Interest rates have been so low for so long, adjustable rate mortgages have almost become an endangered species. An entire generation of new homeowners has probably never even considered an alternative to a fixed rate mortgage.
Should rates continue to rise steadily as many expect, more and more lenders will likely dust off their ARM products to give their less risk-averse customers a choice. Under the right conditions, ARMs save tens of thousands of dollars in interest payments.
Adjustable rate mortgages take many forms, but all feature an interest rate that periodically adjusts based on an index which reflects the cost to the lender of borrowing on the credit [...]
When financial advisors say that homeownership is a good investment, they are referring to the value that your home gains over time. This value is called home equity. Home equity is the difference between the amount you may still owe on your mortgage and what your home is worth.
Equity is important for several reasons. In addition to being a measure of the hidden wealth you have in your home, it is also an asset you can tap when the need arises, and protection against losing your home should you suffer a financial reversal. Almost all experienced home buyers use the equity in the home that they are selling to make a significant down payment on the home they are [...]
These days, homeowners are staying put longer. The average owner sells a primary residence every nine years, compared to five in 1984. First-time buyers today plan to live in their new homes even longer, fifteen years — a big increase over six years in 2006.
Many factors contribute to longer tenure, including rising home prices and rising interest rates. More seniors are “aging in place” in their family homes rather than downsizing. Boomers burnt by the housing bust are staying put longer to catch up on the years when their homes lost value. Longer tenure is one of the underlying causes of the chronically tight inventories of homes for sale that plagued real estate [...]
These days lenders are using more ways than credit scores to decide whether to approve applications for mortgages. Trended credit, for example, provides a long-term view of how borrowers’ credit behavior, an alternative to the “snapshot” of a credit score.
Over the past year, median FICO scores for approved loans have fluctuated from a high of 731 in August to 720 in February 2017. Despite continued pressure on lenders to relax standards, the median FICO for mortgages is only two points lower today than it was in 2014 after declining from 750 in February 2012.
Marginal borrowers stand a better chance of getting approved for an FHA loan than a [...]
Drones are giving real estate buyers a whole new way to see potential homes online — from the top down. The availability of drones for commercial uses has added a new dimension to portraying real estate online that is changing the ways many agents and their clients are marketing their homes.
A drone’s eye view of a property can include dramatic video footage that introduces a home from above or takes viewers on a breathtaking aerial tour to give a feel for a home in its neighborhood setting and surroundings. Drones can take panoramic aerial shots from up to 400 feet up or zoom in for close-ups to feature a home’s exterior details and off landscaping features like [...]
If you are in the market for a condo and like the idea of getting FHA financing with a 3.5 percent down payment, your timing is perfect. You will find a larger choice of condos in buildings that will qualify for FHA financing this year than you would have found if bought a year ago.
Not all condos qualify for FHA loans. Historically, certain levels of owner-occupancy in a building is required to approve it for FHA financing to purchase condos in that building. Before 2008, FHA required as many as 80 percent of units in a building be occupied by owners, not rentals or commercial space. The threshold was lowered to 50 percent in 2009, yet the regulation still had a chilling [...]
The property tax is the oldest tax levied in the United States and is the only major tax common to all fifty states. It is the main source of municipal and county revenues and primary source of support for local schools. Property taxes vary widely by state and local jurisdiction. The National Association of Home Builders calculates the effective property tax rate as measured by taxes paid per $1,000 of home value by dividing aggregate real estate taxes paid by the aggregate value of owner-occupied housing units within a state. New Jersey has the dubious distinction of imposing the highest effective property tax rate—2.13% or $21.25 per $1,000 of home value. Hawaii levies the lowest [...]
The massive numbers of foreclosures that spawned the boom in single-family rentals as investment homes is over, while the purchase of homes for investment purposes have settled down to pre-boom levels. Purchases for investment purposes have been on the decline since 2011 when investment sales accounted for 20 percent of sales. Today about 15 percent of existing homes purchased every month are bought by investors, either to “flip” and resell or to rent out.
The hardest part of single family investing today is finding an investment property at a good price. Demand from first-time buyers and tight inventories resulting from the conversion of about 4 million ownership [...]