THE RENTER'S TRAP

There are many benefits to homeownership, one of top ones, is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage.

Over the last five years, a typical rent rose 15%, while the income of renters grew by only 11%. If you are currently renting, this disparity in growth could get you caught up in a cycle where increasing rents continue to make it impossible for you to save for a necessary down payment.

Homebuyers, who were able to purchase their home and lock in their housing costs, were able to grow their net worth as home values have increased and their mortgage balances have gone down. 

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.

-Picture It Sold

Four Reasons To Consider Buying A Home Now

If you are planning on becoming a homeowner, or moving up to the home of your dreams in 2015, here are four great reasons to consider buying a home now, instead of waiting until spring.

 

1. Prices Will Continue to Rise

The bottom in home prices has come and gone..

  Home values will continue to appreciate for years. Waiting no longer makes sense.

The projected appreciation in home values over the next five years is expected to be between 11.7% (most pessimistic) and 27.5% (most optimistic).

 2. Mortgage Interest Rates Are Projected to Increase

An increase in rates will impact YOUR monthly mortgage payment. 

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of 2015.

 

3. Either Way You are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But, what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, better schools, need more elbow room, or you just want to have control over renovations, and paint color - maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

-Picture it Sold

The Year of the Condo

If you were lucky enough to buy a condo last year - either as an investment or a place to call home - you just enjoyed a 23 percent increase in property value on your investment. Most everyone knows about today's low interest rates, but man... when our market mixes in low inventory and plenty of buyers almost begging to purchase, you ARE battling multiple offers.

It's fantastic for people with a condo to sell, but buyers are faced with a very fierce competition. Losing out on a few (or 10) offers before you get an offer accepted is the norm in this environment, so you must be patient.

A life-long resident of the Conejo Valley, I witnessed the mountainous prices before the big crash and remember many friends who didn't purchase who wished they would have. In waiting for what they believed to be the perfect home, they soon found themselves suddenly priced out of the market.

This past winter was the start of the new real estate cycle. I don't have a crystal ball, but speaking from experience - I advise you to buy something you can afford that is acceptable for the time being to get your foot in the door while you can. Let your property appreciate, sell a couple of years later and take the equity to roll into your next purchase. Your other option is to wait for your perfect home - while time and prices pass you by - or throw your money away on rent. Know this: A condo that was purchased at $250,000 last year is now offered for sale at $315,000 WITH multiple offers... something to think about.

If you are a first time buyer, or thinking about investing - do it now. I only see rising prices, and who knows how long the rates will stay THIS low.

Gail Dworkin, REALTOR - gail.dworkin@century21.com

Current Mortgage Rates

Loan Type          Today         Last Week

30 yr fixed           3.63%            3.72%

15 yr fixed           2.88%            3.03%

30 yr fixed refi     3.62%            3.76%

15 yr fixed refi      2.87%            3.08%

30 yr jumbo         4.04%            4.09%

5/1 ARM refi       2.96%            3.25%