Interest Rates

Interest rates affect our buying power! They don’t change fast or dramatically, but they have been absolutely great and they really only have one way to go from here. As you read in my recent market trends update blog, the Fed has announced changes forthcoming in October that are expected to increase interest rates.

If you would like to calculate your payment (principal and interest), plug this formula into Excel and adjust 4.3% to the actual interest rate you’ll receive.

=PMT(4.3%/12,30*12,-Price)

Don’t forget to add a monthly taxes and insurance amount for your true payment. I also recommend setting aside some home maintenance reserves!

Interest rates are a hair higher as of September 15, 2014, from Idaho Central Credit Union (ICCU)

July 23, 2014 Rates from Idaho Central Credit Union (ICCU) https://iccu.mortgagewebcenter.com/

If you’d like to inquire into the rates posted above, or get pre-approved to buy a home, I would recommend contacting Dave Rusk at Idaho Central Credit Union.

Try NHS.

If you have not been able to get approved to buy a home, there are some unique programs available through NHS Neighborhood Housing Services that helps renters turn to owners. NHS also helps people refinance to prevent foreclosure. Find them on Facebook at https://www.facebook.com/NHS.Idaho?ref=ts&fref=ts.

In addition to foreclosure prevention and lending, NHS brings us Paint the Town and Rake up Boise each year. Their focus is housing related, and includes affordable home building and creating sustainable housing options for under-served populations. This newly constructed home in Garden City is one of theirs http://imls.paragonrels.com/publink/default.aspx?GUID=e7d7cf8e-087f-40f5-af1f-deb8ce1faf0d&Report=Yes

I find NHS to be an organization that truly helps Foster Boise. I support their endeavors, sit on their board and would be happy to introduce you them through one of their free lunch “Home Matter Tours.” NHS is always seeking volunteers for their fun, community-focused events and supporters and I’m happy to connect you.

Sincerely,

Shana Foster Moore,

Your resource for market trends, connections and real estate updates!

Contact me if you do not receive a monthly digest of blog updates delivered straight to your in box! You also can find me on Facebook at https://www.facebook.com/shanafostermoorerealestate.

Know Your Market!

The indicators are in! Real estate and housing market trends in Boise, Idaho and Ada County are looking good, with eye-catching data points in pricing and interest rates.

The Ada County Association of Realtors predicts that the third quarter of 2014 will be our recovery quarter,  that puts us back ahead of last year.

The Fed has plans for the fourth quarter that likely will affect mortgage interest rates starting in October. They are exiting “quantitative easing,” which has received credit for low interest rates and reviving the housing market from the 2008 crash, according to NPR‘s recent Morning Edition.

When the inevitability of increasing interest rates has been examined in our previous blog posts, Dave Rusk of Idaho Central Credit Union reminded us that these things happen slowly. On a $200,000 home, a full percentage point increase in interest rate would affect the monthly payment by around $80. Interest changes in much smaller increments.

Your Up and Down Market Trends Update

You’ll notice that sales falls into two categories. That’s because sales are up in homes that fall in the most popular price points, but down overall.

Up!

• Prices are up from last year in both new and existing homes.
• The new home median price was up 22% higher this June at $325,000 compared to a 2% increase in the median price for existing home $199,900
• The number of homes for sale is up 4% from May 2014 and a whopping 32% from last year, with 2,789 houses on the market in Ada County.
• Sales are up in homes at the most popular price points $120,000 – $200,000 and $300,000 – $400,000 from last month.

Source: Ada County Association of Realtors

Down!

• Pending sales are down from last year for the eleventh month in a row. At 126, they are 18% lower than last year.
• Sales are down 2-3% overall, when all price categories are considered, compared to last June and last year-to-date.
• Inventory duration is down 5% from last month to a 3.5 month supply of homes currently on the market at current rate of sale.

Source: Ada County Association of Realtors

Static.

• Days on market are 46 – just like last June and one day less than last month.
• Interest rates also haven’t moved much . . .  for now.

Thanks for reading and allowing me to keep you up-to-date on your local market price trends, housing trends and market indicators. Please don’t hesitate to contact me for a specific home pricing evaluation.

Sincerely,

Shana Foster Moore

Your Local Boise Real Estate Connection

Interest Rate Update

It’s a great idea to keep your eye on interest rates for so many reasons, but especially if you’re keeping your eye on the housing market.

