Summer House Selling Tips

We are officially in the thick of the summer housing season. If you’re one of the millions of Americans hoping to sell in the summer, capitalizing on red-hot market activity, there’s a lot to know.

Here are the seven most important things to know if you’re looking to take advantage of real estate’s most sizzling season:

The Busiest Month of the Year



Nationally, the volume of home sales in June is typically 29% above the annual average, according to Trulia.  In July and August, inventory keeps climbing as some sellers miss the sales peak. Homebuyers begin their search in March and April, but they really get down to business after Memorial Day.  The peak in June and July sales reflects the fact that many people want to move in summer when school’s out and the weather’s good.  In fact, more buyers are ready to close deals in the summer than any other time of the year.  So get your house ready and on the market now, and take advance of the surge in activity.

Mortgage Qualifications Loosening

Fannie Mae (FNMA) and Freddie Mac have just announced that they’re loosening some bank lending rules.  Accordingly, in April, Wells Fargo & Co., the biggest U.S. home lender, cut its minimum credit score for borrowers of Fannie Mae and Freddie Mac-backed loans from 660 to 620, following similar moves from smaller banks.  Thus, there may be a bit more qualifying flexibility for hopeful homebuyers come end of the summer.

Interest Rates

Interest rates on 30-year fixed-rate mortgages rose from a record low of 3.31 percent in November 2012 to 4.58 percent in late August. But optimistically, rates fell last week to 4.21 percent. And falling rates are just another incentive for those summer homebuyers.

Push The Inside Out

Now that the weather is heating up and you’re spending more time outdoors, use it to your selling advantage. Living space is not defined by the interior walls of your home; it actually extends all the way to the sidewalk in front to the property line in back. And whether you have a modest balcony or a big backyard, you’ll want to push the inside out. Make your outdoor space inviting with a cozy seating area or dining table, complete with attractive place settings.  Stage you barbeque area with a nice set of tools and mitts next to the grill. Or if you have a pool, include rolled white towels and a terry cloth bathrobe draped by a Jacuzzi. Be creative. I have seen a backyard staged with a croquet set as if there were a game in progress. These little touches makes people think “I should live here!”

Keep It Green and Flowery

The hot days of summer present their own challenges and opportunities for curb appeal.  You want to make sure the lawns are well watered and green.  Grass and shrubs dry out quickly, and nothing is more uninviting than a charred front yard.  And as you struggle with your lawn, don’t overlook the fact that warm weather affords the opportunity to create an especially inviting front yard, with beds of colorful flowers – a must for spring and summer home sales. Not sure where to start? Keep it simple: choose one color and stick with it. And when all else fails, go with white. It’s sure to look good, and it really pops against other greenery creating a sophisticated look.

Keep It Cool

For every showing or open house, make sure that the air conditioning is working and turned on prior to any guests arriving.  You want your home feel like a cool oasis in the heat of summer.  In fact, it’s smart to set your thermostat a few extra degrees lower than usual to compensate for all the doors opening during prospective buyers’ comings and goings.

Summer Treats For Your Buyers

Buyers are hot and sticky after hours of getting in and out of scorching cars while battling open house crowds.  You’ll want them to have a nice refreshing moment in your home, so break out the pitchers of ice water with lemons or stock the fridge full of cold drinks. It’ll go a long way in keeping interested visitors happy about spending time in your place.  Remember, the longer potential buyers hang in your home, the more they become emotionally attached and want to make it their home!

Source: Forbes

The Risks of Adjustable Rate Mortgages

Confounding most predictions, mortgage rates have remained unusually low this year, begging a question: is an adjustable-rate mortgage worth the risk?

It can be, but it's likely that many borrowers focus on the wrong issue, looking at the way lower interest rates on ARMs (as opposed to fixed-rate loans) reduce monthly payments. Currently, a one-year ARM charges 2.876%, a 30-year fixed-rate loan 4.313%.

A lower payment obviously means more money in your pocket for other things. But if that's what matters to you, consider it a red flag. The ARM rate will start out lower than the fixed-rate loan, but could go higher when the annual adjustments start after one, three, five or seven years. At some point, you could pay more each month than you would if you'd taken out a fixed loan. That means if you think the monthly payment on a fixed loan would be a stretch, be very wary of taking out an ARM for the same amount.

