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Hey "Fence Sitters"--Why buying and selling NOW matter! The dangers of increasing of interest rates!

by Eric Stark - Senior Mortgage Consultant

 

Waiting to buy a home between now and even a few months from now can cause a buyer to incur thousands and even tens of thousands dollars in additional interest on a loan over time.  While home prices are the highest they have been in years thanks to a rebounding economy, new buyers and sellers are losing a net benefit of this increase as a result of increasing interest rates.  For example, in early May, interest rates were as low as 3.25% on a 30 Year Fixed.  By the end of June, they were at 4.5%.  If you were borrowing a $300,000 mortgage, that would equate to the following loss in payment in interest:

 

May 2013

Rate3.25%

Mortgage:  $300,000

Principal and Interest$1,305.62

Interest Paid over 1 Year:  $9,750blog-rising-interest-rates

 

June 2013

Rate4.5%

Mortgage:  $300,000

Principal and Interest$1,520.06

Interest Paid over 1 Year:  $13,500

 

As you can see, the payment INCREASED by $215 a month.  That is the equivalent of losing $50,000 in purchasing power/loan amount.  That means that someone’s whose maximum sales price range of $300,000 can now only qualify for $250,000.  On top of that, they cost themselves over $3,750 in additional interest per year.  In 5 years, that’s almost an extra $20,000.  In 10 years, that close to $40,000.  So quite a lot over the life of a loan. 

 

Even if prices somehow go back down, let’s say by $20,000, but interest rates still increase even by half a percentage, you’re still losing money over the net sales gain in price on a home versus extra cost in rate.  So for example, see below:

 

June 2013

Rate 4.5%

Mortgage:  $300,000

Principal and Interest$1,520.06

Interest Paid over 1 Year:  $13,500

 

 

January 2014

Rate5%

Mortgage:  $280,000

Principal and Interest$1,503.10

Interest Paid over 1 Year:  $14,000

 

The payment might be slightly smaller on the principal and interest, but your interest over the life of the loan is more.  So you lose in the end even though you had a borrower less.  You still paid more.

What this shows us is that as rates climb, in order for buyers to purchase in the higher price point categories ($300,000 and more), sellers are going to have to reduce their costs to bring more offers in the mix.  On top of that though, when the seller goes to buy their new home, they are going to lose more out of their pocket because they are paying more interest over time.  So the time to sell is now while the market is good and rates can still afford a few more buyers in that price range.  Waiting for later can only cost sellers more in every part of the equation. 

 

 Eric Stark

Senior Mortgage Consultant

C: 770-231-1230

F: 678-264-1577

1000 Mansell Exchange West, Suite 270

Alpharetta, GA. 30022

Eric.Stark@Supremelending.com

Mortgage Application

NMLS# 450821  GA# 36837

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Georgia is the Most Expensive State to Operate a Car

by Bruce Ailion

Georgia is the most expensive state in which to own and operate a motor vehicle at $4,233 annually, according to a new survey. Bankrate.com, a personal finance web site, tallied the cost of insurance, gasoline, taxes, fees, and car repairs in all 50 states.  This amount is comprised of $1952 in taxes and fees, $1,129 in Gasoline, $767 in Insurance and $385 in repairs.


Georgia,  is so expensive because  its sprawling development causes computers spend a great deal of time in their cars.  This is compounded by the lack of public transportation options causing travel delays over crowded roads.

“Those long commutes lead to above-average gasoline costs and insurance rates," the web site said.  Forbes ranked Atlanta 7th in the nation for daily work commutes at 34.3 minutes each way, 82% of these involving a single driver,

Georgia also has the highest state auto taxes and fees in the nation.

Rounding out the top ten most expensive states are California ($3,966), Wyoming ($3,938), Rhode Island ($3,913), Nevada ($3,886), Arizona ($3,886), Kentucky ($3,626), Massachusetts ($3,625), Virginia ($3,622) and Nebraska ($3,571).

Buying real estate property by obtaining a mortgage – Some steps you need to follow

by Audric Stevens- Financial and Contemporary writer


Do you want to buy real estate property? Well, if yes, then you need to have sufficient money for it. Possibly, you will not have the lump sum amount and thus, you require obtaining a suitable mortgage. These days there are several lenders who would offer you the loan at a reasonable rate. Thus, make sure you take out the mortgage rate at a low rate so that you can pay it off on time.

