August 2017 - Realty Solutions Group

Mortgage Rates Thursday, Aug. 31: Barely Changed, While Pending Home Sales Dip

Mortgage rates for 30-year and 15-year fixed-rate home loans edged down by one basis point each, while the 5/1 ARM blipped upward by one, according to a NerdWallet survey of daily mortgage rates published by national lenders Thursday morning.

With mortgage rates holding relatively steady, the attention this morning turned to real estate sales. Pending home sales, a peek at future transactions, fell by 0.8% in July, the fourth decline in five months, according to the National Association of Realtors. The index was 1.3% lower than it was in July 2016. All while the overall economy is growing and home prices are rising.

The problem: Not enough homes are for sale. “The pace of new listings is not catching up with what’s being sold at an astonishingly fast pace,” said Lawrence Yun, chief economist for the National Association of Realtors, in a news release. Strong demand for homes overwhelms the limited supply of homes for sale, he said.

Yun said home prices have risen three times faster than incomes in the past five years, making it difficult for people to afford homes. That especially goes for first-time buyers, he said.

Here’s an illustration of the problem: In the first half of this year, home builders sold 11,000 newly built homes for less than $150,000. Over the same period, they sold 15,000 homes for $750,000 or more, according to the Census Bureau.

MORTGAGE RATES TODAY, THURSDAY, AUG. 31:

(Change from 8/30)
30-year fixed: 3.93% APR (-0.01)
15-year fixed: 3.35% APR (-0.01)
5/1 ARM: 3.86% APR (+0.01)

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NerdWallet daily mortgage rates are an average of the published annual percentage rate with the lowest points for each loan term offered by a sampling of major national lenders. APR quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

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The article Mortgage Rates Thursday, Aug. 31: Barely Changed, While Pending Home Sales Dip originally appeared on NerdWallet.

Realty Solutions Group was built around a simple but elusive concept: provide brokers and clients with the highest level of service in the industry through cutting-edge sales, marketing programs and a culture that values innovation, relationships and a strong local focus.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.

As a locally-owned, independent company, Realty Solutions Group is deeply committed to supporting the communities and clients we serve. We are constantly evolving, but remain focused on that one simple idea behind our founding.

We are a full service brokerage with discounted commissions. We offer no long term listing contracts, a Performance Guarantee, Smart Seller Program and a Communication Guarantee. Contact us today and let us provide you with the very best real estate experience.

Adjustable-Rate Mortgages: The Pros and Cons

An adjustable-rate mortgage is a home loan that has an initial period with a fixed interest rate followed by periodic rate adjustments. An adjustable-rate mortgage, or ARM, may sound risky. After all, your payments can increase or decrease based on interest-rate changes that are out of your control. But in some cases, choosing an ARM over a fixed-rate mortgage could be a solid financial decision, potentially saving you thousands of dollars.

How does an adjustable-rate mortgage work?

When you take out an ARM, your loan will have a fixed interest rate for an introductory period, typically lasting from three to 10 years. That introductory, or teaser, rate will be lower than what you would get on a traditional 30-year, fixed-rate home loan. After that introductory phase, the rate on the mortgage will adjust periodically based on the terms of your individual loan and a benchmark interest rate index chosen by your lender. In most cases, the total length of the loan is 30 years.

In comparison, with a fixed-rate mortgage, the rate stays exactly the same during the life of the loan. Some people believe that fixed-rate mortgages are always the better choice. But ARMs can be an option for home buyers who know they will have the loan for only a few years, says Don Maxon, a certified financial planner in San Rafael, California.

“ARMs can make sense for customers who know they will be relocating in the near future or they know they will be paying off the loan in a few years, maybe due to retirement or expected inheritance or other receipt of funds,” Maxon says.

