What Does The Hike In Rates Do To My Payment?

So, with the news running rampant about rates jumping up and mortgage lenders getting slammed with calls, I thought I'd just give you a quickie example of what the increase in rates does to your monthly mortgage payment. Not discussing how much more it will cost over the life of the loan as most buyers are only focused on their monthly payment.

Two scenarios, both with 20% down conventional financing:

1) Home price $800,000
Principal & Interest Payment @ 3.5% = $2873.89
Principal & Interest Payment @ 4.5% = $3242.79
Monthly difference = $368.90

2) Home price $ 350,000
Principal & Interest Payment @ 3.5% = $1257.33
Principal & Interest Payment @ 4.5% = $1418.72
Monthly difference = $161.39

Both calculate out to just under a 9% increase in your monthly payment. This may help you regardless of your home purchase price.

There are plenty of mortgage calculators on-line you can find, 

I just wanted to make it pretty simple for you to see what the difference will do. 

10 Year HELOC's Coming Around Due, Yes?

You know how many people bought their homes 6-7-8-9 years ago that incorporated a HELOC, Home Equity Line Of Credit, as a 2nd? A lot.....quite a few, a big bunch!

A good portion of those, that still own their homes, were 10 year interest only loans. Have you been paying your principal? Or have you taken advantage of these really low rates and just paid the minimum....the Interest Only?

I read an article this morning that makes me realize I better share the info! I've got a HELOC, it got frozen, of course, when the housing market plummeted. It is one of those 10 years and will come due in about four more.

But, I pay principal on mine. Quite a bit of extra principal, every dang month. Honestly, some months I pay less, but most I pay quite a bit extra. But, I'm not a risk taker. Never have been, doubt that will change either.

So I pay extra, regardless of the market. But, there is incentive. If my townhouse, upside down now a rental, doesn't come back to anywhere close to what I paid for it when the 10 years is up...I've got to make sure I'm ready to pay that HELOC off.

If you haven't really been thinking about this, I suggest you do. 

It's going to matter sooner or later.

And, sticking your head in the sand won't make the balance go away.

Will We See More REO's Now That Prices Have Risen?

Read an interesting article this morning and wanted to share.

Basically it appears that we may be seeing more REO's hit the market. You know, the ones that have been foreclosed upon? Not that they've been holding them, but since the Robo-Signing Mortgage Settlement has just about been fulfilled, they can proceed with actually foreclosing on the ones that have been hiding in the dark.

Which will work out for Banks since prices have risen, they stand to make more on the resale than they could have if foreclosed upon last year. Hmmm, funny how that worked out.

Regardless, if this comes to fruition, most definitely it will slow the pace of appreciation we've been seeing. Yes, more supply, preferably REO's and Standard Sales over Short-Sales, will continue to put the pause on outrageous price hikes.

We've already seen the stall here in SCV. Let's see if we start seeing more REO's come on the market now. I've got the buyers for them!

Price Reductions and Inventory Increasing

Not sure if it's a fluke or not, but for almost a week now when I check the 24 hour snapshot of our MLS and look at price changes, the majority of them are reduced rather than increased.

We were seeing so many increases in pricing over the last year with short-sales under priced and more recently with the multiple offers being received, that I think we all got used to the price changes being blue up arrows instead of what we are now seeing, red down arrows.

But, in the last couple of weeks Santa Clarita has gone from under 300 in active listings to almost 400 in active listings.

We all know what it is....sellers excited about the prospect of getting more for their home due to lack of inventory. And, neighbors follow neighbors, friends follow friends, everyone trying to keep up with the Jones'....well sorta.

I either blogged or YouTubed it recently, the dramatic increase just can't keep up. So here we are.....we shall see if we hit the stall I expected (go ahead and ask my bowling friends who are now clients) come this summer and hopefully flatten a bit and get to some normal appreciation.

What say you??

June 14, 2013 Santa Clarita Valley MLS Stats

Inventory is changing yet again!

Remember, I do my stats for you to include these communities:

Acton, Agua Dulce, Canyon Country, Fair Oaks Ranch, Saugus, Newhall, Valencia, Castaic, Stevenson Ranch, Westridge, Tesoro.

ACTIVE: 381. That's almost 100 more that we've been seeing these last few months!
Short Sale are only 25
REO's number 16

PENDING/BACK-UP: 811. That's about the same and you'll see why here...
Short Sale hovering at 368. Once we get these closed we'll have a lower number in this overall category.
REO's at 28

SOLD in Last 30 Days: 327. Yes, we're still closing about the same as we have for many months now.
Short Sales were 94
REO's were 19

With interest rates creeping up, sellers need to stop putting homes on the market for exorbitant prices. I may lose a listing or two for saying that, but with the inventory rising and interest rising, that shrinks the pool of buyers and the shift to a buyers market will be on the horizon.

You decide if you want to sell before that shift happens.

Are Prices Going Up Too Fast?

What's your thought on that one? L.A. Times says they are up 25% since May of 2012. In some areas most definitely. Even in SCV, some tracks have skyrocketed more than others. Someone surely has taken the time to calculate which tracks shot up how much, right? Mariposa's in Plum Cyn Saugus, competely Skyrocketed! Cypress Point in Westridge Valencia, not so much. I could keep shooting off different hoods, but doesn't really matter, it is what it is.

What can we do to get this increase to slow down a bit? Put more houses on the market, pretty simple. Have interest rates continue to climb. Yep, that's going to stall the appreciation we are seeing.

Or, should we just let it be and get back to 2006 prices? Homes buyers say stall, surely home sellers feel opposite. As a home owner, Realtor, and investor.....I'd honestly like them to slow it down a bit....yes, I really would. And you? What do you say?

How'd You Get That Listing?

Was doing a final walk through for one of my clients last week and as we were chatting out in front I mentioned, networking at it's finest, that I just took a new listing.

Told them about the beautiful large Stevenson Ranch home with tons of upgrades listed at $849.

Mr. Client says: 'How'd you get that listing?' I proceeded to explain the circumstances of the couple that referred the sellers to me. How I had helped someone in the past, and as I always do, kept up with them. Regular check-ins to see if they needed anything Real Estate related or knew of someone who did.

I like to keep in touch with people. Help them when they need help. Tis what I do, and it's how my mother raised me as well as how my Real Estate coach trained me.

Funny thing? I took a peek around Google regarding the referral source...and found the wife on a testimonial page for another Realtor's website! A well known and respected Realtor too. I guess she just didn't keep in touch. I don't know.

So, just sharing a story, if you wonder who I help buy and sell homes for and where they come from. Just a tidbit. When I call you, it's not about this moment, or maybe not even about your needs...it's about helping someone when their needs are Real Estate related.....and sometimes about other needs as well!

Home Prices Rising....Down Payments Shrinking

The housing recovery is supposedly loosening the strings on loan origination's. