Friday, February 28, 2014

Cost of Waiting

I was reading an article this morning titled: Average House Payment Has Risen 21% In Past Year - compared to the fourth quarter of 2012.  That is pretty substantial!  It got me thinking about the Cost of Waiting here in Oregon. 

Based on CoreLogics Home Price Index Reports, here is an example of what a $300,000 home at the beginning of 2013 is worth at the end of 2013.   These reports can be found on CoreLogics website.























Oregon ranked 4th out of all states with the largest year-over-year home price appreciation in December at 13.7%.  While home appreciation isn't expected to be that high this year, experts believe that home appreciation will be very favorable in the next few years.  Here are the results from the Home Price Expectation Survey which polls over one hundred economists, real estate professionals, and investment and market strategists. 

















The Bulls are the average of the highest predictions and the Bears are the average of the lowest predictions.  When factoring this into the Cost of Waiting example above, here is what that same home would be valued by 2018 according to the BEARS:





That comes out to nearly $100K more in value through 5 years using the lowest average predictions!  But the Cost of Waiting isn't purely based on home values.  We must also factor in rising interest rates.  Here is a simplistic example assuming 4% appreciation year-over-year:









Interest rates are projected to be over 5% by the first quarter of 2015.  We are not sure where they will be by the end of 2015 so we used 6% for this example.  Because we are in a market with high home affordability (comparatively low interest rates and low home values), each year homebuyers wait will have a BIG impact on their payment and the size of home they can afford. 

Tuesday, February 25, 2014

How Does a Rise in Interest Rates Impact Your Buying Power?

We have updated our Interest Rate Impact on Buying Power flyer with current interest rates and where they are projected to be next year (as seen in our post on February 19th).  A one percent increase in interest rates (4.5 to 5.5%) translates to slightly over a 10% decrease in qualified loan amount.