National rates are still really good – in the 4′s, for a 30-year-fixed loan.

Source: Bankrate.com

I recommend that you find local rates, which may run a little lower than the averages above, and get pre-approved, through a local resource. I like Dave Rusk at ICCU for his service, as well as the unbeatable rates he consistently provides. To compare, today’s rates at ICCU are listed at 4.375 for a 30-year fixed loan.  https://iccu.mortgagewebcenter.com/

Keep in mind, interest rates affect your monthly payment, as well as the house you can afford. I always suggest checking into a pre-approval even if you’re still waiting for your credit to improve. It’s the first step in the process, and one that good lenders are eager to take with you, even if you’re “not really serious right now.”

Once you are serious, you can compare rates between a mortgage broker (who has access to loans from many different banks) and Idaho Central Credit Union (ICCU) or your bank of choice. Banks underwrite loans in-house and aren’t sourcing them, like mortgage brokers, although it’s common for them sell the loan once it’s in effect.

With a few years between us and the big crash, many people are closer than they may think to being “approvable.” As spring approaches, don’t write-off your ability to buy until you’ve verified your options. My previous, in-depth blog entry reveals some of the waiting periods following issues with distressed properties. http://fosterboise.com/financing-first-and-following-distress

Sincerely,

Shana Foster Moore

Your local, Boise Real Estate Professional

A Wavy Market

The local market trends I’m seeing on a micro scale are a series of small ups and downs, acting like waves. These waves flow within an upward marcro trend that we’ve been examining in our most recent blogs about rent and interest rates.

What it Means for Sellers

When it comes to pricing homes for sale in Boise, the ups and downs create a need for careful calculations aimed at a moving target. My partner Sheri B. and I have been using each other to cross-check our price point calculations and incorporate additional expertise into the prices we set. (We call that “twice the service.”)

Source: Ada County Association of Realtors

What it Means for Buyers

In terms of buying a house in Boise, I continue to maintain that any home that has been on the market for longer than a couple of weeks is fair game for an offer below the asking price. Practical advice here includes expanding your price-range at least 10% higher than desired, and offering 10% under asking for homes you’d like to call your own.

Engineers and data lovers

The latest data from the Ada County Association of Realtors sheds a data-based spotlight on these small waves of ups and downs in Boise’s real estate market trends, offering news considered good, bad and neutral.

Homes are increasing in price. Year-to-date sales are up and dollar volume is up.  Inventory is a challenge with seasonal decreases in effect, but is better than last year. Boise maintains its “better-than-average recovery pace.”

Source: Ada County Association of Realtors

December is predicted to be unpredictable, as anything goes, however it’s poised to lead us toward a 13% overall increase in sales for the year. For two months, local real estate sales have been down compared to last year’s sales in October and November. Single family home sales in November 2013 were 548 in Ada County, a decrease of 3.3% compared to November 2012.

 Average news

“The median price in November was $205,700, an increase of 16% from last year and above the national average of  $199,500 according to NAR’s most recent report,” reports Mark Lebowitz of the Ada County Association of Realtors.

Source: Ada County Association of Realtors

Median prices have sat above 200,000 for five consecutive months. New homes are up in price by 10%, putting the new home median at $274,171. Existing homes were up 15% compared to last year at this time, bringing their median to $185,000.

When compared to the median family income of $67,519, our median home pricing is considered affordable. The same cannot be said for the rental market pricing, as we examined in our recent rental market blog.

Here’s our monthly up and down update, depicting Boise’s real estate market trends:

Up

• Year-to-date sales are 7,385; up 14% over 2012 YTD sales of 6,471.
• Dollar volume for the month (131 million) and year $1.7 billion
• Median prices are up compared to national median prices and last year.
• New home sales are up compared to last month, but down 14% compared to November 2012.
• REO or bank owned sales were higher than short sales for the first time this year, and total distressed properties crept up over 10%, barely.
• Homes priced between $120,000 to $160,000 were up by 16 homes, where all other inventory was down.

 Down

• The number of houses available for sale is down for the third month in a row, but still up from last year at this time by 21%.
• Single family home sales this November was down 3.3% compared to Nov 2012.
• Sales decreased 11% from October (which is 2 points more than historically average decreases).
• Pending sales this month (831) were down compared to last month and last year.

