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Rate versus Price Reduction

This is a great reminder from our friend Mike Ouverson at Waterstone Mortgage:

Since the Fed’s Mortgage Backed Securities purchase program ended, the markets have seen much more volatile price swings…and rates overall are off their lows. For potential buyers who are waiting to see if home prices come down a little more, that means the wait could well cost you more money in the long run.

Let’s look at an example to see why. Say a home buyer wants to buy a home that costs $300,000. But the buyer wants a better deal on the home, so she delays a transaction until the home is reduced by $10,000. If, in the meantime however, rates were to rise .75% to 6.00% and the buyer financed 90% of the purchase price, the amount of total payments over a 30-year term would be over $35,000 more than paying the $300,000 purchase price and locking in the 5.25% interest rate. In other words, the buyer would save $10,000 only to end up paying $35,000 more.

Now these prices and rates are just for the sake of example. But the point is that home prices are already very affordable…and rates are still low for now. So in the end, waiting for a home price to reduce may end up costing you much more than you expect if rates rise.

Today, 30 year interest rates are as historically low as 4.5% and 15 year interest rates are as low as 3.875% and aren’t expected to go much lower.

Six New Programs If You Have a House To Sell

There’s never been a better time to invest in a new home, but do you have a house to sell?  Here is a brief overview of six alternatives for our clients to sell their house for those that have a house to sell.  Read it over and stop by for a visit so we can explain them in further detail.

1. Buyer For Your House

It may not be the best time to sell your home, but if you are committed to selling your home there are buyers for your home and we can show you how.  We also have a preferred Realtor contact that will sell your home at a reduced commission, which will save you thousands of dollars on the sale of your house and put more money in your pocket.   

2. Lump Sum Money From Your House

This alternative will give you the opportunity to have someone provide you with a large sum of money for your present home and afford you the opportunity to do the things that mean the most to you and bring comfort, peace, happiness, and contentment for the things you want to do in life.  This is offered by banking institutions every day and there are generally no qualifications for it other than having equity in your home.

3. A Monthly Fee Paid to you to Cover Your Present Home

Have someone pay your current mortgage or loans each month and create a source of income by turning your house into an investment.   That source of income has many benefits but the main purpose for you is to keep your house in place and have money coming in while you wait for the market to rebound a little bit.  This will help your cash flow, build wealth and secure your future for the things that are important to you.

4. Appreciation of Present House

Do you think your house will be worth more or less in the future?  Most folks would answer more and that is correct if history is an indicator.  Banks continue to loan money on homes, lines of credit and second mortgages because they know homes are an investment that will eventually increase in time.  The key is buying and selling at the right time and now is a great time to buy, and maybe not the greatest time to sell, so these alternatives help you take advantage of capital appreciation.

5. Reverse Mortgage – A New Alternative for Those With A House to Sell

What if a bank would give you money you did not have to pay back in your lifetime?  For those over the age of 62, there are new reverse mortgage programs where you can purchase a new home with low interest rates and no income qualifications and don’t have to make any monthly payments until your sell your move out of your home. 

6. Guaranteed Price Alternatives

By using one or more alternatives, you are locking in today’s price.  With inflation possibly on the horizon and the increased cost of materials, labor, oil prices and borrowing money, by investing today you will essentially be riding the wave of price increases and intern increasing your base of wealth for the things you want to do in the future.

 

BIG NEWS: $6,500 Tax Credit for Repeat Buyers

The federal government is doing its best to continue to stabilize the housing market and have expanded the original $8,000 First Time Home Buyer Tax Credit to also include a $6,500 Tax Credit for Repeat Buyers.  This is great news for anyone who is considering investing in a new home since the government is essentially going to give you $6,500 for moving.  There are some conditions and limitations though and we have listed some of the more important ones below. 

1. A repeat home buyer is defined as someone who has used their sold home, their home being sold or their current home as a principal residence consecutively for 5 of the previous 8 years.
2. You must be under contract by April 30, 2010 and close by July 1, 2010.   As a side note, the government said there is no way they will be extending these benefits so it is highly unlikely they’ll be extended (although it is the government saying that so you never truly know).
3. Income limites of $125,000 for a single person and $250,000 for a married couple.

Combine the $6,500 tax credit gift with historic low interest rates, housing at its most affordable point in years and this is a great time to invest in a new home. 

