with Britain voting for Brexit, they could go even lower.”

Now that much of the dust has settled and the panic has waned, let’s take a look at what impact Britain’s exit from the European Union may have on the U.S. housing market.

The most immediate impact of Brexit will be on mortgage interest rates. Interest rates have remained at historic lows for the last several years. Contrary to what many experts believed, rates have remained low throughout the first half of 2016.

Possible impact of Brexit on mortgage rates?

In a recent article, the Washington Post explained:

“Brexit has spawned the recent bout of volatility in global financial markets. That has anxious investors scurrying for safety — and few assets are safer than U.S. Treasuries. High demand for government debt pulls down interest rates.

That all translates into ultra-low mortgage rates for American households. And with Britain voting for Brexit, they could go even lower.”

However, the lower rates caused by Brexit may be short lived as Trulia Chief Economist Ralph McLaughlin pointed out in a recent post:

While the departure of the UK from the European Union has driven down the 10-year bond, and thus mortgage rates, we expect them to rebound later in the year as uncertainty over the economic consequences of the departure lifts.”

Bottom Line

Rates are already at historic lows. The UK’s exit from the EU almost certainly guarantees they will remain low (and possibly go lower) over the next few months. If you were thinking of buying your first home or trading up to the house of your dreams, this may be the time to act. The cost of money may never be better for a potential buyer.

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4 Reasons to Refinance Your Mortgage

4 reasons to refinance

 

You may be wondering whether it’s worth it to refinance your home loan. Rest assured my team and I are here to make the process as smooth and painless as possible. We’ll answer all of your initial questions and walk you through the entire loan process, with the end goal of securing the right home loan for you.

As a rule of thumb, check out four reasons why refinancing can be a smart move. By refinancing, you may be able to:

Lower your interest rate, making a big difference in your monthly out-of-pocket costs for housing, meanwhile saving money on financing fees over the life of your loan.

Build equity faster. Homeowners who are in a position to make higher monthly payments could switch from a longer to shorter term mortgage, where available.

Change your loan program from an adjustable-rate mortgage (ARM) to the stability of a fixed-rate mortgage, taking advantage of more attractive rates and loan programs.

Cash out on equity you’ve already established for home improvement projects you’ve wanted to tackle, to pay off debt, or send your child to college.

If you would like to discuss whether refinancing makes sense at this time and all available opportunities, please get in touch. I’m happy to help.

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Time to downsize??

The best thing in life is love

A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their house in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing a seller’s market.

In a recent blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

  1. A smaller home means less space, but it also means less time, stress and money spent on upkeep.
  2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
  3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in a recent article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help. 

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profit from the sale of their current home and splitting it in order to put down payments on a smaller home in their current location, as well as a vacation/retirement home where they plan to live when they retire.

This allows them to lock in the home price and mortgage interest rate at today’s values. This makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’s latest Equity Report revealed that 72.6% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about. 

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, give me a call and let’s run the numbers.

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Do Americans Believe Real Estate is the Best Long-Term Investment?

Some Highlights:

  • Real estate outranks stocks/mutual funds, gold, savings accounts/CDs, and bonds as the best long-term investment among Americans.
  • Real estate is ranked as the best long-term investment among all age groups.
  • Millennials rank both real estate and savings/CDs at 26% when it comes to the best long-term investment.

Karen Jones great investment

 

 

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