Static

• Days on market in November averaged at 52, compared to 51 for the year.
• Market influencers in Boise, such as job creation, population growth and quality of life maintain their influence on our above-average recovery.

Let me know how if you’d like to talk about how today’s market supports your real estate ideas and goals.

Sincerely,

ShanaFosterMoore@gmail.com
Your Local Boise Real Estate Professional

Here’s a chart with updated mortgage interest rates, for reference in your real estate considerations and mortgage payment calculations.

Chart data courtesy of www.bankrate.com/finance/mortgages/current-interest-rates.aspx

Of Further Interest (On Interest Rates)

In follow up to our article Time to Take Interest in Interest Rates, which contained valuable information on interest rates and quotes from the Feds and CNN Money, we’re going deeper. This month, we’re taking a look back in time and into the future.

In July, our local source and lender, Dave Rusk at Idaho Central Credit Union (ICCU), told us we would be right where we are – around 4.5%.

“My guess would be [rates] stay around the 4.5 area for the rest of the year,” Rusk estimated, adding that the super low days are behind us. “Rates are not going back to 3.3 or 3.5%.” He also said we’d not experience any other major changes for the year, aside from that percentage point jump we experienced in Spring. Kudos Dave, you we’re spot on!

As reported last month, Frank Nothaft told CNN Money he expected rates “to hit about 5% by mid-2014.”

The Wide Angle

Expert and technical analyst Louise Yamada points out that the current generation hasn’t yet lived through an era of climbing interest rates, as the last one ended in the early 80s. She made quite the chart, looking at interest rate trends over 200+ years, dating as far back to the days of George Washington’s lifetime.

Technical Analyst Louise Yamada’s 200-year interest chart. Source: Yahoo! Finance.

Brave enough to make predictions

Yamada predicts, and depicts, that we will see the start of higher interest rates trends that will last for the next couple of decades. “Our 32-year declining market for bonds appears to be coming to an end, based on historical indicators of rising rate cycles and reversals,” she told the Yahoo Finance team.

Zillow chief economist Stan Humphries told the Boston Business Journal, “Interest rates will rise to 4.5 percent by the end of 2015 and they will be at 5 to 5.5 percent by mid 2016. By then, we expect the economy to be doing much better and we will be trying to soak up liquidity… We will see inflation rise, pushing mortgage interest rates up.”

The National Association of Realtors also predicts increasing interest rates. Source: Ada County Association of Realtors

Housing market reactions

In terms of home prices, interest will affect what a buyer can afford, what an investor is willing to pay and the overall supply, demand and capital flow of the marketplace.

Interest could hold housing prices down, some say. Buyers may be prompted to buy lower-priced homes or make larger down payments, to achieve lower monthly payments.

What’s it mean for us?

If the first step is getting pre-approved to buy a home, and the second is finding one, then the third is locking in your interest rate. This doesn’t change, despite the upward shift in the trending direction of interest rates.

Dave Rusk will look at the most recent couple of weeks when advising clients on a good time to lock in a rate. It’s hard to predict. On a day-by day bases, the change could be 1/8th of a percent. He watches the ten-year yield, available on any financial site, to monitor the changes and help buyers secure the best rate.

As much as I’ve enjoyed sifting through them, I’m not making any predictions, other than more good home-buying and -selling experiences for my clients. Call me if you’d like to share one.

Sincerely,

ShanaFosterMoore@gmail.com
Your Local Boise Real Estate Professional

Why all this recent interest in interest?

Interest rates affect the housing market and they are changing. Both indicators and experts suggest they will slowly continue to climb.
In mid September, however, interest rates took a slight dip, back to 4.5%, from 4.57%. Still, this is up from May of this year, when rates were in the 3-percentage range.

The change in interest from January to mid-September translated to an extra $132 a month in payments on a $200,000 30-year loan. Source: Freddie Mac via money.cnn.com

This difference of more than one percentage point is somewhat drastic in the interest rate world. The general consensus, based on talk from the Fed, is that nothing else drastic should be expected this year (with interest rates anyway).

Instead, talk is shifting to gradual rate increases and comparisons to somewhat recent history or “normal times.”

