What's Happening with Interest Rates?

Welcome back to my video blog! I wanted to talk to you about the rising interest rates. A mere month ago we were at a 200 year low of the rates being in the mid to low 3% range. The rate now is about 4.5%.

Will they go back down? It’s hard to say, but put this in perspective. What does a one point raise mean? Well, if you are looking at $250,000 home from last month to this month, your mortgage payment went up about $80 a month.

To crunch some numbers, an interest rate of 3.5% is about $4.50 per thousand. So if you have a $100,000 home, it’s going to be about $450,000 on your PITI. At 4.5%, you are at $5.07 per thousand. If you look back a few years, though, we were at 8-9%.

Why does all this matter? For most of us, buying a home is the most important investment we make. If you are able to buy a $250,000 home today and we have a 3% annual appreciation, in ten years that house could be worth $336,000. That’s almost $100,000 in equity you have built in toward your retirement.

So now is the time to buy, to lock in that low interest rate. So give me a call at 585.721 and let’s get started!

Planning on Remodeling?

Watch on your mobile device >>

If you are thinking about hiring a contractor to do some home improvements or remodeling, it’s important you are well informed. Lately, we’ve received calls from homeowners who are frustrated with their contractors; the homeowners have paid, but the contractor stops showing up before the project is completed.

If you are using a commercial lender to pay for your contracting, the lender will set payments up to the contractor in a way that protects you. People get into trouble, though, when they use their own line of credit.

If you choose this route, the most important thing is to check references. www.AngiesList.com is a great resource to verify the quality of a contractor’s work. The next most important thing is payment. Do not pay all at once; payment out of pocket should be equivalent to the work done.

If you have any other questions regarding contractors, please give me a call 585-721-3010.

The Short Sale Option

Watch on your mobile device >>

We’re sure hearing a lot about short sales in the media and, in fact, they’re very common here in Rochester with 10 to 15% of the homes selling as short sales.   A short sale is when the homeowner is upside down in the mortgage, owing more than what they can sell the home for so they can’t afford to sell. In this situation most sit tight.

But what happens when the homeowner gets behind in the mortgage payments by a few months? A short sale comes into play. Here’s how it typically works. The homeowner gets an offer that is less than what is due to the lender so we submit it to the bank, telling the bank we can get a certain amount for the home. Even though it’s less than what the homeowner owes, we ask the bank to release the homeowner from the lien. With the attorneys we work with we have a 99% success rate. We have a method to achieve this type of success rate. By knowing the real estate market, we systematically get as much money for the home so the homeowner isn’t giving it away, and we ensure the transaction is an arm’s length transaction, meaning the homeowner isn’t selling it to his brother or uncle.

A short sale is much less detrimental to your credit report than a foreclosure. Last year, a client did a short sale and bought a home right away. A lot of credit unions are getting more forgiving because so many homeowners are having to do short sales.

~

I’d encourage you to look strongly at short sales if it fits your needs. As the market improves and banks are not worried about foreclosures, the ability to do a short sale could disappear. If you want more information, give me a call at (585) 721-3010 or (585) 279-8250.