Interest rates are on the rise. If you’ve been thinking of buying, now be a good time to act and the Fed has announced at least 2 more increases for this year. The following article from the NAR website helps give some further insight into the effects of interest rates on purchasing power.
Why Buyers May Lose If They Don’t Act Now
Rising mortgage rates could have a big impact on the direction your buyers choose when shopping for real estate, economists warn. “Every time the interest rates go up, you eliminate a group of people who can no longer afford to buy a house,” Don Frommeyer, a mortgage broker at Marine Bank in Indianapolis, told realtor.com®. “Some people may have to rent for a period of time until they make more money—or buy a smaller house.”
To avoid further complications in their plans, your buyers may want to speed up their home search this spring, as interest rates are forecasted to move higher in the coming months. Forty-four percent of home buyers say rate increases likely will force them to settle for a smaller, less expensive home that requires a longer commute to their jobs, according to a realtor.com® survey. First-time buyers may be most affected by rising costs, as increasing home prices and interest rates price some out of the market.
Mortgage rates are at their highest levels in more than four years. The 30-year fixed-rate mortgage averaged 4.46 percent last week, according to Freddie Mac, and that’s largely expected to increase since the Federal Reserve said it is likely to raise its short-term interest rates this year. That could prompt mortgage rates to move higher at least three times this year, starting this month.
“For the bulk of buyers, it’s not going to kill their decision to purchase a home,” Rick Palacios Jr., director of research at John Burns Real Estate Consulting, told realtor.com®. “If anything, it will get them off the fence by creating a sense of urgency.” Higher rates are “a kick in the pants for you to start thinking seriously [about buying].”
Rate increases—even minor ones—can add up over time. Realtor.com® offers this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20 percent down payment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000. “Buyers thought they could wait forever because rates were going to stay low forever,” says Palacios. “They’re starting to realize that if they’re going to buy, they should probably buy now.”
Home buyers who are concerned about rising rates may want to lock in with a lender, which guarantees the current rate for a set period of time. Still, don’t let your clients linger on making a decision. It typically costs several hundred dollars to lock in a rate.
Source: “Is It Last Call for Low Mortgage Rate? Why Home Buyers Should Act Now,” realtor.com® (March 7, 2018)
Magic Valley Properties and 1000 Springs Realty want you to beware of scammers. There are a lot of scammers out there seeking to take advantage of unsuspecting individuals. A quick Google search of “scammed” and a click on the “news” button brings up a plethora of stories on how people just like you and I are scammed each an every day. Scams run the gamut. There are scams related to the IRS, missed jury appearances, a loved one being held, check cashing, online purchasing, computer hacks and malware, winning the lottery, unpaid debts, investments and this is just a few that I have read about over the years. I often find myself wondering how individuals keep falling for scams that we hear so much about in the news. It seems like almost daily I read a news story on one of the many news sites about someone else being taken advantage of by a scam that has been around for a long period of time.
I then have to ask myself, would I be one that could fall for the idea of sending a Apple ITunes card to cure a debt? I like to tell myself that I wouldn’t, but I suppose I don’t really know what I may do under any particular set of circumstances until I’m actually faced with that circumstance. I believe that what I fail to realize is that professional scammers are really good at making what they do seem credible. They like to take advantage of people’s vulnerabilities. They may attempt to build a rapport with an individual. They like to play off of emotions. They try to create critical or emergency situations.
The real estate industry is also susceptible to scammers. My local real estate board, Western Magic Valley Realtors, repeatedly sends out notices of an agents email account that has been hacked. Just yesterday we received an email from a local agent that realized they had received an email in an attempt to hack their account. Now this individual regularly does business over the Internet through their auction service, therefore it is not unusual for them to carry out a lot or correspondence via email. He happened to receive an email with an offer attached, we he went to click on the PDF document to open the offer, he was asked to sign into his email again. Fortunately, he realized this was an attempt to access his accounts and didn’t fall prey to the scammer. He did point out a couple of items he noticed in the email that may help others avoid similar scams. First, he noticed that the pdf document didn’t portray an image of its contents; in today’s world pdf files will normally show a snippet of its contents.
This is how a typical pdf file appears as an email attachment.
He also noted that the email didn’t contain a signature line at the bottom. Now, real estate agents are in the business of selling themselves and their services to the public, therefore, most real estate agents (as well as most professionals) include a signature line in their email telling who they are.
This is my signature line:
I was thankful for the tips he provided. I suppose the lesson we can learn from this is to not enter our usernames and passwords that are requested when we click on an unfamiliar link. Even if the link appears to direct you to a legitimate looking website, don’t enter your personal information. Only enter personal information on websites that you know and trust, sites that you have intentionally visited by entering their website information in the browser address bar. The following links provide information from Bank of America and computer security experts McAffee on how to avoid falling victim to phishing emails.
Now you may be wondering if those are legitimate links, and I assure you that they are, if nothing else, they aren’t asking for any personal information.
Finally, I will finish this entry with information about wire fraud in the real estate industry. Real estate transactions involve the transfer of large sums for money during the transaction. Scams today involve the interception of legitimate emails coming from real estate and escrow offices. These emails redirect funds from legitimate accounts to the scammers account. The attached news story from NBC highlights this problem. If ever you are asked in an email to transfer funds, please call the company directly that you are working with to verify the authenticity of the email as well as the accounts associated with the transfer.