Types of adjustable-rate mortgage

It’s important to remember that changes to the interest rate will change your mortgage payment. There are many types of ARMs, but they all share the variable-rate characteristic. Some common types are:

Hybrid ARMs. These mortgages have two phases: a fixed-rate period — typically three, five, seven or 10 years — followed by an adjustable phase, during which your interest rate can move up or down, depending on an index of market rates chosen by your lender. How often the rate adjusts and other details about how your ARM works are written in the mortgage contract. Some possible hybrid ARMs:

3/1 ARM. The interest rate is fixed for three years and adjusts annually for 27 years.
5/1 ARM. The interest rate is fixed for five years and adjusts annually for 25 years.
7/1 ARM. The interest rate is fixed for seven years and adjusts annually for 23 years.
10/1 ARM. The interest rate is fixed for 10 years and adjusts annually for 20 years.

Interest-only ARM. An interest-only, or IO, ARM gives you a specified number of years, typically between three and 10, during which you pay only interest on your mortgage. Your payments stay low during the fixed-rate IO period. But paying only interest doesn’t reduce the loan amount. When the IO period ends your payments will be bigger, possibly much bigger, because they’ll include both principal and interest.

Payment-option ARM. These ARMs, which have become rare since the 2008 housing crisis, allow borrowers to choose one of several monthly payment options: an interest-only payment, a minimum payment that does not pay all the interest due or a fully amortizing payment that includes principal and interest.

Eventually, either after a specified period of time or if the loan balance grows too big because the borrower is making minimum payments that don’t cover all the interest due, the payment options end and the loan is recast, meaning that payments are adjusted to include principal and interest.

“Option payments generally lasted for five years if no loan-balance trigger was hit,” says Keith Gumbinger, vice president of HSH.com, a mortgage information company. “After that time, the payment was reset to fully amortizing (principal and interest payment).”

These loans are extremely complicated, and pose high risks to all but the wealthiest and most sophisticated borrowers. Many observers consider them to be one of the main factors behind the wave of home foreclosures that helped trigger the housing crisis and great recession. Borrowers should proceed very carefully if they’re ever offered one of these loans.

Know the lingo

ARMs come with complicated terms and conditions. You’ll want to understand all of the terms used with your mortgage so you know how the loan works and how your payment may change. Here are some of the terms you’ll hear:

Adjustment frequency: How often your interest rate will adjust after the introductory period.
Benchmark index: The interest rate index to which payment changes on an ARM are tied.
Introductory or teaser rate: The initial interest rate of your ARM, which does not change during the fixed-rate period of the loan.
Interest-rate cap: The limit on how much your rate can rise with each adjustment.
Payment cap: A limit on how much your mortgage payment can change.

The pros of an of adjustable-rate mortgage

Low payments in the fixed-rate phase. A hybrid ARM offers potential savings in the initial, fixed-rate period. For example, with a 5/1 ARM, your introductory interest rate is locked in for five years before it can change. That gives you five years of predictable, low payments.
Flexibility. An ARM can be a good idea if your life is likely to change in the next few years — for instance, if you plan to move or sell the house. You can enjoy the ARM’s fixed-rate period and sell before it ends and the less-predictable adjustable phase starts.
Rate and payment caps. ARMs may have several types of caps, which limit the increases on your mortgage rate and the size of your payment. These include interest-rate caps (on how much the rate can change each time it adjusts and on the total rate change over the loan’s lifetime) and caps on how much the payment can grow each time the rate adjusts. You can ask a lender to explain the risks and show exactly how much the payments could be, at most.
Your payments could get smaller. If prevailing interest rates fall, and drive down the index against which your ARM is benchmarked, there’s a possibility that your monthly payment could drop.

The cons of an adjustable-rate mortgage

Your payments could get bigger. If interest rates are rising, your payments could increase after the adjustable period begins; some borrowers might have trouble making the larger payments.
Things don’t go as planned. ARMs require borrowers to plan for when the interest rate starts changing and monthly payments may grow. Even with careful planning, though, you might be unable to sell or refinance when you want to. If you can’t make the payments after the fixed-rate phase of the loan, you could lose the home.
Prepayment penalty. Some ARMs come with a prepayment penalty. This is a fee that can be charged if you sell or refinance the loan. If you plan on selling the home or refinancing within the first five years of the mortgage, you should ask the lender for a loan without this penalty.
ARMs are complex. ARMs can have complicated rules, fees and structures. These are part of their appeal but can also pose risks for borrowers who don’t fully understand what they are getting into.

