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April 29, 2005
Choosing a Fixed Rate Loan
Fixed rate loans generally come with one of two options; the 30-Year Fixed and the 15-Year Fixed. If a borrower is planning on being in the same home for a long period of time, a 30-Year Fixed may be more attractive because it offers stability. The monthly payment will remain consistent over the life of the loan. If interest rates are at historic lows at the time the borrower is seeking to obtain financing, this is a good program to consider.
A 15-Year Fixed loan program offers the same stability, but the accelerated amortization schedule makes the monthly payment substantially higher. While the interest rate may be lower on this type of loan, the borrower must be willing to commit to a higher monthly payment. If the borrower wishes to retire in 15 years and be debt-free at that time, this loan program may be more suitable to the borrower's long-term needs.
It is also possible to make pre-payments on a 30-Year loan and reduce the life of the loan, as well as the overall interest payment, without committing to the higher monthly payment of a 15-Year program. As long as there is no pre-payment penalty associated with the 30-Year mortgage, pre-payment offers the borrower the latitude to make additional payments when it is affordable. If cash flow becomes difficult, this arrangement will not put the borrower in a compromising position.
Posted by beaubetts at 10:44 AM
April 26, 2005
Quarter 1 - 2005 Western Washington Real Estate Market Update
With the close of first quarter, the 2005 housing market continues to boast low interest rates, record homebuyers, and record housing sales. While market conditions have not changed significantly since 2004, the threat of rising interest rates has many buyers jumping off the fence to buy a new home, causing a frenzy market.
First quarter homes sales around Western Washington leapt into high gear with impressive gains over the same period a year ago. According to the Northwest Multiple Listing Service (NWMLS), January saw a 22 percent increase in pending sales in the 14-county market area compared to a year ago. February’s figures showed a total of 8,426 pending sales for a gain of nearly 12.9 percent compared to February 2004. And March rounded out the first quarter with an impressive 10,841 pending sales and recording a 12.2 percent increase over March 2004.
Steady streams of new buyers are creating intense competition for the limited inventory currently available in the Puget Sound area, which is down 20 percent from a year ago. These conditions are causing a “quick action market” complete with multiple offers, escalator clauses, waved contingencies, and unconventional terms that aim to make a buyer’s offer more appealing to the seller. Because of this, it’s more important than ever to work with a trusted, qualified Realtor who understands the intricacies of negotiating a real estate transaction.
What continues to drive the housing economy are low interest rates, local job growth, and an improving economy. While interest rates have risen slightly from their 40-year low, the 30-year fixed-rate mortgage is still below six percent, offering phenomenal opportunities for homeownership.
Posted by beaubetts at 10:27 AM
April 22, 2005
What Are Points and When Should You Pay Them?
Points are up-front fees paid to obtain a better interest rate on a loan. One point equals one percent of the loan amount. A lower interest rate may result in a lower monthly payment, but it is important to consider how long you intend to be in the loan, and to compare current rates to historical market trends.
If you take out a $300,000 mortgage and decide to pay one point, this translates into an up-front closing cost of $3,000. Paying a point up front saves $100 a month but it will take 30 months to recuperate the cost of that point. If you decide to refinance or sell the home before the 30-month mark, your money is lost. In this case, you would benefit financially by remaining in the home longer than the 30 months.
Rates run in cycles. When rates are at historical lows, it is sensible to pay points if you plan to live in the home for an extended period of time. It is unlikely that rates will go down; hence, there will be no need to refinance.
When rates are up, there is a strong likelihood that they will come down. This is no time to pay points. The chances of refinancing in the future are extremely high, and you will likely not be in the loan long enough to recuperate the cost of the points.
Posted by beaubetts at 3:16 PM
April 15, 2005
More on the Seattle Real Estate Market
This is news regarding the state of the greater Seattle real estate market straight from the mouth of the Northwest Multiple Listing Service:
Hefty Home Sales in Western Washington Fueled by “Basic Economics”
KIRKLAND, Wash. – Multiple offers, crowded open houses and some “wild and wooly agreements” are contributing to hefty home sales in Western Washington even as real estate brokerages continue to grapple with inventory shortages.
