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Santa Clarita Home Prices Take a Sizable Upswing In January
Last year, there were some experts and analysts wondering just how long the real estate market could continue to rise. There were definitely rumors of changes in light of interest rates being raised by the Federal Reserve at the end of last year.
January is usually a very slow month for real estate. Many buyers and sellers are recovering from the holidays, and it's usually not at the forefront of the "to do" list. Typically, we see a slight drop in home values between December and January. For example, last year January saw a $15,000 drop in home prices from December of 2014. At the beginning of 2013, home prices dropped nearly $40,000 in one month. You get the picture, right?
However, this January saw single family home prices actually JUMP by $12,000 over December's closing price of $518,000. That's right. TWELVE THOUSAND IN ONE MONTH!
How is this happening in what's normally a slow month for real estate?
For one, mortgage rates are still dropping. That's right! We've seen them go down almost half a percentage point in recent months, and currently (As of the date of this post), rates for a 30 year fixed rate mortgage are at the nearly historic low of 3.64 percent. Qualified buyers can get a 15 year fixed rate home loan for just UNDER 3 percent.
If that's not motivation to get "off the fence" and find your dream home, then what else is there?
Making smart decisions when it comes to choosing a mortgage loan can save you a huge amount of money for years to come.
We talk a lot about interest rates. In most cases, the rates we’re discussing are base rates without any points or fees added by mortgage lenders. Many lenders may not want you to know this, but those points and fees may be negotiated to your best advantage.
A recent survey showed that, while 4 out of 5 Americans consider themselves bargain hunters, less than 30 percent of consumers actually look for, or ask for, better terms for their home loan.
Why is it so important to shop lenders?
There are several reasons. The main one of course would be….money! Aside from lender fees that you would pay as a lump sum at close of escrow, even negotiating your interest rate a few fractions of a percent can save you thousands of dollars over the lifetime of your loan. What’s equally important is the level of service you can expect from your mortgage lender. Finding out how easy it is to have problems resolved through their customer service branch, or even if a lender regularly sells your loan to another bank are good things to know up front. Continue reading Shopping Home Loans Can Save You Money→
The Federal Reserve has held off on raising rates for now, but how long will it last?
Buyers have been very fortunate for the past several years to enjoy what has become historically low interest rates. In 2008, the Federal Reserve dropped their base rate (The rate at which lending institutions can borrow money) to practically zero percent. Of course, consumers pay a bit more on their rates, but even still, home buyers have been able to take advantage of rates as low as 3 and a half percent. Currently, rates stand just below 4 percent.
Why are interest rates so low, and why might they rise again?
You might say that interest rates can reflect economic conditions nationally, and even internationally. In most cases, rates rise or fall based on economic forecasts that include the potential for inflation as our economy improves. That being said, in 2008 the Federal Reserve dropped rates in an effort to stabilize the real estate and credit markets, which were struggling due to issues that affected our economy and put the US on shaky financial footing.
Why would rates rise? As our economy improves, there is more money for goods and services, which in turn may cause prices to rise, or “inflate,” due to demand. There’s a delicate balance between inflation that could get out of hand (Known as “runaway inflation”) and putting systems in place that can maintain our economy without becoming volatile or unpredictable.
Raising interest rates has the ability to control the purchasing power of consumers to the degree that it could make them think twice about how they spend their money. This in turn could help to keep the price of goods and services steady, thus avoiding potential runaway inflation.
The Federal Reserve recently held off on raising rates due to our economy not showing any warning signs of unpredictable inflation. That being said, they may revisit this before the end of the year, with news that rates could rise as early as December.
Don’t wait! Qualify for a loan today!
If you’re on the fence about buying a home, now is the time to find out if you qualify for a mortgage and begin to take advantage of all the benefits of home ownership. Contact Team Avalos today for a no obligation consultation.
Do you have a down payment? Want a no-money-down loan? Are you self-employed? Follow these tips to making sure you’re ready to buy a home.