So you have all the complete facts, please visit our website at http://www.medicidevelopment.com/special-programs.php to find the Frequently Asked Questions regarding the $6,500 Tax Credit.  You can also go to http://www.federalhousingtaxcredit.com/ hosted by the National Association of Home Builders (NAHB) to find out more as well.

 

we have also listed below many of the Frequently Asked Questions regarding the new tax credit as provided by the National Association of Home Builders (NAHB)

MMG Weekly: Fed Chairman Gives Feedback

I’d like to share an article from our friends at Prime Mortgage that briefly addresses the economy, inflation and the potential for rising interest rates….

“LISTEN TO WHAT THE MAN SAID.”And those aren’t just the words from Paul McCartney’s hit song of the same title…they’re also words of advice for anyone who’s considering buying a home or refinancing. Last week, Federal Reserve Chairman Ben Bernanke said that as the economy heals, the Fed will be very vigilant to protect against inflation. While inflation is not a problem at present…it will most certainly become a problem down the road. So why does this matter if you are considering purchasing or refinancing? Because inflation is the arch-enemy of Bonds and home loan rates, and just the knowledge of it coming has been causing both Bonds and home loan rates to worsen in recent days. Along with the fear of inflation, the Fed’s purchasing program of Mortgage Backed Securities is already slowing down, with the end of their buying in sight – and the reduced demand for these Bonds is also driving home loan rates higher.

Bottom line: home loan rates are already on the rise, and we won’t likely see these low historic levels again.  

Interest rates are still very near historic lows – George Washington couldn’t have gotten a better interest rate – and the opportunity these low rates present is huge for homebuyers or people looking to refinance. If we haven’t talked recently about your own home loan situation – or if you have a friend, family member, neighbor or coworker who needs advice – please call or send me an email. There’s no time to waste.

———————–

If you have any questions about current or future interest rates and how the economy and the Feds actions affects those rates, please don’t hesitate to call River’s Edge or call our mortgage experts from Prime Mortgage @ 763-222-1503.

 

River’s Edge receives VA & FHA Approval!

We are pleased to announce River’s Edge has just received approval for it’s future homeowners to receive VA and FHA loans when financing their home.   What does this mean to you?  Some of the benefits include:

1. Buyer’s at River’s Edge can finance a home with low down payment of as little as 3.5% of the purchase price.

2. Allows for seller’s assistance with closing costs.

3. Mortgage Insurance Premiums are much less than with conventional loans saving you money.

4. Lower income requirements for the borrower.

5. Can purchase a home through a Reverse Mortgage.

6. Many more benefits…

More information will be posted on our website in the near future, please keep an eye out for it.  Also, if you have further questions regarding these programs, make sure to call your representative at River’s Edge at 763-493-8955.

Have a happy 4th of July.

Forbes.com – Minneapolis 4th on List of Best Housing Bets

I came across this article today, which I thought you might find interesting.   Although the article is a few months old, it is still very relevant since it has a long term view of the Twin Cities market and places Minneapolis 4th on America’s List of Best Long-Term Housing Bets.  Read on…

In Depth: America’s Best Long-Term Housing Bets

by Matt Woolsey

These 10 markets are the least likely to overheat and bust and the most likely to have vibrant economies moving forward.

4. Minneapolis, Minn.

Job-growth projections 2008-2017: 1.1%

Minneapolis has not experienced the same sort of booms seen elsewhere. In the most recent run-up, building activity peaked in the third quarter of 2004; this will help the market in the short term as it means less new inventory dragging down prices. The city’s real strength is its economy, which has less of a manufacturing base than most Midwestern cities and hosts a handful of multinational corporations.

Methodology: Forbes.com evaluated the country’s 40 largest Census-defined metro areas using the last 25 years of NAHB data. We examined new construction and vacancy rates to calculate historical fluctuations in supply and demand against national averages. Moody’s Economy.com provided job-growth forecasts through 2017.

For the full article please see the following link:

http://www.forbes.com/2008/12/16/cities-ten-homes-forbeslife-cx_mw_1216realestate.html

Bird Watching During Spring Migration

Bird watching during spring migration is an incredible treat for all birdwatchers, newbies and veterans alike. The month of May ushers in spring along with largest influx of migratory birds that provides an unparalleled experience for expectant spectators.

