My New Blog

Record low interest rates make today a great time to purchase a new home or an investment property.  The average rate for a 30-year fixed loan sank to 4.69% last week, according to Freddie Mac. That was the lowest since the since the mortgage company began keeping records in 1971.

Considering rates were in double-digits (10%+) for most of the late 1970's and early 1980's, today's rates just can't be beat.  On a loan amount of $175,000, with a 30 year fixed rate mortgage at today's record loan rates would amount to a fixed monthly payment of $906.56 for loan principal and interest.  The same loan at the 2008 rate of 6.69% would amount to a payment of $1128.08 per month.  So, the same $175,000 home that has likely not appreciated in value, is $222.00 more affordable per month today than it was 2 short years ago. 

Purchasing a home in Rochester, Olmsted County, or Southeastern Minnesota has never been more affordable with the record low interest rates, falling home prices, large inventory, and motivated sellers.  Now is truly the time to buy.  Call me or text me today at (507) 202-0995 to get started.   

Purchasing Foreclosure properties can offer the buyer deep discounts based on current taxable market value.  Our Century 21 Alpha Realty Office here in Rochester located at 12 Elton Hills Drive NW Suite 102 has about 12-15 Foreclosure properties currently listed on the Multiple Listing Service (MLS). 

An example of one of our discounted properties is located at 1763 21st Ave NW here in Rochester, MN.  Olmsted County has the taxable market value of the home and the lot at $154,500 for 2010.  The property is currently in Foreclosure and is listed at $89,000 by the REO that owns the property and has it listed through our office. 

The obvious key to purchasing a Foreclosure property is to know how much you will need to spend to bring the home into tiptop shape.  A veteran home inspector and contractor can give you a good ballpark idea of what needs to be done and how much it will cost to get the job done.  Do-it-yourselfers can save on labor costs by doing some/all of the work themselves; but, must figure in cost of materials and time to get the job done. 

When done properly, Foreclosure purchases can save the buyer much money up front and reward them with equity down the road.  With our economy slow to recover from the recent deep recession, now might be the time to consider a purchase of a deeply discounted property such as a short sale or a Foreclosure. 

A short sale in the Real Estate world is the sale of a home for less that what is owed on the current mortgage(s).  Lenders might allow the current owner to sell "short" in order to take a smaller loss than what would result should the property fall into Foreclosure.  The short sale process can benefit all three parties to the short sale transaction: 

Seller - gets out from underneath a mortgage and monthly payments they can no longer afford and avoids bankruptcy and foreclosure at the same time. 

Buyer - gets a home at a reduced price that is likely in better shape than many foreclosure properties would be. 

Lender - minimizes losses; avoids costly and lengthly foreclosure process; doesn't have to worry about getting a property back that might be tough to sell and could remain on the books for years. 

The first key for the short sale process to work well is that the seller needs to demonstrate financial hardship to the lender.  A seller than can afford the monthly payments is less likely to get the lender to accept a short sale. 

The second key for the short sale process to work is the ABSENCE of a second mortgage.  Since the second mortgage holder will likely have to forgo all or most of what it is owed, they are not likely to approve the short sale process. 

Short Sales do not work in every seller's situation.  If you are thinking of selling short sale and your criteria meets the above, please don't hesitate to call or email me for your no cost, no-obligation short sale consultation. 

Here is a quick look at home activity in Southeastern Minnesota for the month of January 2010 comapred to one year earlier. 

Closed (Sold) Transactions:

January 2010 - 57
January 2009 - 68

New homes (Listings) on the market during January:

January 2010 - 293
January 2009 - 206

Active Listings Still on Market at end of month:

January 2010 - 929
January 2009 - 852

Average Days on the Market (DOM)

January 2010 - 140
January 2009 - 119

Median Sales Price:

January 2010 - $149,000
January 2009 - $153,400

According to Mortgage Finance company Freddie Mac, mortgage interest rates declined for the second consecutive week.  The average rate on a 30-year fixed rate mortgage was 4.93% this week, down from 4.97% a week earlier. 

Rates were even better on 15 year home loans.  This week, the average rate on a 15-year fixed-rate mortgages fell to 4.33%, down from 4.34% last week, according to Freddie Mac.  15-year fixed rate mortgages are popular with consumers as they save the consumer considerable interest and only result in a 16% higher payment vs. a 30 year mortgage. 

The rates do not include add-on fees known as points. One point is equal to 1% of the total loan amount.

The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year loans, 0.6 point for 15-year and one-year loans and 0.5 point for five-year loans.

The good news is that the $8,000 credits for first-time buyers and up to $6,500 for repeat buyers are still in effect until April 30th, 2010 for signed purchase agreements and closings on or prior to June 30th, 2010.  The original expiration date of November 30th, 2009 was extended to the dates listed above to continue the first-time and repeat buyer incentives.  The housing tax credits had bipartisan support in the United States Senate passing by a vote of 93-0. 

While home sales are clearly up from where they were in late 2008 and early 2009, prices remain in flux.  The national median price for an existing single-family home was $172,900, or 4.1% below the median price in fourth-quarter 2008. That was the smallest price decline in more than two years.  Prices actually rose in 67 out of the 151 Metro areas surveyed in the 4th quarter of 2009.  Of the 67 that reported price increases, 16 of them had double-digit increases lead by Saginaw, MI.  But, a 15% increase in foreclosures in January of 2010 compared to 2009 may keep prices from climbing much in the near future.  Foreclosure filings are expected to climb in 2010 vs. levels seen in 2009. 

All signs point to another good year for home buyers in 2010 - tax credits, low interest rates, plenty of inventory, and stable if not declining prices all make 2010 a great year to purchase a new home!   

According to a recent story in USA Today, homeowners applying for mortgage modifications under the US Department of Treasury's Homeownership Preservation Office will need paperwork up front at the time they apply for the modification instead of first doing things over the phone.  To speed up the process of getting into the modification program sooner to lower monthly payments on a permanent basis, borrowers should have these documents with them prior to making the formal application with their lender:

1. Two most recent paystubs
2. An electronic form that allows a servicer to pull up a tax return online
3. Hardship letter in request for mortgage modification

The goal of the program is to qualify up to 4 million borrowers into the program that will result in lower monthly payments through 2012.  Homes must be owner occupied to qualify and the housing debt expenses need to be greater than 31% of the owner's income.  The end result of the home modification is a lower interest rate or an extended term of the loan and in some cases both.  Median savings as a result of the lower interest rates and the longer terms have been around $500.00/month.  After a 3 month trial phase of making on-time payments, homeowners enter into a permanent modification phase. 

Here is a quick look at home activity in Southeastern Minnesota for the month of December 2009 comapred to one year earlier. 

Closed (Sold) Transactions:

December 2009 - 65
December 2008 - 79

New homes (Listings) on the market:

December 2009 - 146
December 2008 - 162

Active Listings Still on Market at end of month:

December 2009 - 874
December 2008 - 860

Average Days on the Market (DOM)

December 2009 - 124
December 2008 - 112