There are plenty of reasons why owning a home is one of the most sound investments you can have. Even still, there are some out there who think
buying a home is a lot like buying a car. You know, walk on the “lot”, pick out what you want, haggle the price a little, and drive home…right?
Actually, the two couldn’t be more different. But before you get into the PURCHASING part of home buying, it’s best to make sure you’re ready to afford a home. What does it take? What do lenders look for? Can you buy a home when you’re self employed?
First up, your finances.
It’s one thing to have a good credit score, and it’s another to know that the money you make is enough to afford a monthly mortgage payment. Assuming your credit is in good shape, lenders also look at your DTI, or Debt-to-Income ratio. Very simply, this is an easy bit of math where you divide your monthly recurring debt (Car payments, credit cards, alimony if applicable, student loans, personal loans, rent/mortgage payment) by your combined gross monthly household income. The result should come in the form of a decimal point. Of course, from there, basic math says that you move that decimal point over two spaces to the left, and the answer turns into a percentage. So let’s say you have a monthly combined gross income of $7,000. Your recurring debt expenses are $2,500. Divide 2500 by 7000 and the answer is (rounded up) .36, or 36 percent DTI. Some lenders will allow mortgages when a borrower’s DTI is as high as 42%, but most like to see it between around 28-35% to offer the best rate.
From there, your lender will determine your best monthly mortgage payment that is affordable within your DTI, and along with your qualifying interest rate, will then determine your total loan amount.
Okay, what if I don’t have 20% down to purchase a home?
Of course, we know especially with today’s housing prices, not everyone has saved up the usual high five figure amount that would equal a 20% down payment. Even still, your lender will look at your DTI to determine your loan figure based on the amount of cash (if any) you can put toward your home purchase. Keep in mind that while there are low money and no money down loans out there, you still have to be able to afford the monthly mortgage. The more you have to put toward the purchase price, the more home you can afford, and/or the lower monthly payment you’ll have.
I’m self-employed. Can I qualify for a home loan?
There was a time, before the recession, that it was fairly easy to get a home loan, even if you were self-employed. The “stated income” loan often used by those who were self-employed required little in the way of proof that what you actually made equaled what you put on your loan application. Guess what? Believe it or not, both buyers and lenders “occasionally” abused the system, which resulted in many buying homes they actually could not afford.
Since the recession, new rules and guidelines have been in place and are enforced for self-employed home buyers. First of all, you’ll need to show your lender at least two years’ worth of tax returns from your business that provide an accurate portrayal of your annual earnings. Also, your lender will use only your adjusted gross income as a qualifier, and not your overall gross income.
Team Avalos Real Estate is here to help you with all of your real estate needs!
Santa Clarita single family homes holding at just over $500K, while condos take a leap forward in July.
Recent statistics released by the Southland Regional Association of Realtors showed home prices holding, with single family homes in the Santa Clarita Valley at an 8 year high, and condo prices jumping $15,000 from June.
The median price of a single family home in the SCV clocked in at $509,500 for the month of July. Condominiums in the valley are currently at a median price of $330,000.
442 homes closed escrow in July, which is a 16% increase over July of 2014. A total of 546 residential properties were listed last month, with 470 homes opening escrow.
“Boomerang” home buyers are re-entering the marketplace, and some are able to take advantage of first time home buyer programs.
The last decade brought us a few tough years, especially for some home buyers. Real estate professionals like us were able to help many avoid foreclosure during the darkest days of what’s become known now as “The Great Recession.” In some cases, foreclosure was avoided through a short sale or other means such as deed-in-lieu. Of course, in avoiding foreclosure, the now former homeowner was once again in the position of renting the place in which they lived.
Fortunately, in most cases, distressed times are short-lived, and many were (and are) able to get back on their financial feet. Lenders made changes to their restrictions, some allowed former short sellers to qualify for a mortgage in as little as two years under certain circumstances.
There are many benefits to paying off your mortgage more quickly, but is a 15 year loan right for you?
Interest rates are a sticky business. They rise, they fall…and while we try to predict their outcome, they’re a “moving target” when it comes to really trying to pinpoint where they will land on any given day.