Friday, February 21, 2014

10 Tips for Mortgage Borrowers in 2014

Below is an article from Fox Business with 10 Tips for Mortgage Borrowers in 2014.  This is a great article for those who haven't got a mortgage in the last few years!  I have made some of my own comments to sections in red.  
The clock is ticking for buyers and homeowners who want to grab a low mortgage rate in 2014. But if you stay on top of your game, keep your finances in order and act quickly, you can still grab attractive mortgage deals.
These 10 mortgage tips can help you with your mortgage decisions in 2014.
1. Document your finances.
Lenders will be extra diligent when underwriting home loans in 2014, as new mortgage regulations go into effect in January. The rules put pressure on lenders to verify that borrowers have the ability to repay their loans.
Keep good records of your finances, including bank statements, tax returns, W-2s, investment accounts and any other assets you own. Be ready to explain any unusual deposits to your accounts. Yes, the $500 that Grandma deposited in your account for Christmas could delay your loan closing if you can't prove where the money came from.  A $500 deposit won't need to be verified for most borrowers.  The general rule is we must document and verify any deposits into your bank accounts that are greater than 25% of your total monthly gross income.
2. Lock a rate as soon as you can.
Rates will likely climb in 2014 as the Federal Reserve is expected to reduce the pace of the economic stimulus program that has long helped keep rates low. If you are planning to get a mortgage, lock in a rate as soon as you are comfortable with the numbers.  If you are comfortable with the numbers, then locking in your interest rate does make sense to protect yourself from rising rates.  Rates will climb throughout 2014 into the 5% territory as predicted by Freddie Mac, but on a weekly (short-term) basis, they do have the potential to dip depending on the economy and stock market.  When you have an accepted offer on a house, I will inform you where rates are and where they are headed to the best of my knowledge.  
3. Refinance now -- if you still can.
Many homeowners lost the opportunity to refinance at a lower rate when rates jumped in 2013. But those who are still paying more than 5% interest on their home loans might still have an opportunity.
If you think you may be able to save with a refinance, but you are not sure, it doesn't hurt to try. Speak to a loan officer and take a look at the numbers to see if refinancing still makes financial sense for you after you consider how long it will take to break even with the closing costs.  If you have any friends, family members, or co-workers who are possibly in this boat, we would love to help them out!  The Home Affordable Refinance Program is still available for borrowers who may be underwater with a loan that closed before June of 2009.
4. Buyers, use your bargaining power.
As mortgage rates climbed, lenders lost a big chunk of their refinance business. In 2014, they will turn their attention to homebuyers and will fiercely compete for their business. Buyers should take advantage of bargaining power they gain with that increased competition. Shop around for the best deal and look beyond the interest rate on the loan.  Here at Windermere Mortgage Services, we take pride in being Purchase oriented, even when the refinance boom happened.  We understand that these are HUGE, time-sensitive transactions and take priority over refinances.  Many thanks to all our referral partners!
5. Learn your rights as a borrower.
Mortgage borrowers will get many new rights as consumers this year when new mortgage rules created by the Consumer Financial Protection Bureau go into effect in 2014. If you run into issues with your mortgage servicer in 2014 or fall behind on your payments, make sure you are aware of your rights and put them to use. These new rules are designed to protect the borrowers, but it comes at the cost of more paperwork needed to document the borrower's ability to repay the loan.  Homework typically isn't fun, but it has to be done if you want the house. 
6. Take good care of your credit.
It's nearly impossible to get a mortgage without decent credit these days. That will continue to be the case in 2014. If you are planning to get a mortgage, monitor your credit history and score until your loan closes. The best mortgage rates usually go to borrowers with credit scores of 720 or higher. You may still get a mortgage with a score of 680, but lower scores will mean higher rates or higher closing costs.  We are able to get borrowers approved with at least a 620 FICO credit score.  For conventional loans, you will get a better rate/fee for every 20 point increment higher in your credit score up to 740.  At 740, you will get the best rates/fees Fannie Mae offers.  
7. Don't overspend.
Lenders don't want to give out loans to borrowers who will have little money left each month after they pay their mortgages and other debt obligations such as credit cards and student loans. If that becomes the case, the lender will tell you that your DTI, or debt-to-income ratio, is too high and you don't qualify for a loan. Try to keep your monthly debt obligations, including your mortgage and property taxes, below 43% of your income.  We can go up to 44.99% DTI on conventional loans and up to 49.99% DTI on FHA loans.  
8. Consider alternative mortgage options.
Mortgage rates are rising, but there are alternatives to grab a lower rate, depending on your plans.
A homeowner planning to keep a house for seven to 10 years could take advantage of lower mortgage rates by choosing a seven- or 10-year ARM instead of the 30-year traditional fixed-rate mortgage. Rates on adjustable-rate mortgages can be as much as 1 percentage point lower than on fixed-rate loans.
If you are not sure how long you plan to keep the house, a fixed-rate loan is probably the better choice.
My son bought his first house in July of 2013 with an FHA 5/1 ARM.  He plans to own the house for 5-7 years which made this program perfect for his goals and needs.  By choosing this product he was able to obtain an interest rate about 1% lower than a 30 year fixed rate.  
9. Considering an FHA loan? Reconsider.
FHA loans have long been popular among first-time homebuyers because they require low down payments and have somewhat less strict underwriting standards than conventional loans. But they come at a price. Mortgage insurance premiums on FHA loans are likely to continue to rise in 2014, and after recent changes, the borrower is now required to pay for mortgage insurance for the life of the loan. Try to qualify for a conventional loan before you apply for an FHA mortgage.  FHA has some advantages for first-time homebuyers like a higher DTI is allowed to qualify and only 3.5% is needed for a down payment compared to 5% for conventional.  However, if a borrower is able to get the extra 1.5% down payment (this could be a gift from a relative) then going conventional is typically more advantageous.  We can go over the pluses and minuses for your situation if you are considering an FHA loan.  
10. Don't panic.
Yes, mortgage rates likely will climb in 2014. But don't panic, thinking you have to buy a home now to grab a low rate. If you are shopping for a home, do your best to move quickly, but remember that this is one of the biggest financial decisions of your life. Get your mortgage and buy your home when you feel ready.  The author hits the nail on the head here.  Make sure you are ready to be a homeowner because it will be one of the biggest transactions of your life.  If you are ready, now is the time to buy!