Brokers in the 15-county market area served by Northwest Multiple Listing Service reported 10,841 pending sales during March for a 12.2 percent increase over the same period a year ago. The volume of pending sales (offers made and accepted, but not yet closed) for the first quarter of 2005 is up 14.8 percent compared to the first three months of 2004.
Reports of competitive bidding are widespread. “We're experiencing many multiple offer situations across the market from Everett to Puyallup and in all price ranges,” said NWMLS director Mike Grady, the president and designated broker of Coldwell Banker Bain. “It's a matter of more demand than supply,” he explains, noting much of the imbalance is due to not enough land being available for development, “especially in King County , in part due to GMA [Growth Management Act] restrictions.”
King County 's pending sales rose only 5.25 percent during March, lagging eight counties with double-digit gains. Four counties experienced drops in last month's volume of pending sales: Kitsap (-9.1 percent), Kittitas (-11.7 percent), San Juan (-40.7 percent) and Skagit (-11.2 percent).
The inventory in King County is at 70 percent of year-ago levels. That 30 percent drop for the month compared to twelve months ago was the largest among the 15 counties in the NWMLS system and a factor in rising prices. The median asking price for current listings of single family homes and condominiums in King County is $385,000, which is $55,500 (16.8 percent) higher than a year ago.
All counties served by Northwest Multiple Listing Service reported having fewer listings last month than a year ago. Area-wide, inventory is down about 18.9 percent, with six other counties also reporting drops of more than 20 percent (Grays Harbor, Island, Jefferson, Skagit , Snohomish and Thurston).
For the month, brokers added 11,808 new listings to inventory, bringing the total number of single family homes and condominiums being offered for sale at month-end to 20,308. A year ago, MLS members represented 25,047 sellers and replenished inventory with the addition of 12,320 new listings.
“The brisk market is beating up both agents and buyers,” remarked Dick Beeson, manager of Windermere Real Estate/Paragon Co., in Tacoma and a member of the NWMLS board of directors. Slim inventory is prompting some “wild and wooly agreements,” he reports. Some buyers have included blank escalator clauses, which he suggests is ill-advised. Beeson also notes the seller's market is spawning some “cocky sellers,” with unrealistic price expectations.
Attractive interest rates continue to fuel the frenzy, notes MLS director Ken Bacon, the broker at Windermere's Redmond office. Anxious buyers who fear rates will rise, potential sellers who are in a holding pattern (instead taking advantage of low rates for refinancings and remodeling) and investors are keeping inventory at low levels.
Bacon expects inventory to improve “as we go deeper into the spring selling season.” Sellers with kids prefer to move during summer months, rather than relocate during the school year, he notes. He also expects a recovering economy, rising consumer confidence and strong relationships with Asian markets will contribute to ongoing demand and price appreciation “even if rising interest rates create a leveling off to a strong market instead of a frenzied market.”
Brokers reported high volumes of closed sales for the month, reflecting robust pending sales activity of the past few months. NWMLS members completed 8,776 transactions last month for a 23.9 percent jump in closings over the same period a year ago.
Prices are up about 12.7 percent from a year ago, with the median price area-wide reported to be $256,783. In the four-county Puget Sound region, King County topped the list with a median sales price of $324,950 for homes and condos that sold there last month. That's up about 16 percent from twelve months ago. (For single family homes that closed last month in King County , the median selling price was $362,000; for condos, the sales price was $205,990.)
On a percentage basis, Mason County claimed the biggest change, with prices there climbing 20.9 percent compared to a year ago, rising from $138,500 to $167,500.
Local brokers tend to dismiss speculation about a “housing bubble.” Asked about periodic reports that home prices are on the verge of tumbling, Grady stated, “There is no bubble.” A great job market, the inability to obtain an adequate number of building permits because of growth and development restrictions and “our own children growing into their first homes” continues to propel the strong market. He expects prices will escalate in response to basic economics.
Even rising interest rates (which crept above 6 percent briefly last month before dropping back to around 5.8 percent for a 30-year fixed rate) shouldn't curtail demand, according to Grady. “While we believe interest rates might climb above 6 percent this year – perhaps as much as 6.5 percent by September or October – most purchasers are not using 30-year mortgages but instead are choosing adjustable rate options, such as 5/1 ARMS or other shorter term financing programs.