More from NerdWallet

The article Adjustable-Rate Mortgages: The Pros and Cons originally appeared on NerdWallet.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.

Mortgage Rates Wednesday, Aug. 30: Some Loans May Now Be Appraisal-Free

The 30-year fixed-rate mortgage bounced back by four basis points, while the rate on the 5/1 ARM went up by one basis point, according to a NerdWallet survey of daily mortgage rates published by national lenders Wednesday morning. The 15-year fixed was unchanged.

Fixed mortgage rates remain near the lows last seen around the time of the 2016 presidential election.

Current interest rates are quite low by historical standards, and they make it more affordable to buy a home or refinance the loan. A few refinancers and buyers will get mortgages faster and cheaper because they won’t have to get appraisals, according to announcements by Fannie Mae and Freddie Mac this month.

Until this summer, appraisals were required on virtually all home loans that were destined for sale to Fannie Mae or Freddie Mac, the companies that bundle mortgages and sell them to investors. Now Fannie and Freddie have relaxed their appraisal requirements. Waiving the appraisal could save borrowers around $500 and shave seven to 10 days off the time between application and closing, Freddie Mac said in a news release.

Who decides whether an appraisal is necessary? Not the borrower or the lender. The call is made by the underwriting software operated by Fannie and Freddie. The companies say most applications won’t receive an offer to forgo the appraisal. To satisfy investors, most loans still will need an appraisal to establish market value, Fannie Mae said in a fact sheet for lenders.

MORTGAGE RATES TODAY, WEDNESDAY, AUG. 30:

(Change from 8/29)
30-year fixed: 3.94% APR (+0.04)
15-year fixed: 3.36% APR (NC)
5/1 ARM: 3.85% APR (+0.01)

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The article Mortgage Rates Wednesday, Aug. 30: Some Loans May Now Be Appraisal-Free originally appeared on NerdWallet.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.

What Is The Home Price Expectation In The Next 5 Years?

Real estate conversations are centering around where home prices are headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of more than one hundred economists, real estate experts, and investment & market strategists on where they think the home price is going over the next five years. The projections of all 100+ are then averaged into a single number.

The results of their latest survey:

Home values will go up by 5.0% over the course of 2017, 4.0% in 2018, 3.2% in 2019, 3.0% in 2020, and 3.0% in 2021. That means the average annual appreciation will be 3.64% over the next 5 years.

The prediction for cumulative appreciation went up from 17.8% to 18.4% by 2021. The experts making up the most bearish quartile of the survey are projecting a cumulative appreciation of 6.7%.

Bottom Line

Individual opinions make headlines. We believe this survey is a fairer depiction of future values.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.

Mortgage Rates Tuesday, Aug. 29: North Korean Missile Launch Pushes Rates Lower

Fixed mortgage rates fell to their lowest levels since November, according to a NerdWallet survey of daily mortgage rates published by national lenders Tuesday morning. The 5/1 ARM slipped to a rate last seen in June.

Bond yields fell overnight immediately after North Korea launched a missile over Japan. Investors responded to the latest threat from North Korea by buying bonds, which are seen as a safe place to stash money. The bond-buying spree means that there is more money available for governments, businesses and consumers to borrow, which caused bond yields to fall. Mortgage rates followed.

The yield on the 10-year Treasury stood at 2.16% at the end of business Monday. Overnight, the yield fell to as low as 2.09%, and by this morning, the 10-year Treasury yield rebounded a bit to 2.12%. While that doesn’t seem like much of a change, it was enough to push fixed mortgage rates down to their lowest level since the week of the 2016 presidential election.

MORTGAGE RATES TODAY, Tuesday, AUG. 29:

(Change from 8/28)
30-year fixed: 3.90% APR (-0.09)
15-year fixed: 3.36% APR (-0.04)
5/1 ARM: 3.84% APR (-0.02)

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The article Mortgage Rates Tuesday, Aug. 29: North Korean Missile Launch Pushes Rates Lower originally appeared on NerdWallet.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.

