Interest Rates Will Continue to be Low Until Unemployment Drops

Fed Chariman Ben Bernanke

by Yvette Betancourt

As the end of the year comes near (according the Mayans, it's the end today), the Feds made the decision to continue to curb interest rates low as long as the unemployment rate remains above the 6.5 percent.

Sounds good right? but for how long?

Unemployment rate is estimated to drop below 6.5 until 2015 according the Feds.  sounds like 2013 and 2014 will be a the best time to get into the market for buyers, sellers and real estate investors.

So as we anticipate the decision of the "Fiscal cliff," government is doing their best to make sure the 2012 real estate market gain will continue to grow into 2013 and beyond.

Source: AGBeat

Is California shifting from a Buyers Market to a Sellers Market?

by Yvette Betancourt

According the C.A.R (California Association of Realtors®),  homes that have been priced right and the record-low interest rates are making the market competitive that six out of ten homes are receiving multiple offers.  

In 2012, 57% of homes sales were in a multiple offer situation that included lower priced homes and  distressed properties (bank-owned real estate REO, short sales, etc.).  These properties had more multiple offers than market sales. 

The multiple offer has led homes to be higher home sales than the originally asking price.   Also, homes are also sold faster than market sales taking about 32 days compared to the average of 67 days in 2011.  REOs are sold in 30 days than the 50 days average of last year! Short Sales market days has not change due the complexity of the short sale process but the average of days are 90 days than 141 days from last year.  

My question is, who is the buyer? Are they cash investors or future home owners?

In 2012, a third of homebuyers paid with all cash and 16% of buyer bought for investments purposes.  International buyers are making up 5.8 percent of buyers with the largest group of buyers coming from China, Canada, India and Mexico. 

The good news is that 77% of buyers are purchasing a primary residence that include 40% of first time home buyers.  Most first time home buyers are purchasing REO property or a short sale.  

Due to the current tight lending, few buyers have a second mortgage.  In 2006, 43.4 percent of home sales were bought with second mortgage. In 2012, 1.8 percent. What a big difference.  

The fierce market conditions have forced buyers to complete with all-cash offers and investors and making it difficult for first-time buyers to become homeowners. 

In my current experience, homes in the San Fernando Vally that are under $450,000 have been in a multiple offer situation since February 2012.  If you are a buyer who is looking to place an offer lower than listing price, chances are your offer will be over looked due to offers at listing price or over listing price.  Yes, these properties need TLC and there are no credits for repairs however, the days of bargaining with homes, especially distressed properties are very slim.  Home buyers, please don't get discouraged! I've seen cash offers be outbid by offers with a loan. Remember, the highest purchase price and best terms will appeal to the sellers.  As for home sellers, if you need time to relocate or find a new living arrangements, add the time frame to the listing contract.  

If you have any questions, please contact me at (818) 384-5928 or email.

Source: MortgageNewsDaily.com

Top 4 Reasons to Refinance

According to the Mortgage Banker association, the average American refinances his or her mortgage every four years! 

Here are the top four reasons why a home owner refinances. 

1.  Get a lower interest rate - The homeowner is swapping a higher interest rate for a lower one.  

2. Switch your mortgage type - If you have an adjustable rate mortgage (ARM) that offered great low introductory rates, but those rates are about to increase. The opinion to change to a fixed-rate mortgage will give you a consistent monthly payment.  Or if you have attractive low rates for an ARM, then you could switch to an ARM.

3.  Build home equity faster - If you can pay more toward your monthly mortgage payments. Either by refinancing from a 30 year fixed to a 15 year fixed, you can reduce your interest charges and pay off your home quickly.  Or if you don't want to refinance, you can pay against your principal by making additional payments each month. 

4. Take cash out - Pulling equity out of the home in the form of cash but you add to your principal in the process.  Example: Joe has a home worth $500K, and he owes $300K on his mortgage and has $200K in equity.  By refinancing his existing loan, and his mortgage will look like this: $500K home value, $400 mortgage and $100 in equity.  

However, is Refinancing right for you?

Before contacting a lender, ask yourself these questions:

How long will I be in my home? General rule of thumb is that unless you are planning to stay in your home at least another five years, then refinancing may not make sense.  You usually "break even" at the five year mark which means you have paid for the costs to refinance. 

Is there a prepayment penalty on my current mortgage?  Many mortgages carry a penalty if you pay off your existing mortgage.  Ask your lender if your mortgage has a prepayment penalty.  

Will my tax savings be reduced?  If you claim mortgage interest on your tax return, refinancing to a lower rate will mean that you'll have less mortgage interest to deduct.  Check with your tax advisor.

Can I build equity faster?  For a shorter-term mortgage might make sense for someone who can now make greater monthly payments than when they originally financed.   

Can I reduce my monthly payments? 

Can I cash out some of my equity? 

Remember, refinancing helps many homeowners stay in their homes for less money, or give them cash out they desire, but just make sure you do the math and understand how the new loan will affect you.