5 Steps to purchase real estate with a mortgage loan

 

You may take out a mortgage loan for purchasing real estate. Read on to know about the 5 steps for it.

 

  1. Know the exact value of your property - While searching for real estate is a daunting task, you should still buy one for yourself. It is important that you know the actual price of your real estate property. This will enable you to obtain the right mortgage loan for purchasing your property. Thus, you will be able to pay off the loan within the definite time period.

 

  1. Compare between the different home loans - When you want to obtain a home loan for your real estate, you should make it a point to compare between the different home loans. Since the different loans have different rates, try to choose the one that is affordable so that you may be able to repay it on time. Thus, you can live safely on your property.

 

  1. Shop for as many lenders as you can - If you come across a lender who will offer you the mortgage loan as per your requirement, you should not stop looking for the other lenders. Try to shop for as many lenders as possible so that you get to know what the different lenders are offering to the customers. This will enable you to take out the loan from a good lender.

 

  1. Seek help of a real estate expert - If you do not know much about real estate market, you probably will not be able to understand which property you should buy. As such, you can seek help of a real estate expert who will guide you through the entire process. He will also suggest you some good property that may suit you the best.

 

  1. Hire an agent to choose the right home loan - You may appoint an agent who will help you find the right loan for buying your real estate. You need to talk to your agent and tell him about your exact requirement. Since he deals with innumerable customers everyday, he will be able to suggest you with the most suitable mortgage. You will have to pay a certain amount of fees to your agent for helping you find the right property.

 

If you want to purchase real estate property but don’t have the needed bucks, see that you take out the right loan. Thus, you will have to follow the above-discussed steps in order to buy your real estate with a home loan.

 

Audric Stevens is a financial expert and a contemporary writer. He is involved in various online activities through which he imparts financial lessons to people with diverse needs. In addition to that, he is closely working with the ‘debtconsolidationcare community’ at the moment that has several interesting and prudent financial tips for people to use. If you like this article please follow us here.




 

Real estate mortgage tips for the novice home buyers- Strike the best deal

by Audric Stevens- Financial and Contemporary writer

Who doesn’t dream of owning a home in the heart of America? In fact most Americans nurture the dream of homeownership but very few are able to realize it. If you too have the same dream of buying your own home and let go of the hassles of renting an apartment, you’re not alone as there are hundreds of people who are going through the same situation. Buying a home can become an intimidating and a daunting task if you’re not aware of the steps that you should take in order to grab a home loan within your means. Home mortgages are secured loans that you have to take out by pledging your home as collateral to the loan and hence if you fail to make timely payments on your home loan, you will run the risk of losing your real estate property to a forced foreclosure. Here are some vital essentials that you need to take into account while buying a home in the United States of America.

  • Give a glance at your credit score: The most important document that the mortgage lenders will check is your credit score. Your credit score is a 3-digit number that speaks about your financial health, the way you’ve managed your finances in the past and whether or not you have a good and positive record of making timely payments. If you have a good credit score, it is most obvious that this will imply that you’ve been regularly making your payments in the past. But when you have a poor credit score, this will speak against you and will therefore bar you from getting a new line of credit at an affordable rate. So, improve your scores before approaching a mortgage lender.
  • Repay debts to reduce your DTI ratio: Apart from the 3-digit credit score, the DTI ratio is something that is also checked by the mortgage lenders.  The debt-to-income ratio gives the lender a ratio between your gross monthly income and the total monthly expenses that you make from your income. The more is your DTI ratio, the lesser will be your chances of snag a mortgage within your means. Therefore, you should either pay off your debts immediately or look for ways to boost your income in order to lower your DTI ratio. Take this step before approaching a mortgage lender.
  • Save enough money for paying the exact money down: You should save enough money for paying down the exact amount while taking out the mortgage loan. The required down payment is 20% of the loan amount that you’re taking out and unless you pay down the exact amount, it won’t be possible for you to avoid paying the PMIs or the Private Mortgage Insurance payments. The insurance payments will unnecessarily increase your monthly payments and therefore you should try to avoid it by saving enough money for the down payment.

Therefore, when you’re all set to seal the deal with a mortgage loan, you should take into account the above mentioned points. Don’t forget to test your shopping skills by getting multiple quotes from multiple lenders as without this you might just end up with the wrong loan. Compare the interest rates, closing costs and monthly payments before choosing the final one.

 

 

Displaying blog entries 1-4 of 4

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Marietta GA 30066
404-978-2281
678-760-6266
Fax: 404-480-8448

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