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Showing posts from September, 2022

Cause to Pause

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Rising mortgage rates are causing some would-be buyers to pause their decisions until they determine whether rates are going to come back down.   While it may be possible, the probability is that prices are going to continue to increase. On December 23, 2021, the 30-year fixed-rate, according to Freddie Mac, was 3.05% and is at 6.29% as of September 22, 2022, a 3.24% increase. On a $360,000 mortgage, the principal and interest payment went from $1,528 to $2,226.   The $698 difference represents a 46% increase in the payment. It seems understandable to pause and see if rates will come down again, especially since they went up so fast, but it probably isn't going to happen anytime soon based on the Fed's position on controlling inflation. The fact that inventories are growing slightly, and market times are increasing doesn't negate that supply cannot keep up with demand and homes are continuing to appreciate, albeit, not as much as they did in 2021. If a person

Five Factors that affect the Sale of Any Home

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Owners directly control four of the five factors that affect the sale of any home: price, location, condition, terms, and the agent you select.   The one thing you can't control is the location of the home, but you can adjust the other factors to compensate for failings. The seller controls the price of the home which determines its positioning in the marketplace.   If is priced too high, it will take longer to sell and, in some cases, for less than what it should have sold for because when it doesn't sell immediately, it is assumed that there must be an issue with it.   If it is priced too low, the owner will not realize as much of their equity as they should. Not pricing the home in the proper search brackets could keep the property from being exposed to potential and likely, buyers.   For example, if a home is priced at $399,000 to follow an age-old retail marketing principle, many of the most likely buyers will never know about it because they are searching for

Gift Amount Increased for 2022

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The limit for tax free gifts for 2022 is $16,000 and no tax is due to the donor or the donee.   There are provisions that would allow gifts higher than this amount providing the total lifetime gifts above the annual exclusion of $12.06 million for 2022 has not been met. The donor and donee can be separate persons so that the aggregate tax-free gift for one-year amounts to more money.   For instance, a father and mother can gift $16,000 each to their married son in 2022 and an additional $16,000 each to the daughter-in-law for a total $64,000. If the son and daughter-in-law used the money as a down payment to purchase a home, depending on how recent the gift occurred, the mortgage company might require a gift letter from the parents stating the amount was a gift and is not expected to be repaid.   Lenders may ask the exact amount of the gift, where it came from and the relationship involved. Family members and friends with financial resources can become the catalyst that al

Housing Affordability - Call to ARMs

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Housing Affordability is negatively affected by both rising home prices and mortgage rates.   A 20% increase in nominal home prices and a 2% increase in the 30-year fixed rate mortgage since January have contributed to a 46 point drop in the NAR Housing Affordability Index. The Index was 143 in June 2021 and is 98.5 in June of 2022. The Housing Affordability Index indicates whether a median income family can qualify for a mortgage loan with a 20% down payment and 25% qualifying ratio for monthly housing expenses to gross monthly income. 100 points is considered the tipping point.   As the Index rises above that point, housing is considered more affordable and as it declines, it is considered less affordable. With affordability threatening to limit buyer's ability to purchase, more borrowers are considering an adjustable-rate mortgage.  For the last ten years, fixed-rate mortgages have been so low, only about 3% of borrowers used adjustable-rate mortgages.   There is