Hundreds of migratory birds fly in from different parts of the world which is why this season is much awaited in the bird watching scene. Many different bird species can be spotted and enjoyed during this time which makes it easy even for first time bird watchers to sight even the often rare and difficult to sight birds.

Different birds of different feathers flock together during this momentous time which is why many serious bird watching enthusiasts travel great lengths, often crossing continents to track and sight migratory birds during spring. Fortunately, one need not travel too far to enjoy this natural phenomenon. All one has to do to take part of this wonderful event is to track the migratory patterns of these birds through simple research and find out good places for sighting.

To do this, one may start by finding out the different local bird watching activities that usually culminate during International Migratory Bird Day. Take advantage of the interstate bird watching activities both for the bird sightings and also for the networking. These festivals often offer various bird related activities that are not necessarily actual bird watching so there is something for everyone and you can bring you family along. Click to here to see where your next bird watching activity will take you!

Whether you consider bird watching as a casual hobby or your life’s passion, remember that bird watching during spring migration is something that you must try, even if you only try out local haunts to begin with.

Active Spring for the Twin Cities Housing Market

The news keeps improving regarding the Twin Cities Housing Market.  The Minneapolis Area Association of Realtors (MAAR) reported on April 13th, 2009 that the market is seeing considerable improvement and “all in all, dropping prices, low mortgage rates and government incentive programs for home buyers are making this a spring to remember.”

The complete MAAR Weekly Market Activity Report by reads as follows:

“It’s becoming a wild and active spring for the Twin Cities housing market. First, pending sales ought to give REALTORS® some joy in their Easter baskets, with 1,004 reported for the week ending April 4—a 28.7 percent increase over last year and the best single week since May 2007. New listings went skyward compared to last week with 2,055 for the week ending April 4, but they remain 11.2 percent behind the same week a year ago.

The recent jump in sales is bringing the supply of available homes down even further. There are currently 26,085 homes on the market in the region—17.5 percent below this time last year and good for 7.7 months of supply.

Finally, like Warren Robinett in Adventure, this week’s WMAR has its own Easter egg tucked away. The Housing Affordability Index for April has grown to 218, which means the median family income is 218 percent of what’s necessary to qualify for the median priced home. For those of you scoring at home, that’s a 40.8 percent increase over where we stood last year at this time and is 77.3 percent over our low point of 123 in July 2006. We have to bear in mind that increased lender-mediated activity makes that number supernaturally high.

All in all, dropping prices, low mortgage rates and government incentive programs for home buyers are making this a spring to remember.”

Laminate vs. Silestone vs. Granite – Which is Best?

With so many countertop choices available, we often get asked “What is the superior kitchen countertop surface?”   Medici offers 3 surface types that include Wilsonart decorative laminates, Silestone Quartz surfaces and Natural Granite surfaces.  All of these surfaces are great products, but each has individual characteristics that distinguish one from the other.   Read on to find out the advantages and disadvantages of each surface so you can make an informed decision.

 

 Wilsonart Laminate Surfaces

 Advantages

• Affordability – Most affordable countertop allows you to spend more on special extras or other things.
• Durable – New and Better Technologies give Laminate greater strength and help make Laminate last and look better longer. Plus newer laminates are more scuff and scratch resistant than ever.
• Low Maintenance - Low maintenance, easy care, easy to clean up and it is designed to be stain-resistant. Just wipe with a damp cloth and soapy water and for tougher stuck-on stains and residues scrub with a bristle nylon brush. Very easy to live with.
• Safe Surface - Safe and harmless to food since laminates do not harbor the growth of mold, mildew, bacteria or other microorganisms.
• Variety of Choices – Widest array of designs, colors and patterns of any surface material and new technologies improves clarity, fidelity, color and beauty. Looks terrific in the home and can match almost any décor.

 Disadvantages

• No Complete Resistance to Scratches and Cracks – No complete resistance to scratches and cracks, although the technology has vastly improved. Very sharp knives and other pointed objects can scratch the surface so slicing and preparing food directly on the countertop is not advisable.
• No Resistance to Heat – No resistance to heat, which means the countertop can melt or burn. It can also crack if it is exposed to hot objects such as hot skillets or a cup of steaming coffee.
• Cannot be Repaired – Cannot be repaired if the countertop is severely damaged. Most third-party seam-fill kits can reduce the damage or make it less noticeable, but they cannot completely repair a fragment that’s broken or cracked.