How to Lower Your Monthly Mortgage Payment

Money is tight, and you’re looking for expenses to cut. Your mortgage payment is the biggest bite out of your paycheck, so that seems like the logical place to start.

Here are some ways that may help you lower your monthly mortgage payment and important considerations about each one.

Refinance to a longer term

Refinancing a mortgage to gain more time to repay is a popular option. If homeowners have made payments on a 30-year loan for a few years, for example, they refinance the remainder back out to 30 years.

But extending a loan term means you’re piling on additional interest charges, especially if you’ve been paying for a significant amount of time. So, this move should be a “last resort” option, says Randall Lowell of Parkview Services, a HUD-approved nonprofit housing counselor service in Shoreline, Washington. HUD is short for the Department of Housing and Urban Development.

If you’re in that situation, he suggests looking first for a streamline refinance loan product. Some government-backed loans — such as Federal Housing Administration and Department of Veterans Affairs mortgages — offer these lower fee and less paperwork refis.

» MORE: Calculate your refinance savings

Apply for a loan modification

If you’ve experienced a severe financial hardship and your mortgage payment is no longer affordable, a loan modification may be an option. That’s when a lender restructures your loan in some way to lower the monthly payment.

You don’t have to be in default to request a loan modification from your lender, Lowell says. If you’re facing an imminent reduction in income — for example, from the loss of a job or retirement — he says it’s a good idea to get ahead of the issue.

“When you reach out to a lender, they might actually refer you over to a HUD-approved housing counselor to discuss your situation,” says Stephanie Somerville, with GreenPath Financial Wellness, a HUD-approved nonprofit financial counseling service in the Detroit area.

Eliminate mortgage insurance

Somerville can speak from her own experience getting mortgage insurance eliminated. After owning her home for only a year in a rapidly appreciating real estate market, she refinanced her FHA loan with lifetime mortgage insurance into a conventional loan without mortgage insurance.

Her mortgage rate dropped one percentage point, and she was free from the FHA mortgage insurance.

Your credit score and the home’s rise in value will play a big part in making this work. Generally, you would need to have more than 20% equity in your home to cancel mortgage insurance. That means a lender appraisal may have to show a substantial increase in your home’s market price, depending on how much you put down.

Refinance the loan to a lower rate

You probably have considered refinancing your loan to a lower rate. Replacing your mortgage with a new loan at a lower interest rate would reduce your monthly payment, right? Yeah, but it’s harder than it sounds.

Somerville says you’ll need equity in your property to pull this one off. Rising home values might work in your favor. And you’ll need a good credit score, too.

However, a small interest rate improvement probably won’t make enough difference, especially when you consider the costs of a refi, which include closing costs just like those you paid on your existing mortgage.

“If you can get a significantly lower rate, that might drive down your payment,” Somerville says.

The mortgage may not be the problem

Lowell says a vast majority of the people who come to housing counselors are struggling with budget issues, but the mortgage is usually not to blame.

More often than not, it’s credit card debt. And prioritizing ways to attack that debt may do more to improve their cash flow than reducing the monthly mortgage payment.

Somerville agrees it’s better to chip away at that debt without putting your house at risk.

“Credit card debt is unsecured; it’s not attached to anything,” she adds. If you don’t make a payment, nothing can be taken. But, if you don’t make your mortgage payments — on a refinance or on a home equity line of credit — you could lose your home.

More from NerdWallet

The article How to Lower Your Monthly Mortgage Payment originally appeared on NerdWallet.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.

Across The Country Home Prices Skyrocket!

Highlights:

The Federal Housing Finance Agency (FHFA) just released their latest Quarterly Home Price Index report. It shows home prices up 6.4 % or higher.
They stated that home prices are compared both regionally and by state.
Based on the latest numbers, it may cost you more money if your plans to relocate are put on hold, due to the increase of home prices.
The only state where home prices are lower than last year were Alaska & West Virginia.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.

Mortgage Rates Monday, Aug. 28: Down at the Start of a Busy Week

Mortgage rates slid downward across the board, according to a NerdWallet survey of daily mortgage rates published by national lenders Monday morning.