Why, then, would you even consider an ARM? In a nutshell, not to reduce monthly payments but to reduce your overall interest charges — assuming everything works in your favor.

Consider some numbers produced by Jack M. Guttentag, emeritus professor of finance at the Wharton School. On a $300,000 loan, he figured a 30-year fixed mortgage would charge 4%, for a monthly payment of $1,432. A five-year ARM would start at $2.635%, for $1,205 a month.

After five years, the ARM rate would be reset every 12 months, based on a formula using prevailing rates, with a "cap" limiting the annual changes — typically 2 percentage points for each adjustment, up or down. Assuming the rate went up the maximum allowed, the five-year ARM would still be cheaper than the fixed loan for nine years. It would take that long for the rising payments on the ARM to wipe out the savings enjoyed in the first five years. After the nine-year breakeven point, the total cost of the ARM would be higher than for the fixed loan.

Note that in year six, the ARM would charge about 4.6%, while the borrower would have continued paying just 4% on the fixed loan. In year seven, the ARM could charge 6.6%. So although the total costs of the ARM are still lower through these years, the monthly payment would be considerably higher than on the fixed mortgage.

Of course, the borrower could get lucky, with smaller rate hikes. Conceivably, rates could even go down.
But if that happened, the savings would be gravy. Unless you have a crystal ball, the prudent move is to assume the rate will go up the maximum allowed.

All this demonstrates that an ARM is a safe bet only if you can afford the maximum payments it could charge, and that overall savings are certain only if you expect to pay off the mortgage before the breakeven point — by selling the home, for instance. If you expect to have the loan longer than that, savings are a gamble. (Find the breakeven point with the ARM vs. Fixed Rate Mortgage Calculator).

To improve your odds of coming out ahead, the monthly savings from the ARM should be reinvested, not spent. That "extra" cash could be used as extra principal payments to reduce the mortgage balance, thus reducing the payments after subsequent adjustments. Or it could be invested in stocks, bonds or mutual funds — anything that looks promising.

But if you're considering an ARM because the lower initial payments will make it easier to put food on the table or make your car payment, better reassess. In this case, the key issue is not whether to get an ARM instead of a fixed loan, it's whether you'd be wiser to buy a cheaper home.

By the Tracy Tidwell Team at ERA Henley Real Estate in Conway, AR
http://www.tracytidwell.com
Tracy: 501-472-4709   ERA: 501-327-6731

10 Steps to a Great Mortgage Loan Deal

How to Get a Great Deal on a Mortgage Loan

It is often said that for most people, the purchase of their home will be their single greatest expenditure. In truth, however, the purchase of a mortgage--the points and interest paid over the life of the loan--often equals or exceeds the sale price of the house. Thus, as everyone knows, it's essential to get the best deal on your mortgage as possible. Doing so, however, is not an easy proposition. To get a truly great rate, you'll need not only to shop smartly for a mortgage, you also need to establish yourself as a good credit risk before you apply.

Steps
Get a Get a Great Deal on a Mortgage Loan Step 1
1. Wait for Low Interest Rates

The easiest way to get a lower rate is to wait until the interest rates on loans across the board are at low levels. Interest rates fluctuate a great deal, sometimes even during the same day, but there are times when they are simply far lower than at other times. Keep in mind, however, that (all other things being equal) periods of low interest rates often see increased home prices.






Get a Get a Great Deal on a Mortgage Loan Step 2
2. Improve Your Credit Score

Make loan and other payments on time, especially over the months leading up to the loan application. Every delinquency will result in a lower credit score The better your score, the better your deal. Keep in mind, however, that it typically takes at least a couple years to significantly improve your credit. Don't close accounts when you pay them off - credit capacity is an important part of credit scoring. Unused open accounts do not help credit scores, however - higher scores come from current use of credit. Use it - pay it off - repeat.

Get a Get a Great Deal on a Mortgage Loan Step 3
3. Get the mortgage first if multiple financial obligations are going to pop up in the near future

Numerous credit inquiries, such as new applications for credit cards, can hurt a borrower's score, especially if they're filed in the months prior to the home loan review process. In addition, if you add new debt expenses shortly before applying for a mortgage, the loan underwriter may question whether you'll be able to make all your payments, so avoid making large purchases in the months before you apply.