  

Silestone Quartz Surfaces

 Advantages

• Stain Resistant – Non-porous and extremely stain resistant and withstands everyday spills naturally.
• Scratch Resistant – Silestone Quartz surfaces are one of the hardest surfaces available today, offering scratch resistance that is unsurpassed by any other material.
• Scorch Resistance – Since Silestone is composed of 93% natural quartz, it is extremely heat resistant, offering burn and scorch resistant unmatched by plastics or solid surface countertop products.
• Care Free – Silestone needs no sealing, waxing or polishing and offers the elegance and luxury of natural stone with none of the work.
• Depth of Appearance and Variety – Silestone features the depth of quartz, offering a dazzling and luxurious appearance unlike any other material. Multiple designs and styles can typically match any décor.
• Color Consistency – Due to its advanced technology, Silestone delivers color consistency that is not possible with natural stone.
• Mold-Mildew Resistant – Because Silestone is non-porous, it is resistant to stains and bacterial growth, making it ideal for sensitive environments such as food preparation areas.

 Disadvantages 

• A Little More Costly – Silestone surfaces are priced more than Laminates and some levels of Silestone are priced more than Granite.
• Color Consistency – Although Silestone delivers color consistency, some feel that natural Granite offers uniqueness being that every slab of stone is different.
• Limited Color and Style Palettes – Compared to Laminate and natural Granite, Silestone has a limited number of color and style palettes, although it’s broad range typically is enough to suite many design themes.

  

Natural Granite Surfaces

 Advantages

• Variety of Choices and Colors – Granite offers almost unlimited choices in colors and patterns.
• Scratch Resistant – Natural Granite is also one of the hardest surfaces available and offers scratch resistance.
• Scorch Resistance – Granite it is extremely heat resistant, offering very good burn and scorch resistance.
• Low Maintenance -Although it is recommended to apply a granite sealer once a year (a simple wipe on, wipe off procedure), Granite offers the elegance of a natural stone with hardly any work. Please note sealing is for stain resistance and not for polishing since granite will always maintain its shiny polish that came from the manufacturer.
• Lower Cost – Many types of Granite are typically less costly than many Silestone surfaces.
• Depth of Appearance and Variety – Granite offers a dazzling and luxurious appearance.
• Color and Style Uniqueness – Since it is a natural stone, each slab of Granite is unique onto itself, whereby Silestone offers fewer than 50 choices, all of which have a similar repetitive appearance. Granite may offer hundreds and possibly thousands of different colors and styles to choose from. In some cases Granite enjoys a greater “prestige” due to its natural uniqueness and is therefore a greater value in the minds of many buyers.
• Bacteria-Mold-Mildew Resistant – Although there has been rumors that since Granite is porous, it is not resistant to bacterial growth, mold and mildew. There is growing evidence that Granite is just as resistant to bacteria and mold as Silestone Quartz surfaces.

 Disadvantages

• Not Stain Resistant – Although sealing your Granite is highly recommended to help resist stains, Granite can stain. All Granite style are different so some may be more porous than others, but Granite will absorb oils and liquids if left on for too long and not cleaned up quickly.
• Not Entirely Carefree - Granite should be sealed periodically to help resist stains. Sealing Granite is a very simple wipe on, wipe off procedure.
• No Color Consistency – One of its greatest advantages, its uniqueness, can also be a disadvantage if you are looking for complete color and pattern consistency. Plus if you add to your kitchen or countertop later, it will be difficult to match the original stone.
• Visible Seams – The lack of pattern consistency also makes matching seams difficult since you can not typically match patterns when putting together seams.

And the clear winner is….all of the above.  It is obvious each has its advantages and disadvantages and the only one that can answer which is best depends upon the homeowner and the homeowner’s needs and situation.

Best of luck making your countertop choice and don’t hesitate to contact us if you have any questions, comments or would like help with your choices.

To find more information on Laminate Countertops please visit www.wilsonart.com.

To find more information on Silestone Countertops please visit www.silestone.com.

