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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


Mortgage:  $300,000

Principal and Interest$1,305.62

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


June 2013


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


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

Mortgage Application

NMLS# 450821  GA# 36837

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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.



Americans Squeezed by Higher Rents, Tight Credit

by Bruce Ailion

Americans Squeezed by Higher Rents, Tight Credit

By Michelle Conlin and Melanie Hicken

Thu Jul 5, 2012 1:01pm EDT

(Reuters) - One night last spring, David Hall returned home to his studio apartment outside Boston to learn that his monthly rent had spiked from $725 to $995.

It would be much cheaper for the maintenance manager to buy a nearby starter house than to stay put. But his mortgage broker told him that while his credit score was good, it was not high enough to meet banks' tough standards, he said. "I know if I walk into a bank, they are just going to laugh at me," Hall says. "So I'm stuck." He is not alone.

Five years after the housing bubble burst, the United States is in the midst of a housing affordability crisis. Home prices have fallen a third from their peaks, but many Americans cannot benefit because they cannot get a mortgage. With credit tight, many consumers have no choice but to rent. Others who can afford to buy are also renting, because they view real estate as a lousy investment. As demand has increased, rents in some cities have jumped by double-digit percentage rates.

Rents rose 1 percent to record highs in the second quarter from the prior period, according to real estate research firm Reis.

Just 4.7 percent of U.S. apartment units are vacant, the lowest level since the fourth quarter of 2001. Low vacancies are likely to push rents even higher, Reis said.

People with lower incomes have long struggled to find affordable housing, but many in the middle class are now hurting, too. Most personal finance experts recommend allocating no more of 30 percent of family income to housing, but nearly 40 percent of Americans are paying more than a third, according to the U.S. Census Bureau's American Community Survey. In New York City, one-third of households are spending more than half their pay on rent.

"We have falling incomes, rising rents and nothing but substantial upward pressure on those rents," says Chris Herbert, director of Harvard University's Joint Center for Housing Studies. "And nothing in the cards suggests it will turn around anytime soon."


Today's housing market is a buyer's paradise.

It is now cheaper to buy a home than it is to rent in virtually every major city in the United States, according to John Burns Real Estate Consulting.

But for many in the renter class, buying even a modest home is impossible because financing is so hard to secure.

Lending for home purchases hit a 12-year low of $404 billion last year, down from $1.4 trillion in 2006, according to trade publication Inside Mortgage Finance. That means mortgage credit is tighter than it was even before the housing boom.

This year, lending is expected to drop even more, according to Inside Mortgage Finance.

A recent Morgan Stanley research report states that the average credit score is 762 for a consumer securing a mortgage backed by government-sponsored enterprises like Fannie Mae. But 65 percent of Americans have scores below 750.

In other words, a disproportionate number of mortgages are going to people with unusually good credit. A perfect score is 850, and anything below 660 is considered subprime.

"Basically, access to credit for borrowers with less than spotless credit is severely limited," the Morgan Stanley report states. "A good chunk" of U.S. households are "cut off from mortgage credit on this count alone."

For people who can get mortgages, rates are at their lowest levels in several generations. Add that to the cheap home prices, and houses are at their most affordable since at least 1970, when the National Association of Realtors began tracking this metric.

Normally, high affordability translates into higher sales. And the housing market is showing some signs of recovery - the S&P/Case Shiller index of home prices had its third consecutive monthly gain in April. Last week, the NAR said pending home sales had matched a two-year high in May.

But any recovery has been tepid. The NAR said existing home sales had declined 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. That is 34.2 percent above the July 2010 bottom of 3.39 million, but far short of the 5.5 million pace that the NAR considers healthy.

"Home sales have just barely picked up from their cyclical lows, and that's because there are still constraints to borrowing," said Moody's Analytics economist Celia Chen.

Part of the lender pullback has to do with the stringent regulations Washington put in place after the housing crash, says Michael Fratantoni, vice president of the Mortgage Bankers Association. These rules put more of the losses from bad mortgages onto lenders, instead of investors or government-sponsored enterprises.

Then there is the climate of unstable home prices and a shaky labor market: "There's a risk that even a borrower with moderately good credit may fall behind," Fratantoni says.

Consumers who cannot buy must rent, and that is where many Americans are feeling the pressure. A rent index from real estate data provider Zillow shows year-over-year gains for 70 percent of the U.S. metropolitan areas, while its home value index rose in only 7.3 percent.

In the 12 months ended in May, rents rose 14 percent in San Francisco and 11 percent in San Jose, California, according to Zillow. Last year in Minneapolis, they spiked 11 percent even as home values sank 8 percent.

Only a few years ago, landlords in cities like San Francisco and New York were tossing in a month or two of free rent, sometimes with parking, to lure tenants into signing leases.

Today, applicants are showing up at apartment viewings with copies of their unblemished credit reports and letters of recommendation from bosses and prominent friends, in the hopes of snatching up a place to rent.

Equity Residential, one of the biggest apartment owners in the United States, has more renters with high credit scores than ever, Vice President of Operations David Santee said on an April conference call with analysts.

Demand for apartments is also higher because many potential buyers in their 20s and 30s want to stay flexible - home ownership is not as attractive as it was to earlier generations.

Still, plenty of people would prefer entry into the ownership class. Last spring Rosemary Wynder, a physician order specialist, found her rent shooting up. She decided to buy a house.

But a bank glitch in February had caused one late car loan payment, dinging her credit score. The Utica, New York, resident has been unable to straighten out the mistake, and five banks have rejected her for a mortgage.

"I've been crying," says Wynder. "I've been praying."

Best rates - At 60 year lows!

by Bruce Ailion

Mortgage rates declined slightly enough to officially hit new all-time lows. Some perspective is in order though. Certain lenders' rates are unchanged on the day, and some are even slightly higher, but the average moved lower. The improvements from yesterday were seen in the form of lower borrowing costs for those same rates. Bottom line: Best-Execution remained at 3.625%, but just got a bit more affordable.

I am often asked is this the best time to lock in a mortgage interest rate?  I am reminded of the limbo and the question “how low can you go?”. Rates simply just can’t drop much more from here.  For more than 60 years there has not been a better time than now.

The possibility of a sharp upward spike in response to unpredicted or unscheduled events remains a risk.  The risk/reward matrix for floating a historic bottom is generally negative.


  • 30YR FIXED - 3.625%
  • FHA/VA -3.5% - 3.75%
  • 15 YEAR FIXED - 3.00%
  • 5 YEAR ARMS - 2.625-3. 25% depending on the lender


Displaying blog entries 1-5 of 5

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The Ailion Team
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Marietta GA 30066
Fax: 404-480-8448

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