First, the good news. Rates on 30 year mortgages matched the lowest level in decades by falling to 4.32%. According to Freddie Mac, this is the lowest rate since 1971. The rate on 15-year fixed loans fell to 3.75%, the lowest since records began in 1991.
The 15-year rate is particularly good news, because the 15-year term will result in a big interest saving and allow you to build equity faster. If you are buying a home or refinancing, I recommend you lower your cost of borrowing by seeing if you can afford the payments under a 15-year loan. You will be pleasantly surprised at how quickly the loan is paid down due to the shorter term.
Other good news comes is that nationally the number of contracts to buy homes in August rose for the second straight month.
Here in Arizona, the news isn’t as good. The median price of all resale homes sold dropped further from this year’s high of $135,000 in April to $122,000 for August. June was $133,000 and July’s median number was $129,000. Recently foreclosed homes were the poorest performers, indicating that fewer investors are willing to pick up those homes. The median price of metropolitan Phoenix area condos fell from $65,000 from $77,000.
But its not all bad. The affordability of homes and condos has never been better. If you can’t afford to buy now, you probably don’t have a job! Everybody else should give home ownership a try. Don’t wait until prices and interest rates rise when you might not be able to afford it.
Other good news is that the Arizona legislature passed a bill that prevents resale fees – a sum paid to a developer when you sell your new build. Often that sum equals a one or more percent of the sales price. Preventing developers from getting into your wallet is good as it will increase your net when you sell.
Finally, Bank of America has joined four other major lenders in delaying starting or completing foreclosures, although B of A is the only lender to do it nationwide. Errors in the foreclosure process are said to be the reason. Some of the blame has been place on “robo-signers,” people who sign hundreds of foreclosure documents a day without reviewing their contents.
I’m thinking the fact that about 20 percent of the home loans Bank of America services are delinquent also has something to do with the moratorium; lenders just don’t want to take back more homes. Nationwide, more than 300,000 homes were foreclosed on in the U.S. in August, and more than 2,000,000 homes are said to be in the inventory of lenders in the U.S.
That lenders are not in a hurry to start or complete foreclosures can also be seen in figures which show that the average foreclosed borrower has not made a payment in 18 months. This is great if you are short of funds, as you can live for free for an extended period of time, which may allow you put money down on another home if you can overcome the credit issues.
One alternative to obtaining the standard loan is a “rent to own” arrangement. Owners of some properties are offering this alternative to buyers with poor credit. You can build “equity” by application of the rent to amounts required to close. Give us a call if you would like to find out how SimplySOLD can help you find these type of properties. You can reach me at 480 675-0112, through our website at www.simplysoldaz.com or mark@simplysoldaz.com.
– N. Mark Kramoltz © 2015