You Can Have It All – In Today’s Housing Market

Relax for a moment and take a deep breath.  I want to take you to a place where there are no distractions, only peace and quiet.  I want you to forget about the economy and the media’s coverage of the housing market and all your preconceptions for a moment.  Now continue on and read the many reasons (in no particular order) why now is undoubtedly the best time to invest in a home. 

 1.    Low Interest Rates - Rates remain at near record lows.  A conventional mortgage on a $200,000 home at a rate of 6.25% (last year, and likely next year) vs. 4.75% (today) would cost you over $186 per month more or $2,232 per year more.   This adds up to almost $66,960 of savings over the life of the loan.

 2.    Affordable Home Values - Home values are sort of irrelevant? Whether values are historically high or historically low, everyone is on a level playing field.  For most home investors, the possibility of receiving a lower than expected price for their existing residence is more than offset by the lower price they are receiving on their new home from a Builder.  Subcontractors and suppliers are very eager for business and are cutting costs for new construction allowing Builders to price homes aggressively low.  Plus, according to the Minneapolis Association of Realtors, the Housing Affordability Index (HAI) continues its yearlong improvement and another new record with a March 2009 HAI of 206-31.2 percent ahead of its March 2008 mark of 157. This will not last!

 3.    Higher Appreciation - Which investment is more likely to appreciate – your current older home that may need work or a home freshly designed and built to be relevant for today’s and tomorrow’s buyer?  After all, while you wait for the market to recover, wouldn’t you rather be waiting in a new low maintenance home, customized to your taste and style rather than wondering if your lawnmower is going to start this spring?

 4.    Buy Low, Sell High - It’s the first rule of investing.  Home purchases are not meant to be short-term investments and smart buyers know that waiting for a stronger market means paying higher prices.  You’ve heard the news that new housing starts have been falling for the past two years, meaning the supply is rapidly decreasing.  This also means that when the demand returns to normal levels and new homes are in short supply, prices will undoubtedly skyrocket.   It’s Economics 101, ask Warren Buffett!  Don’t lose out your chance to invest near the bottom.

 5.    Energy Efficiency - New homes have advanced technology and environmentally friendly features that can help you save money.  Take pride in living in a more environmentally friendly home and figure out what you would do with extra money in your pocket each month.

6.    Experience the New Home Experience – Builders are rolling out the red carpet for their customers these days.  Don’t miss out to have a great buying experience with a customer focused builder before they get too busy to go that extra mile.

7.    Quality Counts - Homes built in a slower housing market are constructed with more care and by more highly talented craftsman.  A lot may have been overlooked in the days of “How fast can we build?” – not on purpose of course, but some builders may not have had the time to be picky.  Now builders are able to be more hands on and make sure attention is paid to the details.  Plus with a possible lighter workload, only the best tradesmen have retained by subcontractors, which in effect “weeds out” the amateurs.

8.    Made in the USA - With the housing industry comprising over 1/5 of America’s GDP, it’s no wonder the economy is struggling.  Most Americans feel a patriotic draw toward buying American made products, but does it really make a difference?  Think about this – virtually ALL of the dollars spent building and buying a new home stay in your local community.  Simply put, those who wait on the sidelines are continuing to compound the problem, but those who can afford to purchase a car or home or something else manufactured in the USA during a time of recession and actually do it are patriots and should be applauded.

9.    Unbeatable Investment – Even in down markets, over the long term home prices still appreciate more than the stock market.  Although housing prices have decreased over the past few years in the Twin Cities, take a look at what’s happened to the much more volatile stock market only in the past few months.

10.   New $8,000 Federal Tax Credit – Until December 1, 2009, qualified first-time home buyers (those that haven’t owned a home in the previous 3 years) can receive an $8,000 tax credit that doesn’t have to be paid back.  Learn more at: www.FederalHousingTaxCredit.com

11.   The Market has Improved - According to the Minneapolis Association of Realtors the Twin Cities market is showing significant signs of improvement.  Pending sales are up 33 out of 34 weeks this year over the previous year.  Also, new listings and total inventory of homes are down over the same period.  This means more home sales and less competition to sell your home, which is great news when selling or buying a home.  These indicators signify the Twin Cities market is stabilizing which is necessary for the market to continue to improve.

To add to the discussion for further explanation please make a post on our BLOG.

Thank you to Tom Joyner from the Villas at Timber Run and Jeff Scherber from Prime Mortgage who contributed to this BLOG post.