May 14th, 2012 With interest rates having dropped to record lows and having been on the decline for the last several years, many homeowners are inclined to refinance their mortgages to achieve a lower monthly payment. While in many cases this can be an effective strategy, there are many points to consider before diving into the refinance process. Below are some of the most relevant items to consider:
- Refinancing Means You’re Starting Over Again – With the way that loans are amortized over typically a 15 or 30 year period, the first several years of payments are mostly made towards interest and don’t make a big dent in the principal owed. Homeowners that refinance start this process all over again and while likely achieving lower monthly payments, they’ll not be making substantial strides towards paying the loan off.
- Compare Rates & Fees – Often times a low advertised rate may be accompanied by “points” which the buyer must pay up front to achieve the lower rate. Each point is equal to one percent of the loan amount. Other times an advertised no-cost refinance achieves reduced or eliminated out-of-pocket expense to the borrower by charging a slightly higher interest rate. The variables associated from loan to loan and lender to lender makes comparison shopping often difficult for the uninitiated.
- Low Appraisal – Of course a common hurdle today to overcome is the appraisal. With values of homes having fallen in most locations for the last few years there are many homeowners that can easily afford a new refinanced mortgage, but their home may not have enough equity for the new lender to approve the loan. There are now government sponsored programs like HARP 2.0 that can help “underwater” homeowners achieve refinancing, but certain values still must be met and who the original mortgage is held by may impact the scenario.
- Closing Costs – The amount of closing costs, unless rolled into the new mortgage itself, may not make a refinance beneficial if the borrower plans on moving in the near future. A very general rule of thumb is that a refinance makes sense if the closing cost amount is saved in the monthly mortgage payments during the first two years. Even so, unexpected life changes can cause a property to be sold unexpectedly, potentially making the refinance not cost effective.
- Time – Any mortgage sought today comes with some degree of time spent by the borrower collecting documents, etc. so factor in your time in the ultimate savings.
Hopefully these above points are well considered before taking on a refinance. One point that is notably missed most often is the first item about starting all over again with the mortgage. Essentially all the interest paid previously to date is wasted. However, refinancing can still be beneficial, particularly for those that need some relief from a higher monthly payment.
May 10th, 2012 Freddie Mac reported just today that the 30-year fixed rate mortgage dropped just below the previous record set last week. The average rate now sits at 3.83% down from 3.84%. While clearly just a minor drop it continues to show affordability is high and a home purchase with rates that low are even more attractive as inflation heads upwards. As inflation increases the cost of that rate is effectively lessened, although until increases in wages resumes this truly can be an overstated point at times. Still, financing is awfully attractive with rates at record lows like these.
May 5th, 2012 The budget submitted for next fiscal year to the county supervisors recommends a $1.23 billion budget that includes no change in the property tax rate for Pima County. Coupled with most property seeing declining assessed values, this should mean most people will have a reduced tax burden. However, other factors which can add cost to your tax bill include school districts, fire departments and voter approved levies. At least there is good news that the rate charged by the county is likely to remain unchanged. Of course this allows residents to save more money and could potentially help stimulate the local economy slightly as well. If nothing else a reprieve from tax increases will be a positive sign to counter other inflating commodities.
May 3rd, 2012 Another record low has been reached this week as Freddie Mac reports that 30-year fixed rate mortgage loans averaged just 3.84%. This is down from 3.88% and marks the lowest number on record. The drop in large part was achieved in a run towards bonds by investors who were seeking safety on renewed concenrs regarding the ecnomic recovery. Of course this news is encouraging for anyone looking to purchase a home and perhaps some that have held off on refinancing to this point. The rates for 15-year fixed rate mortgages averaged just 3.07%.
April 28th, 2012 The Pima County Fair concludes its 11-day run this weekend, operating from 10:00am – midnight on its final weekend. Held at the Pima County Fairgrounds located at 11300 S. Houghton Rd., this annual event has been one of Tucson’s largest for the last 100 years. Among the many activities occurring at the fair are carnival rides, 4-H, nearly 600 performances on 5 different stage locations, and over 400 vendors. General admission is only $8.00 and the variety of activities at the fair means its perfect for all ages and an ideal activity for families.