Thursday, February 20, 2014

Interested in Vacation Homes? Central Oregon is a Popular Spot

Trulia, a website used to search homes-for-sale, did a study on homebuyer searching habits when the "Polar Vortex" impacted their particular area.  Below is an infographic by the KCM Crew showing the 10 cities that had the highest increase in home searches by these prospecting homebuyers when looking at a primary residence or vacation home.  The #1 increased search area at this time for vacation homes was Sunriver, Black Butte, and Bend!

Baby Its Cold Outside

Here is a link to this information: Baby it's Cold Outside

Wednesday, February 19, 2014

Interest Rate Projections

The Federal Reserve tapered it's asset purchases by $10 Billion in December and did so by another $10 Billion in January.  These purchases are tied to mortgage interest rates.   The large volume of asset purchases by the Fed has helped keep mortgage interest rates low for the time being, but the decrease in volume of these purchases will lead to higher interest rates.

Janet Yellen, who replaced Ben Bernanke as Fed Chairman, stated: "If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings."  Because of this, Fannie Mae, National Association of Realtors, Freddie Mac, and Mortgage Bankers Association have adjusted their projected interest rates for Q1 of 2015.

2.18 Visual.2
Today's 30 year fixed mortgage is at 4.375%

Here is a link to the article by KCM Crew:  Mortgage Rates Projected to Rise as Tapering Continues

Thursday, February 13, 2014

February's You Magazine

YOU Magazine
Clayton Scott   Clayton Scott
Branch Manager/Mortgage Consultant
WMS Series LLC/AT
Phone: 503-497-5060
Fax: 503-497-5264
License: 754407
cscott@windermeremortgage.com
www.windermeremortgageservices.com/cscott
WMS Series LLC/AT
February 2014



January 2014
December 2013
November 2013
October 2013
September 2013
August 2013

    
Lower Rates and Higher Home Prices Ahead
A weaker-than-expected December employment report sent
interest rates lower, resulting in more home loan applications
in early January.
  Lower Rates and Higher Home Prices Ahead
6 Things You Must Know About Home Heating
By Pat Mertz Esswein, Kiplingers.com

Your home may be your castle, but you don't have to pay a king's ransom to keep it warm.
  6 Things You Must Know About Home HeatingBy Pat Mertz Esswein, Kiplingers.com
A Three-Course Meal for
Valentine's and Any Night After
By Kathy Brennan, Caroline Campion and Kirk Leins

If you're opting for a quiet, intimate dinner at home instead of at a noisy restaurant this month, consider this three-course meal with recipes from Kathy Brennan and Caroline Campion, co-authors of the new, award-winning weeknight meals cookbook, ''Keepers,'' and Kirk Leins, of notimetocook.com.
  A Three-Course Meal forValentine's and Any Night After - By Kathy Brennan, Caroline Campion and Kirk Leins
Games for Playing and Learning
If you had any doubts video games could help kids learn, these programs may dispel them all. From playing an instrument to preparing for natural disasters, kids will love what they learn. Most come with guides for parents and educators to help kids make learning more effective - the FUN is covered!
  Games for Playing and Learning
Stop Dieting Now
4 Essential Rules for Weight Loss

It's that time of the year—that time between New Year's and spring. Whether you're still focused on that New Year's Resolution to be healthier or starting to trim down for an upcoming vacation to a warm location, a diet has probably crossed your mind. But did you know that dieting can actually contribute to weight problems?
  Stop Dieting Now - 4 Essential Rules for Weight Loss
Collaboration Tech
3 Frustrating Tasks, Made Easy
By Emil Towner, PhD

It doesn't matter who you are. It doesn't matter what you do. We all need to collaborate and communicate. Unfortunately, busy schedules and on-the-go lifestyles make it difficult.
  Collaboration Tech - 3 Frustrating Tasks, Made Easy - By Emil Towner, PhD


You are receiving a complimentary subscription to YOU Magazine as a result of your ongoing business relationship with Clayton Scott. While beneficial to a wide audience, this information is also commercial in nature and it may contain advertising materials.
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