Rates didn’t move much last week, partly because there wasn’t much economic news to react to. The economic calendar is more active this week, so there’s more opportunity for mortgage rates to move up or down.

A big potential rate-mover comes Thursday, when the Commerce Department releases the core Personal Consumption Expenditures price index. In short, the core PCE price index is the Federal Reserve’s favored measurement of inflation. The Fed would like to see this inflation rate at around 2%, plus or minus a couple of tenths of a percentage point. But it’s been stuck below that mark for several years. Last month’s reading was 1.5% inflation year-over-year.

Even though inflation is lower than the Fed wants it, the central bank is expected to keep raising short-term interest rates. It has raised the federal funds rate four times, a total of one percentage point, since late 2015. And it’s about halfway done with its rate-raising campaign, the president of the San Francisco Fed told CNNMoney in an interview. “We do need to see some more rate increases over the next couple years to get us to this normal level,” John Williams said in the interview. “We’re probably about half the way there in terms of raising short-term interest rates.”

The other big rate-mover comes with Friday’s employment report for August. That report can move mortgage rates, too. If job creation is much stronger than expected, interest rates could rise. If it’s a lot weaker than expected, rates could fall.

MORTGAGE RATES TODAY, Monday, AUG. 28:

(Change from 8/25)
30-year fixed: 3.99% APR (-0.01)
15-year fixed: 3.40% APR (-0.03)
5/1 ARM: 3.86% APR (-0.04)

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More from NerdWallet

The article Mortgage Rates Monday, Aug. 28: Down at the Start of a Busy Week originally appeared on NerdWallet.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.

Mortgage Rates Friday, Aug. 25: Up a Notch; Fed Chair Defends Reform

Thirty-year fixed mortgage rates edged upward by a basis point, and so did rates on 5/1 ARMs, according to a NerdWallet survey of daily mortgage rates published by national lenders Friday morning. Fifteen-year fixed mortgages were unchanged.

In a speech this morning at the Federal Reserve’s annual symposium in Jackson Hole, Wyoming, Fed Board Chair Janet Yellen defended the legislative and regulatory response to the 2008 economic crisis.

“In retrospect, mortgage borrowing was clearly too easy for some households in the mid-2000s, resulting in debt burdens that were unsustainable and ultimately damaging to the financial system,” Yellen said.

Regulators all but banned the riskiest mortgages, such as payment-option ARMs, in which the minimum monthly payment didn’t even cover that month’s interest.

“The United States, through coordinated regulatory action and legislation, moved very rapidly to begin reforming our financial system, and the speed with which our banking system returned to health provides evidence of the effectiveness of that strategy,” Yellen said.

MORTGAGE RATES TODAY, Friday, AUG. 25:

(Change from 8/24)
30-year fixed: 4.00% APR (+0.01)
15-year fixed: 3.43% APR (NC)
5/1 ARM: 3.90% APR (+0.01)

Get personalized mortgage rates

More from NerdWallet

The article Mortgage Rates Friday, Aug. 25: Up a Notch; Fed Chair Defends Reform originally appeared on NerdWallet.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.

Do You Save Money By Doing A FSBO?

A recent study by Collateral Analytics reveals that FSBOs (for sale by owner) don’t save the seller money, sometimes they end up costing more by not listing with an agent. Some sellers believe that they will save money on commission if they market and sell it themselves.

With this study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data indicated that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)

Why would FSBOs net less money than if they used an agent?

The study makes several suggestions:

“There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often trying to same money for themselves.
“Experienced agents are experts at ‘staging’ homes for sale”, this may bring in more money for the home.
“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” When more buyers see a home, there is a greater chance that there could be a bidding war for the property.

Three main conclusions from the study:

FSBOs receive prices significantly lower than those from similar properties sold by Realtors using the MLS.
The difference in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.
The sales in 2017 noted the average price for a FSBO was near 6% lower to similar properties in the area.

Bottom Line

If you are thinking of selling, FSBOing may end up costing you money instead of saving you money.

In less than 5 years, Realty Solutions Group is among the top independent brokerage firms in S/E Wisconsin.