“Despite recent increases, rates are still low by historical standards. During the housing boom years, they typically ranged between 6% and 7%,” – Frank Nothaft, Freddie Mac’s Chief Economist

Freddie Mac’s chief economist, Frank Nothaft told CNN Money he expected rates “to hit about 5% by mid-2014. That’s an increase of less than $24 a month for every $100,000 borrowed – enough to weed out borrowers who are struggling to afford homes but not enough to impact overall demand,” according to CNN Money.

If you find this interesting, and would like a digest email of my monthly blog headlines to hit your in box, please sign up at the top left of FosterBoise.com. If you’d like to receive real-time MLS listings for a certain area, price or housing type, shoot me an email. In the meantime, stay tuned for next month’s follow-up article on interest. It will delve deeper into the topic.

Sincerely,

ShanaFosterMoore@gmail.com
Your Local Boise Real Estate Professional

The low down on DOWN PAYMENTS

If you took out a loan in the days of “no-doc” or “low doc” loans, the number of documents you are asked to produce when you apply for your next loan might surprise you.

Conversely, after jumping through all the extra hoops and rounding up the documents needed to secure financing, you might find it even more surprising that a 20% down payment is not a prerequisite for a loan. In either event, with all these hoops, a loan officer who makes jumping easy is a strong asset to your team. I refer clients to Dave Rusk at ICCU because he shares my work ethic of making it easy while making things work for you (drusk@iccu.com).

Low Down Payments

“A lot of people think a conventional loan requires 20% but that’s a misconception. Zero down is attainable and five percent is very reasonable,” shared Dave Rusk at Idaho Central Credit Union (ICCU). Interest rates are most favorable at 20%, and increase slightly in 5% increments, at 15%, 10% and 5% down.

“Idaho Housing offers zero down programs for both a conventional and FHA loan with a credit score of 680 or higher,” Rusk added.

Conventional loans tend to require at least 5% down compared to FHA’s typical 3.5% (however fees and mortgage insurance can add costs with FHA). Non owner-occupied investment purchases tend to require more, with 25% being standard.

Other obscure zero down payment resources listed on the AOL Real Estate blog include:

NFCU Navy Financial Credit Union which still underwrites zero down loans nationwide for active duty or retired military or a civilian and some government employees. Little known USDA mortgages also can be zero down in widely-defined/suburban rural development areas.

Source: www.FosterBoise.com (reuse only with source attribution)

Low Income and First Time Buyers

Idaho Housing has some compelling programs for lower-income homebuyers across the state, as well as buyers who have not owned in the last three years. Eligibility and programs can be checked on their web site. They have two programs that allow zero down purchasing.

Source: Idaho Housing and Finance Association web site.

Common Misconceptions

About Interest, Down Payments, Mortgage Insurance and Refinancing

People believe that interest goes up as down payment goes down. It doesn’t have to. Dave Rusk cites this as another one of his competitive advantages.

“ICCU clients get the same rate at 5% or 50% down, however that’s kind of our niche,“ Rusk says. In much of the lending industry, interest rates climb in proportion to a higher loan-to-value ratio.

Mortgage insurance may be required with a lower down payment, although sometimes it’s low enough to make sense. “Our mortgage insurance rates are a lot lower,” Rusk says, citing the bank’s low default rate, which brings access to more compelling mortgage insurance rates (e.g. $15 – $43/month on a $100,000 home).

• Interest does not have to go up as down payments go down
• 5% and lower down payments are available
• Mortgage insurance rates are not the same with different lenders
• Credit score affects rates. A 650 score can access the rate a 740 score would access, depending on the variables.
• The length of your mortgage does affect mortgage insurance rates (15-year versus 30 year)
• Refinancing is worth investigating, if you haven’t looked into it. Many buyers can lower their interest rate, or mortgage term at no cost.

Please don’t hesitate to contact me with questions, or if you’re thinking about buying or selling a home or you know someone who is. I treat your referrals right!

Thanks for reading.

Sincerely,

ShanaFosterMoore@gmail.com
Your Local Boise Real Estate Professional

Financing First.

Financing is the first thing to investigate in real estate, primarily because offers aren’t considered “legit” anymore, unless they’re accompanied by a pre-approval letter. Besides being pre-approved, talking to a lender early helps you uncover what you can afford, based on the estimated mortgage payment for a given price.