April 21st, 2012 Forbes.com recently showcased the best places to purchase a home right now based upon REALTOR.com Feburary housing data and Tucson came in at number 1 on the list. Affordability for homes is near an all-time high given the drop from peak housing prices coupled with near record low mortgage rates. The article stated how many of the best areas to buy are starting to see a turnaround in the marketplace, which dovetails exactly with what we’ve indicated the recent statistics are showing for our local market. It listed Tucson’s median home list price at $170,000 which is down 45.1% from the housing peak, and then most encouragingly is the inventory level falling 23% year-over-year. While it’s nice to receive some notoreity, ultimately each buyer should decisions based upon their own circumstances and with the help of a professional.
April 13th, 2012 The Tucson MLS just released statistics for March 2012 and the market trend continues to look extremely positive. Reasons for optimism abound, but foremost among them is the steady average price increase we’ve seen over the last six months. The rate of foreclosures, while substantially down from the peak numbers, will continue to keep average prices in check and slow growth overall. However, the inventory levels remain low and with increasing demand that points to a gradual price recovery. In what perhaps was the bottom of the market in September, the average sales price came in at a low of $150,699. Since that time all but one month has seen an increase in average price, with March’s average the highest in some time at $168,153. That equates to a 11.58% increase in that time span.
Below are some other key statistics from March:
- Average Sales Price is up 2.21% from February
- Total Sales Volume increased by 39.13% from February and is up 21.96% from March of 2011.
- Total Unit Sales rose 36.11% over February
- Average Days on the Market dropped from 77 days in February to 73 days in March. This is down 13.10% from March 2011
- Under Contract increased 6.07% from February
It’s beginning to look as if a gentle recovery is taking hold within the Tucson market. There may well be some bumps in the road ahead, however it appears the worst is probably behind us at this point unless something substantial rocks the market. Even if prices do dip there simply isn’t too much lower that values are likely to fall and certainly not enough to pass up the incredible interest rates present today. Contact Team Woodall for more information.
April 9th, 2012 Freddie Mac’s official release last week shows mortgage rates holding steady. The 30-year fixed rate mortgage averaged 3.98% (with an average 0.7 points) which is down fractionally from 3.99% the week prior and still substantially lower than this time last year when the FRM averaged 4.87%. The 15-year FRM settled at 3.21% (0.7 points) on average, while 5-year ARMs were at 2.86% (0.8 points on average). Financing is still exceptionally cheap and as we begun a slow recovery these rates will continue to help bolster sales.
April 6th, 2012 The recently held Primary Election in Oro Valley to determine three town council seats resulted in one incumbent retaining his seat, while two new members were elected. For the first time in history each of the elected candidates received more than 50% of the vote, resulting in no General Election being necessary. Joining incumbent Bill Garner who was re-elected are newcomers Mike Zinkin & Brandon Burns. Failing to claim a seat on the council were Fred Narcaroti, Mark Napier, and previously appointed councilmember Steve Solomon. The new councilmen will take office on June 6th of this year. Among the key issues of this election were fiscal responsibility and specifically a debate as to whether a study examining the police department, the largest single general fund expenditure annually, was warranted & itself fiscally a good idea.
April 2nd, 2012 One of the common mistakes that both first-time homebuyers and sesasoned real estate buyers can make is to throw a wrench into a loan approval prior to closing by making large purchases. Today most buyers will receive pre-approval before even making an offer but may not fully realize that it’s not until a loan is through underwriting that the final determination is made as to whether they will receive a loan. It’s happened too many times that anxious future homeowners want to furnish their home and will spend either cash or enter into a revolving credit scenario prior to closing. However, opening new lines of credit can affect credit scores and impact debt-to-income ratios. Even cash purchases reduce available assets and can impact a final approval for qualifications. It’s even be known for lenders to pull credit right up to closing, so hold off on any major purchases until recording happens and the keys pass over to your hands. This extends beyond just items for the new home of course and applies to any large ticket item. Always keep this in mind to ensure a smooth transaction all the way to closing.
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