It’s more than a house, it’s YOUR home!!™
It looks as though spring is finally coming to the Hagerman Valley. It’s been a long hard winter in Idaho’s banana belt. We have endured record-breaking snowfall, rain, and flooding. Hopefully the brief thaw we had several weeks ago will alleviate more severe flooding as the temperatures continue to rise.
Temperature isn’t the only thing on the rise. According to a story on the Washington Post on March 9, 2017 financial markets anticipate the Fed will raise the benchmark rate when they meet on March 14-15th. In anticipation of such an announcement, mortgage rates have reached a high of 4.21% compared with 4.1% last week, and 3.68% at this time last year. The article notes that mortgage rates aren’t actually tied to treasury rates, they appear to be finally coming in line with those after several years of doing their own thing. The economy appears to be strengthening and with that strength comes the need to increase rates in order to curb inflation. Unless something unforeseen, it is highly likely that the benchmark rate and mortgage rates will continue to climb.
If you have been considering buying a home as a first time home buyer, or you have been thinking about moving into a different home, you may want to act sooner than later. Interest rates play a key role in how much home you can afford.
In looking at Twin Falls County for January 1, 2016 – December 31, 2016 the average price for a home was $174,170 per IMLS. The mortgage and interest payment on a home of that value at last years rate of 3.68% would have been $799.71, at today’s rate of 4.21% your payment would now be $852.74. In order to maintain that same payment, as one year ago, would have to purchase a home valued at $163,339.12, you just lost $10,830 in buying power.
So, if you have any interest in buying, now is a good time while you can get a better bang for your buck.
It’s more than a house, it’s YOUR home!!™
The Magic Valley of South Central Idaho received a significant snow event over the past several days. My home received nearly 16” of snow over three days. While this may not seem like much to some, this is highly unusual for the Magic Valley, and especially the Hagerman Valley. I spent most of my day yesterday helping my neighbors clear snow from around their homes, and will be doing the same later today. It feels good to be able to go out and serve my neighbors, and more importantly to make sure they are doing okay.
I’m lucky since I am relatively healthy; I have access to a four wheel drive vehicle and a tractor to use to help clear the snow. But not everybody is so fortunate. I stopped at the store yesterday and thought I should call a friend who has difficulty getting around to see if he was in need of anything, and he was, he needed a gallon of milk. Fortunately I was able to get that for him and get it to him. When dropping it off I noticed his house was rather snowed in, so I returned to help clear the snow from his sidewalks and driveways. I don’t mention this to toot my own horn, but to show how simple acts of service can go along way in bringing comfort to others.
It’s important for us to be prepared when events like this occur. Are you prepared?
The American Red Cross has some great information on their website to help you to be prepared. It’s certainly worth taking a look at to help you evaluate where you stand.
Driving in the conditions that we had present a whole new challenge. Last night roads were declared impassible, many were closed, and drivers were told if they got into trouble to not expect help for extended periods of time. When traveling in winter conditions it’s important to be prepared. You should travel with a tank full of gas, have water and food, and a blanket to help you stay warm is you become stranded. This article from KTVB new presented some tips from Napa Auto Parts incase your find yourself stuck in the snow.
Stay safe. Stay warm. Check on your neighbors.
It’s more than a house, it’s YOUR home!!™
With all the new ways to search for real estate, along with the wide variety of do-it-yourself, real estate investing, and flipping shows on tv, many may wonder why they should bother with hiring the services of a REALTOR to help them with their real estate transactions. The National Association of REALTORS sums it up well in this article they published to their website.
“7 Reasons to Work With a REALTOR®
REALTORS® aren’t just agents. They’re professional members of the National Association of REALTORS® and subscribe to its strict code of ethics. This is the REALTOR® difference for home buyers:
- Ethical treatment. Every REALTOR® must adhere to a strict code of ethics, which is based on professionalism and protection of the public. As a REALTOR®’s client, you can expect honest and ethical treatment in all transaction-related matters. The first obligation is to you, the client.
- An expert guide. Buying a home usually requires dozens of forms, reports, disclosures, and other technical documents. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes. Also, there’s a lot of jargon involved, so you want to work with a professional who can speak the language.
- Objective information and opinions. REALTORS® can provide local information on utilities, zoning, schools, and more. They also have objective information about each property. REALTORs® can use that data to help you determine if the property has what you need. By understanding both your needs and search area, they can also point out neighborhoods you don’t know much about but that might suit your needs better than you’d thought.
- Expanded search power. Sometimes properties are available but not actively advertised. A REALTOR® can help you find opportunities not listed on home search sites and can help you avoid out-of-date listings that might be showing up as available online but are no longer on the market.
- Negotiation knowledge. There are many factors up for discussion in a deal. A REALTOR® will look at every angle from your perspective, including crafting a purchase agreement that allows enough time for you to complete inspections and investigations of the property before you are bound to complete the purchase.
- Up-to-date experience. Most people buy only a few homes in their lifetime, usually with quite a few years in between each purchase. Even if you’ve done it before, laws and regulations change. REALTORS® handle hundreds of transactions over the course of their career.
- Your rock during emotional moments. A home is so much more than four walls and a roof. And for most people, property represents the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on the issues most important to you.”
So when you’re ready to take that leap into real estate and either buy or sell, it pays to work with a professional REALTOR. I am a professional REALTOR and I will serve you with the honesty, integrity, dedication, and professionalism that has been instilled in me through my professional training.
It’s more than a house, it’s YOUR home!!™