As a recent case study demonstrated, interest rates significantly affect payments can be a true dealmaker or breaker. A 1.25% difference in interest rates practically equalized the monthly payment for a home that was 14% (or $22,000) more expensive, as shown in my payment breakdown chart at http://fosterboise.com/know-your-market-piti-party. If prices are low but rising, and interest rates are great, all indicators point to “buy now.”

Give Me Some Credit, Man.

But, is financing feasible? Good members of our local Boise community have endured some hard hits to previously spotless credit or been part of the massive numbers of distressed sales we’ve seen (that are thankfully decreasing at last as we depicted last week insert link to distressed inventory downturn here that opens in a new window. Be sure to tag link appropriately as internal links are a huge SEO booster). The rest of this blog is for you.

“Tons of people are on the borderline right now, who may not realize they could get qualified,” divulges Dave Rusk, at Idaho Central Credit Union (ICCU), a lender who has proven worthy of my referrals. Low down payment options also tend to surprise his clients –as low as zero.

Source: FosterBoise.com

Waiting Periods After Distress.

Post-short sale purchases are on the rise. “I’ve definitely seen more this year than last year. More and more, people are asking “when can I get in?” Rusk reports.

I dug up the chart below to reveal Fannie Mae’s answer to that question. It didn’t appear to be a document prepared for public consumption, and isn’t high-quality resolution, so this is one chart that I won’t caption with a source. http://bit.ly/LoanTiming.

Notice that 3 years after short sales, FHA loans open the real estate market back up to borrowers. It could be sooner in conventional loans with 20% down or if extenuating circumstances (medical illnesses or death) caused the short sale.

Boise Market Indicators

I would speculate that the number of buyers will increase as the market opens back up for the people who have had a “significant derogatory credit event,” as Fannie Mae calls it.

Rusk agrees. “There’s a lot (of formerly distressed, future buyers) out there that we can see. I’m sure we’ll start hearing a lot more from all those people who are ineligible to buy now, as those timeframes start getting close.”

So while the number of distressed home sales are decreasing, the number of loans being issued to post-distressed market survivors is increasing. I’d speculate that this could help sustain that double-digit increase in home values we’ve been experiencing. FINALLY, some appreciation! I’ve been waiting for this for years and would love to help you experience it through a purchase or a sale consultation– call me.

Thank you for all the appreciation you’ve shown me, simply by reading! Sincerely,

Shana Foster Moore,
Your Local Boise Real Estate Professional

Payments

Monthly mortgage payments, which we affectionately refer to as “PITI,” are staying at accessible levels for homeowners, aspiring homeowners and investors alike.
PITI – it’s not the feeling that you get when you pay each month, rather it’s Principal, Interest, Taxes and Insurance –the four items that comprise your monthly mortgage payment.

Home prices are still affordable and not far above that bubble-bursting bottom. After several years in decline, assessments may start to show increasing value and drive taxes up, however this is a slow process. The most significant influencer of the day…interest.

INTERESTing.

National Average Mortgage Rate 1963 – 2012

Source: Reproduced with the permission of Mortgage-X.com

Interest rates are within easy reach of an “all-time low” status. Interest significantly affects monthly payments (see case study below for a real-life example provided by one of my clients and readers).
Experts at Zillow.com speculate that interest rates will remain compelling through 2014.

Case Study:

I sold a home in 2011 for 160,000 and the buyer’s interest was around 5% with 20% down. Taxes and insurance stayed constant around $200/month. That same home today would be priced about 14% higher, but require less money each month due to the impact of today’s lower interest rates (buyer could get 3.75% now).

2011 Value:160,000; interest 5%; Payment: $887/month

2012 Value: 182,400 (up 14%); Interest 3.75%; Payment: $876/month

Of course to keep all else equal, we can’t forget that the 20% down payment means $4500 more at close with the price increase. Fortunately, ACAR reports that closing costs are down 7% due to buyer-friendly Federal Regulations. I usually budget $3,000 – $5,000 for closing costs, although the national average is $3754 according to CNN Money:http://cnnmon.ie/QZd4lp

All this makes for a good time to check the box, if buying a home is on your “to do” list. Please don’t hesitate to let me know how I can help you understand the market or become a buying or selling part of it ShanaFosterMoore@gmail.com.

Thanks for reading! Sincerely,

Shana Foster Moore,
Your Local Boise Real Estate Professional