Selling time seems to support his optimism. The average time on market for sales that closed last month was 58 days, down from the year-ago average of 71 days. Areas north of downtown Seattle , including Ballard, Greenlake, Richmond Beach and Shoreline, reported having the quickest sales, averaging 32 days or fewer. Grady also lists Capitol Hill, Queen Anne, West Bellevue, South Bellevue and Mercer Island as other “hot” neighborhoods within King County .
So far, rising fuel costs aren't influencing where would-be purchasers prefer to live, although when asked about possible shifts, one broker remarked, “Not yet – but perhaps we'll see car sales affected soon.”
Northwest Multiple Listing Service, based in Kirkland , covers 15 counties, mostly in Western Washington, plus Grant County in the central part of the state. Its membership encompasses nearly 1,300 brokerages with around 18,000 sales associates.
Posted by beaubetts at 10:21 AM
Mortgage Market Update for 4/15/05
Mortgage interest rates go up, mortgage interest rates go down...this morning they're down! Gotta love it..
Here are today's average interest rates for a purchase transaction:
CONVENTIONAL CONFORMING
30 year fixed rate: 5.625%
15 year fixed rate: 5.25%
7/1 ARM: 5.5%
5/1 ARM: 5.125%
3/1 ARM: 4.75%
100% 30 year fixed rate: 6.125%
80/20's available on interest only fixed rates and Arm's
Option ARM: 1.75%
CONVENTIONAL JUMBO
30 year fixed rate: 5.875%
10/1 ARM: 5.625%
7/1 ARM: 5.50%
5/1 ARM: 5.25%
3/1 ARM: 4.75%
80/20's available on interest only fixed rates and Arm's
FHA/VA PRODUCTS
30 year fixed rate: 5.625%
5/1 ARM: 5.0%
1 year ARM: 4.125%
Posted by beaubetts at 10:17 AM
April 8, 2005
Mortgage Market Update for 3/8/05
Bonds are continuing to decline this morning after yesterday's afternoon prices fell sharply. Remember bonds down, mortgage rates up. Traders are looking ahead to next weeks heavy economic calendar and two Treasury auctions. There was a comment made yesterday form St. Louis Fed President William Poole. Poole said "It is unclear if inflation pressure is temporary and the Fed may need to be "more vigorous" with interest rate hikes". Fed Chairman Greenspan is speaking on consumer finance today. It seems that every time that man opens his mouth it has a negative effect on mortgage rates...so be careful and get those loans locked in!
Here are today's average interest rates on a purchase transaction:
CONVENTIONAL CONFORMING
30 year fixed rate: 5.875%
30 year fixed INTEREST ONLY: 6% can be used on a 80/20
15 year fixed rate: 5.50%
7/1 ARM: 5.50%
5/1 ARM: 5.25%
3/1 ARM: 5.0%
100% 30 year fixed: 6.25%
Cash Flow ARM: 1.75%
CONVENTIONAL JUMBO
30 year fixed rate: 5.875-6%
10/1 ARM: 5.75%
7/1 ARM: 5.625%
5/1 INTEREST ONLY ARM: 5.5%
3/1 ARM: 5.0%
Cash Flow ARM: 1.75%
FHA/VA PRODUCTS
30 year fixed rate: 5.875%
5/1 ARM: 5.375%
FHA 1 year ARM: 4.25%
Posted by beaubetts at 10:17 AM
April 7, 2005
Is It Time to Sell Your Home?
If you're a buyer looking for the perfect house in the greater Seattle area you've definitely been noticing how frustrating it can be to purchase a home. Interest rates are inching up and there is a lack of inventory out there which is resulting in multiple offers and homes being sold right after they are put on the market. The Seattle Times has a great article regarding the marketplace which can be found here.
If you are a person who is contemplating putting your house on the market, now may be the perfect time to get the best price for your home. There are plenty of buyers just waiting for you to put it on the market!
Posted by beaubetts at 10:26 AM