Get a Get a Great Deal on a Mortgage Loan Step 4
4. Save as much money as possible for your down payment

A major determinant of your interest rate will be the loan-to-value ratio. These days you can sometimes get a mortgage for up to 97% of the value of the home (100% if you are a Veteran)(as of Fall 2008), but if you can reduce the loan amount to 80% of the value, you'll get a better rate. The larger your down payment, the more equity you will have in the home from the start. With more equity, the loan is a lower risk for the lender, and you'll be rewarded with a lower interest rate. A lease option may also help you build equity if you're not in a position to make a large down payment.

Get a Get a Great Deal on a Mortgage Loan Step 5
5. Reduce upfront expenses

Points--1 point equals 1% of the loan amount--and other upfront fees can drive the cost of your loan through the roof. Always take these into account when shopping for a mortgage. "Points" are a way of obtaining a lower interest rate, and may be necessary to make the payment make sense relative to your income.

Get a Get a Great Deal on a Mortgage Loan Step 6
6. Think small

Don't shop for that 6-bedroom house right off the bat. Lenders consider "payment shock" when approving loans. If you go from a relatively low monthly housing payment to a huge one, you'll either end up covering too big a loan with too little money, or you won't qualify at all.





Get a Get a Great Deal on a Mortgage Loan Step 7
7. Shop around

Mortgage rates for the same person can differ widely from lender to lender, so explore your options. If you belong to a credit union or if you've been with a bank for a long time, you'll often find your best rates there, though it's still a good idea to check around. A mortgage broker, who sifts through many lenders, may be able to find you the best rate. On the other hand, a Lender (not a broker)like a credit union does not have to cover the overhead of a broker - you may find lower rates, or lower costs.



Get a Get a Great Deal on a Mortgage Loan Step 8
8. Get pre-qualified, or "pre-approved"

The difference is a pre-qualification is based on information voluntarily submitted by you to a lender, who then provides an 'estimate' of the maximum mortgage amount you can afford. A pre-approval means the borrower, has had the lender perform credit checks, income verification, and various other underwriting tasks and has been approved for a specific mortgage amount. A pre-approval is a much stronger tool, obviously.



Get a Get a Great Deal on a Mortgage Loan Step 9
9. Lock in a low rate

Simply being approved for a loan amount doesn't mean you'll get the interest rate you've been quoted. You'll need to lock in the rate.









Get a Get a Great Deal on a Mortgage Loan Step 10
10. Enlist a real estate agent

Professional assistance can be invaluable when shopping for a new home. Real estate agents are already familiar with the housing market in the areas you are searching. This saves time as an agent can suggest properties that meet your search criteria. Agents also save you money because they know where the deals are among comparable houses in their areas.
Real estate agents also already have relationships with lenders which increases your chances of getting financed and at lower rates with quicker closing times.

By the Tracy Tidwell Team at ERA Henley Real Estate in Conway, AR

http://www.tracytidwell.com

Tracy: 501-472-4709   ERA: 501-327-6731

Millennials Mortgage Loans Eligibility Threatened by Debt

Housing Recovery Leaves Millennials Out in the Cold
The Fiscal Times By Marine Cole
May 4, 2014 5:30 AM

The housing market is moving toward a recovery – but it won’t take off for good until young Americans have enough money to buy their first home.

Discretionary Spending Power of Millennials

So far this year, a weak housing market has been a burden on economic growth. Mortgage loan applications dropped to a 14-year low in the first quarter as homeowners refinanced at a lower rate and Americans’ appetites for house hunting ebbed. In turn, the U.S. gross domestic product grew at a seasonally adjusted annual rate of 0.1 percent in the first quarter, according to the Commerce Department.

“The weak economic growth was the result, among other things, of housing,” said Greg McBride, Bankrate.com’s chief financial analyst. “I expect we’ll see improvements in the housing market but not at the pace we've seen in the past year.”

Homes have become too expensive for many Americans, especially for young people. Prices increased 13 percent for the 12 months ending in February in 20 major cities, according to the S&P/Case-Shiller Home Price index. Additionally, the supply of homes has remained tight. “There’s really nothing that’s compelling [people] to buy,” said Keith Gumbinger, vice president at HSH.com, which publishes mortgage and consumer loan information.

