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Wednesday, July 26, 2017

What Does the Fed’s Recent Rate Hike Mean for the Real Estate Market?

The Fed’s recent rate hike shouldn’t have any significant impact on our Phoenix market. In fact, it might actually stimulate it.

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On June 14th, the Federal Reserve increased its federal funds interest rate by 0.25%. They’re also widely expected to raise rates once or twice more over the course of 2017. What does this mean for the real estate market?

While any action by the Fed always garners a lot of attention and everyone starts to go crazy, I believe these increases will not have any significant impact on our market. There are three reasons why.

First of all, mortgage rates have actually trended lower in the wake of the Fed’s recent announcement. The 30-year mortgage rate recently hit 3.9%, the lowest level in 2017. In fact, it’s a common pattern for the mortgage rate and the Fed rate to move in opposite directions, and the same thing has happened the last two times the Fed raised rates. 

Second, the economy continues to do well. The Fed decided to increase its rate because unemployment and inflation are low, household spending is picking up, and we’ve seen steady growth for the past nine years. This is good news for the real estate market. As expected, we continue to see strong demand and a corresponding increase in home prices. 

Third, while the Fed’s rate increase is usually meant to cool off the economy, it might actually be having the opposite effect it in this case. Because interest rates were so low for such a long period of time, experts believe the recent increases might ease pressure on the financial system and encourage increased lending. 

Case in point: since the Fed started raising its rate in December 2016, total mortgages are up 2.5% year over year. 

In conclusion, while any move by the Fed is likely to lead to a lot of hand-wringing, I believe the real estate market will not be affected and will continue on its own healthy course. We still have a balanced market, especially above the $300,000 range.

Nonetheless, it’s clear that right now is a uniquely good moment for everyone in the real estate market. Today’s low mortgage rates are good for homebuyers because they make homes more affordable.

If you have any questions about our market or you’re thinking of buying or selling a home, give me a call or send me an email. I’d love to help.

Thursday, May 4, 2017

Can You Buy a Home With a Low Down Payment?

The biggest concern for many people when it comes to buying a home is coming up with the cash for a down payment. If you're in this camp, consider these options.

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If you're looking into buying a home in the Phoenix area, the down payment tends to be the biggest obstacle. A recent survey found that 55% of respondents said they couldn't come up with the cash to qualify for a home loan. The continuing growth of home prices certainly isn't helping. More people are choosing to rent since they feel they don't have the money to buy a home.
Not too long ago, it seemed that anyone with a pulse could get a mortgage, but that's not the case anymore. If you have decent credit and steady income of about two years, though, there are a number of loans you might qualify for:
  • USDA loan: This is a zero money down loan with lenient credit requirements that's valid for homes in certain rural and suburban areas.
  • VA loan: This is a zero money down option for anyone who has served in the military and has low closing costs and low interest rates.
  • FHA loan: This loan requires 3.5% down, but that's far less than conventional loans.

With decent credit and steady income, there are many loans you might qualify for.
As you can see, there are plenty of options even if you're in that 55% of people who list the down payment as the No. 1 reason you're not able to buy a home. If you have any other questions about financing options or buying a home here in the Phoenix area, give me a call or send me an email soon. I'd be more than happy to help.

Monday, March 20, 2017

What Happens If You Change Your Mind About Buying or Selling?

Today I want to go over what your options are as a buyer and as a seller if you change your mind after signing a purchase agreement.

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What can you do if you change your mind after you’ve signed a purchase agreement on a home?
As a buyer, there are so many loopholes in the Arizona purchase agreement. For example, you have a 10-day inspection period. If you know for sure that you don’t want to buy a particular home, something will come up in the inspection that will allow you to get out of that contract. You could also find an issue with the seller’s disclosure form, the HOA guidelines, the codes and restrictions for the area, etc. If you want out of that contract, you are covered. Fear not!
As a seller, all bets are off. If you are a seller and you have signed a purchase agreement to sell your home, you are bound to that purchase agreement. The buyer might request some things such as repairs, in which case you can refuse to comply and hope the buyer walks away from the sale. However, if you feel in any way that you may not want to sell your home, tell your agent.

If you’re a buyer and want out of a purchase agreement, fear not!
It’s much harder for a seller to get out of a purchase contract, so you need to be sure you want to sell before it’s signed.
In fact, I am working with a buyer right now in a case where the seller has changed their mind. The buyer now has an attorney, I have an attorney, the seller has an attorney, the seller’s agent has an attorney, and it is a complete mess. The seller is in hot water because she has a contractual obligation to sell her home, and it’s going to cost her a lot of money to keep it.
At the end of the day, this is your biggest investment, so make sure you are open and honest with the professional you have chosen to represent you. If you have any other questions about this topic of you're thinking about buying or selling a home, give me a call or send me an email. I'd be happy to help you.