Spring Update Housing Market and Mortgage Rates
Spring is here and normally by this time the purchase transactions are in full force. Unfortunately, due to a very cold and long winter the spring market that normally starts in March is just getting under way now. In fact, I spoke to 2 realtors in the last week that had 6 listing each that they were putting on the market. Their clients wanted to wait for the warmer weather to best show their home. We are in desperate need of inventory in most of New Jersey. Homes priced under $1 million are getting 6 to 8 offers with a good percentage going over asking price. Homes priced between $1 to $1.5 million are getting fewer offers and selling around asking while homes over $1.5 million are selling, but not as quickly in some markets. Now is a great time to sell but can be very frustrating to buy due to the bidding wars. Knowing that prices are expected to go up a minimum of 3% to 5% annually for the next few years now is a great time to buy! So hang in there.
Just for some additional information on the housing market: 30% to 40% of all home purchases in the United States are being made with cash and 50% of all home purchases in a calendar year are made between March 1st and June 30th.
The mortgage rates have stayed relatively steady for the last few months but the 30 year fixed rate is expected to be over 5% by end of this year or sometime into 2015. Rates have dropped steadily for the last 25 years and as of August of 2013 they starting trending upward. Now is the time to buy or refinance before the rates go higher.
Important information regarding home equity lines of credit:
Additionally, if you have a line of credit, be aware that the draw down period is normally 5 or a maximum of 10 years. Once the draw period is over the line closes down and if there is a balance you are required to pay back the money based on a 20 year principal and interest payment.
So, for example if you have a $100,000 line of credit with a rate of 2.5% (prime rate is 3.25% so this rate would be prime minus .75) you would be pay $208.33 a month in interest only. Once this converts you would be paying $529.90 based on a 2.5% 20 year fixed payment. This is a big increase for some people and again, most are completely unaware of this part of the agreement. Please call me to discuss this email and I would be happy to consult anyone that currently has a line of credit about their options.
At this point, knowing that the prime rate will be going up also over the next year or so it makes sense to consider locking into a 10, 15, 20 or 30 year fixed rate product or even a 5, 7 or 10 year arm depending on your comfort level with this product and your time horizon for staying in your home.
ONCE AGAIN REGULATIONS HAVE FORCED THE MORTGAGE PROCESS TO BECOME MORE TIME CONSUMING AND HARDER TO QUALIFY FOR A MORTGAGE. IN FACT, A NUMBER OF BANKS NO LONGER OFFER PRE-APPROVAL LETTERS DUE TO INCREASED UNDERWRITING CRITERIA AND SOME SMALLER BANKS ARE DISCONTINUING OFFERING RESIDENTIAL MORTGAGES.
But, the great news is that WE ARE STILL ISSUING PRE-APPROVAL LETTERS AND with my expertise, knowledge, and experience I still have a 99% closing ratio and a 26 day closing program. Whether for a purchase or refinance, now more than ever it is important to be pre-qualified by an expert. I am here to assist anyone looking to buy or refinance a primary residence, second home, or investment property in NJ, NY, CT, PA or FL.
Have a great day and spring is here!!!!!!!
NLMS#111118 | Company NLMS #34973
NJ- Licensed by the NJ Department of Banking and Insurance – License # 9964632
NY- Licensed Mortgage Banker – NYS Banking Department – License # B500689
CT- Licensed Mortgage Banker – CT Department of Banking – License # 13236
FL- Licensed by the Florida Office of Financial Regulation – License #MLD388
PA-Licensed by the Pennsylvania Department of Banking – License #20875
Marc C. Demetriou, CLU, ChFC
Residential Home Funding Corp.
39 Main Street | Bloomingdale, NJ 07403
phone: 9734920117 | fax: 9734921108 | cell: 2012863386