We’ve noticed just a little bit of a bump in rates over the past month or so. Even still, they are holding just over 4 percent, which is still incredible. Are you aware that there are loan programs out there that are not only available at lower than standard rates, but will help you own your home more quickly?
The 15 Year Home Loan
Wouldn’t it be great to not have to make your mortgage payments for 30 years? What about the possibility of putting more of your house payment toward your principle, which increases your equity as you pay down your loan faster? What if, on top of all this, your loan is at a lower interest rate than a traditional 30 year home mortgage? Continue reading The Pros and Cons Of The 15 Year Home Mortgage Loan→
January sees highest number of loan applications since 2008.
With mortgage rates holding at below 4 percent for the past few months, it’s no wonder home buyers are seeing the opportunities available to them in the form of greater purchasing power.
According to the Mortgage Banker’s Association, nationwide mortgage applications were up 49 percent as of the week ending January 9th 2015, which is the largest increase since 2008. What’s interesting about this phenomenon is that it flies in the face of predictions made by some financial analysts who predicted mortgage rates would rise.
So why have mortgage rates remained low despite predictions?
We’ve seen the foundations of not just an economic recovery, but a true rebound in the past 12 months. Nationally, unemployment rates have dropped, while the GDP (Gross Domestic Product) surpassed expectations in the latter part of 2014. Stocks have been strong, as have Mortgage-Backed Securities. Strong investment in the stock side of real estate has helped maintain low rates as well. Consumer confidence has also soared in the wake of lower gasoline prices, putting more money into peoples’ pockets. Continue reading Low Rates Spur Huge Jump In Mortgage Applications→
Mortgage rates hit their lowest in 18 months. Now is the time to buy!
Who knew? Recent positive economic forecasts have had a positive effect on the real estate industry. Considering it was just a little over a year ago that some financial analysts predicted interest rates over 5%, it’s amazing to see that, as of October 15th, mortgage rates dropped BELOW 4 percent.
So how did this happen, when rates were expected to climb?
If you go back a year and a half or so to early 2013, we saw interest rates dip to historic lows (Nearly to the mid 3% range). Now, rates have been helped along since November 2008 by federal stimulus package known as Quantitative Easing, which pumped $85 billion per month into the Mortgage-Backed Securities market. This of course gave confidence to investors, which helped the Federal Reserve maintain (and even reduce) loan rates.
In the spring of 2013, the Federal Reserve hinted that they may begin tapering off the amount of monthly stimulus, which caused panic among some investors, who began selling off their Mortgage-Backed Securities. This initiated a brief chain reaction, which forced rates to rise to over 4%, where they have been holding for a little over a year.
In 2014, the Federal Reserve began reducing their stimulus, which is now down to $25 billion per month (Saving taxpayers over a half trillion dollars per year). During this time, interest rates held in the very low 4% range. In the past few weeks, the Fed announced no new changes in rates based on positive economic news in the job and investment markets. In other words, they wouldn’t want to “rock the boat” during what’s becoming an exponential positive economic growth spurt. Continue reading Interest Rates Dip Below 4 Percent→
Raising your credit score allows you better options for mortgage loan rates and terms.
It goes without saying that most home buyers rely on a mortgage loan to complete their property purchase. Unless you’re paying all cash, you’re limited by two things: Your income, and your credit score. You may not have much control over how much money you make, but you do have control over your credit score…IF you take the right steps.
Aside from how much money you make (and how much you spend), mortgage lenders use your FICO (Fair Isaac & Company) score to determine your credit worthiness. The higher the score, the more “worthy” you are deemed. Higher credit scores can open up more options for you such as a lower interest rate or better loan terms. Typically, a FICO score of 700 or more is considered a good thing. Anything below alerts lenders to a potential credit risk.
That’s not to say you can’t get a loan if you have a lower credit score, but again, your options may be limited to a higher interest rate or terms not quite as favorable. So what can you do to improve your credit score? Here are the top things you can do to start. Continue reading Top Ways To Improve Your Credit Score→
Serving Home Buyers and Home Sellers in the Santa Clarita Valley