Homeownership as an Investment: The Role of Price Appreciation

Posted: 27 May 2015 KCM CrewHomeownership as an Investment: The Role of Price Appreciation | Keeping Current Matters

We recently posted on the results from the latest Home Price Expectation Survey(HPES) showing where residential home prices are headed over the next five years. Today, we want to show you what the results of the report could mean to you. A good portion of every family’s wealth comes from the equity in the home they live in. As the value of their home (an asset) increases so does their equity. Let’s look at a possible case scenario based on the latest HPES. Here is a chart showing the survey’s projections on annual appreciation over the next five years:Projected Mean Percentage Appreciation | Keeping Current MattersWe then looked at the five-year impact this would have on the equity of a family that purchased a home in January for $250,000:Home Price Appreciation | Keeping Current MattersTheir family wealth (based on increased equity) would increase by $47,772 over those five years. Bottom Line If you don’t yet own, perhaps you should be thinking about purchasing. If you already own, maybe it’s time to move up to enjoy your dream home and also ride the increase in equity of the larger asset.

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Mortgage Rates as of May 26th, 2015

 

 

Mortgage Program Interest Rate Fully Indexed
Rate
APR* Monthly Payment
Per Thousand
30 Year Fixed
No Points
3.750%
30 Year Term
3.799% $4.63 – 360 payments of $1,481.97
15 Year Fixed
No Points
3.000%
15 Year Term
3.082% $6.91 – 180 payments of $2,209.86
5/1 ARM**
No Points
2.625%
5 Year Term
3.000%
25 Year Term
2.914% $4.02 – 60 payments of $1,285.28
$4.19 – 300 payments of $1,339.73
5/1 Jumbo ARM***
No Points
2.625%
5 Year Term
3.000%
25 Year Term
2.90% $4.02 – 60 payments of $2,811.55
$4.19 – 300 payments of $2,930.67
7/1 Jumbo ARM***
No Points
3.000%
7 Year Term
3.000%
23 Year Term
3.03% $4.22 – 360 payments of $2,951.23
10/1 Jumbo ARM***
No Points
3.250%
10 Year Term
3.000%
20 Year Term
3.183% $4.35 – 120 payments of $3,046.44

$4.26 – 240 payments of $2,978.78

30 Year Jumbo Fixed
No Points
3.750%
30 Year Term
3.784% $4.63 – 360 payments of $3,241.81
FHA
No Points
3.25%
30 Year Term
4.777% $4.35 – 360 payments of $1,709.29

Above rates are for Purchase Transactions. Payments do not include taxes or insurance. Your payment will be greater.

*Annual Percentage Rate. Rates effective publication date and subject to change without notice. Rates quoted assuming taxes escrowed. 30 Year Fixed, 15 Year Fixed, 5/1 ARM rates applicable for conforming loans on single family properties; examples based on a loan amount of $320,000 with 20% down payment. FHA rates applicable for conforming loan amounts on single family properties; example based on a loan amount of $386,000 with 3.5% down payment. FHA payment above does not include mortgage insurance. 5/1 Jumbo ARM, 7/1 Jumbo ARM, 10/1 Jumbo ARM, and 30 Year Jumbo Fixed rates applicable for non-conforming loans on single family properties; examples based on a loan amount of $700,000 with 30% down payment. Annual Percentage Rates may increase after consummation. Subject to credit approval.

**After the fixed period rate of 60 months for the 5/1 ARM, the rate will adjust annually to the 1 year UST index plus 2.75%. Subject to an initial adjustment cap of 2% over the initial rate, a subsequent cap of 2% over the initial rate, and a lifetime cap of 6% over the initial rate.

***After the fixed period rate of 60 months for 5/1 JUMBO ARM and 84 months for the 7/1 JUMBO ARM,the rate will adjust annually to the 1 year UST Index plus 2.75%. Subject to an initial adjustment cap of 2% over the initial rate, a subsequent cap of 2% over the initial rate, and a lifetime cap of 6% over the initial rate and 120 months for the 10/1 JUMBO ARM, the rate will adjust annually to the 1 year LIBOR Index plus 2.25%. Subject to an initial adjustment cap of 5% over the initial rate, a subsequent cap of 2% over the initial rate, and a lifetime cap of 5% over the initial rate.

 

For more information, please contact:

Bob Hagerty, Senior Loan Officer 

NMLS MLO# 704244

Office: 781-474-5092Cell: 781-733-4051bhagerty@leaderbank.com

www.leaderbank.com/agent/bhagerty

 

Toll Free 1-877-691-7900  |  www.leaderbank.com

Lender NMLS# 449250

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Mortgage Application Activity Ticks Down in MBA Survey

Drop in refinancings continues drag

declining

Mortgage applications dropped 1.6% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending May 22, 2015.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2% compared with the previous week.

The Refinance Index decreased 4% from the previous week. The seasonally adjusted Purchase Index increased 1% from one week earlier. The unadjusted Purchase Index was essentially unchanged compared with the previous week and was 14% higher than the same week one year ago.