But the main problem is that Americans, especially young people who are burdened by rising debt loads such as student loans, won’t be able to obtain a mortgage unless they make more money. Personal income is on the rise—it grew 0.5 percent in April—but the growth isn't as fast as needed to spur a pickup in the housing market.

“The missing ingredient is growth in household income,” said McBride. “It’s been pretty moribund for a lot of people.”

Between a lack of substantial income, rising home prices and interest rates that are higher than a year ago, affordability is compromised for young Americans.

While the share of loan applications for mortgages of $400,000 and over increased in March compared to a year ago, applications at the lower end of the market for loans valued at or under $400,000, which represents the bulk of the market, have been shrinking, according to data from the Mortgage Bankers Association.

“There’s less growth in the large part of the housing market,” said Joel Kan, director of economic forecasting at MBA. “This is caused by a lower share of first-time buyers.”

Historically, first-time buyers have represented roughly 40 percent of existing home sales, but in March, they equaled 30 percent. That figure fell as low as 26 percent in January.

“For young adults, the biggest problem is saving enough for a down payment,” said Jed Kolko, chief economist at Trulia.

Would-be-first-time home buyers are often either renting or living with their parents because they are struggling to find jobs. The employment rate among 25-to-34 year-old Americans, which is considered the prime age group for housing demand, fell to 75.5 percent in April, after hovering around 76 percent for the last three months, according to the Labor Department. But the rate hasn't returned to pre-crisis levels.

“Having a job matters for housing,” said Kolko. “Even though their job prospects have improved from a year ago, [young people] are renting first before they buy their first home.”

To make matters worse, lending standards continue to be tight, a trend that started after the financial crisis in 2008. But there are some early indications that lending may loosen up a bit  thanks in part to new mortgage rules that give more clarity to banks about  their responsibilities when it comes to default. So far, Wells Fargo is making a comeback in the sub-prime home loan market, but few other lenders, particularly banks, are following suit.

Overall, there are some encouraging signs that this may be a mere bump on the road rather than a major shift in the housing recovery.

“It’s definitely a hiccup,” said Kan. “How big of a hiccup, we don’t know yet. We expect things to firm up a bit later in the year, but more rapidly next year.”

While interest rates have increased in the past year to 4.34 percent in March, from 3.57 percent for a 30-year fixed-rate mortgage, they continue to be lower than historical averages, which eligible home buyers should note. Price appreciation has also slowed down and will be more modest from now on.

“It will take some time for young people who recently got a job to be able to purchase their first home,” said Kolko. “That’s the most important factor in the long term.”

By the Tracy Tidwell Team at ERA Henley Real Estate in Conway, AR
http://www.tracytidwell.com
Tracy: 501-472-4709   ERA: 501-327-6731

Mortgage Rates Inch Up After a Five Week Slump

From DAILY REAL ESTATE NEWS | FRIDAY, FEBRUARY 14, 2014

The five-week streak of falling mortgage rates ended this week, with the 30-year fixed-rate mortgage moving up slightly to an average of 4.28 percent, Freddie Mac reports.

Freddie Mac reports the following national averages for mortgage rates for the week ending Feb. 13:

• 30-year fixed-rate mortgages: averaged 4.28 percent, with an average 0.7 point, up from last week’s 4.23 percent average. Last year at this time, 30-year rates averaged 3.53 percent.

• 15-year fixed-rate mortgages: averaged 3.33 percent, with an average 0.7 point, holding the same average as last week. A year ago, 15-year rates averaged 2.77 percent.

• 5-year hybrid adjustable-rate mortgages: averaged 3.05 percent, with an average 0.5 point, dropping from last week’s 3.08 percent average. Last year at this time, 5-year ARMs averaged 2.64 percent.

• 1-year ARMs: averaged 2.55 percent, with an average 0.4 point, rising from last week’s 2.51 percent average. A year ago, 1-year ARMs averaged 2.61 percent.

Source: Freddie Mac

Tracy Tidwell Team  501-472-4709

ERA Henley Real Estate   501-327-6731