The refinance share of mortgage activity decreased to 51% of total applications from 52% the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 6.4% of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.07% from 4.04%, with points increasing to 0.35 from 0.32 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.06% from 4.04%, with points increasing to 0.29 from 0.25 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.83% from 3.80%, with points increasing to 0.16 from 0.06 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 3.29% from 3.26%, with points decreasing to 0.24 from 0.30 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.04% from 2.99%, with points increasing to 0.48 from 0.45 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

Follow Len and Leslie Marma of Success! Real Estate on their facebook business page, “Marshfield Matters” ….. press LIKE to receive real estate info and what’s happening in Marshfield.

 

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“Lagging Supply” Leads to Slowdown in Sales

Posted: 26 May 2015 KCM Crew“Lagging Supply” Leads to Slowdown in Sales  | Keeping Current Matters

The National Association of Realtors (NAR) recently released the results of their Existing Home Sales Report. Despite the fact that properties are selling faster than they have at any other time since July of 2013, existing home sales declined 3.3% from March. NAR’s Chief Economist Lawrence Yun explained the main reason for the slow:

“April’s setback is the result of lagging supply relative to demand and the upward pressure it’s putting on prices.”

One major news organization actually used this headline about the decline:

Existing home sales crater in April, falling 3.3%

They certainly haven’t cratered! April marked the second month in a row that the annual sales pace remained above the five million mark (5.04 million). Year-over-year sales have increased for seven consecutive months and are still 6.1% above a year ago. Every month, SentriLock, LLC provides NAR Research with data on the number of homes shown to potential buyers. This data is referred to as ‘Foot Traffic’ and is a great predictor of future sales and buyer demand. In April, buyer demand remained at the same level experienced in March.

So why did sales go down?

Buyers who are ready and willing to make a purchase are entering a market where their dream house may not have been listed yet. They can’t find it! Or if they find it, it happens to catch the eye of other buyers and an ‘auction like environment’ begins.

“Housing inventory declined from last year and supply in many markets is very tight, which in turn is leading to bidding wars, faster price growth and properties selling at a quicker pace,” says Yun. “To put it in perspective, roughly 40 percent of properties sold last month went at or above asking price, the highest since NAR began tracking this monthly data in December 2012.” (emphasis added)

The median home price of existing homes sold in April was $219,400, which is 8.9% higher than last year, and marks the 38th consecutive month of year-over-year price gains.

Bottom Line

So how do you make sense of everything that’s going on in the housing market when there are so many conflicting headlines on the same report? John Burns, real estate expert and CEO of John Burns Real Estate Consulting gives this advice:

“The bottom line is this: don’t make decisions based on newspaper articles. Read the actual press release, including the methodology, and make sure the results jive with other data points and qualitative feedback you receive.”

If you are one of the many homeowners out there realizing that now may be the time to list your home for sale, or one of the many renters debating a purchase, sitting with a local real estate professional who takes the time to find out what’s really going on in the market, should be your first step!

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New Construction: Hear Those Hammers in the Background?

Posted: 21 May 2015 KCM CrewNew Construction: Hear Those Hammers in the Background? | Keeping Current Matters

If you are planning on selling your home over the next two years, now may be the time to act. Demand is high, supply is low and many homeowners are benefiting from an almost auction atmosphere with several buyers fighting for their house in the current multi-bid environment. Higher prices and less stringent contingencies are making it easier for the seller and their family. However, there may be more (and better) competition about to hit the market in the form of newly constructed homes. This may put an end to the buyers’ frenzy over the limited inventory of existing homes which has been below normal levels for over a year. According to the latest report from the National Association of Realtors (NAR), the forecast for new housing starts and sales will increase significantly over the next two years:

  • NAR is forecasting 1.1 million new housing starts in 2015, jumping to 1.4 million in 2016.
  • New home sales are projected to increase from the 437,000 in 2014 to 570,000 this year and 720,000 in 2016.

Bottom Line

In major urban areas across the country, building cranes are again stretched across the city skyline. In many suburbs, you can again hear the thumping of a carpenter’s hammer in the background. Those are the sights and sounds that inform us that it may be time to sell.Attention Agents: Join us today for a special LIVE webinar, Listing Inventory: Conquering Every Agent’s Biggest Challenge.

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30-Year Mortgage Rate Slips a Bit

Washington — The average long-term mortgage rate edged slightly lower this week after rising for three straight weeks, the mortgage giant Freddie Mac said, with the average on a 30-year fixed-rate produce at 3.84 percent, down from 3.85 percent.  The average rate on 15-year fixed-rate mortgages slipped to 3.05 percent from 3.07 percent.  Last week, both rates reached their highest level since mid-March, rising along with the yield on 10-year Treasury notes — reflecting some signs of improvements in the US economy.  Still, mortgage rates remain low by historic standards.  A year ago, the 30-year rate was 4.14 percent and the 15-year was at 3.25 percent.  A separate report showed that sales of existing homes slipped 3.3 percent in April due to relatively few listings and rising prices.

Associated Press, May 25th, 2015

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All Gave Some, Some Gave All

 

Posted: 22 May 2015 KCM CrewAll Gave Some. Some Gave All. | Keeping Current Matters

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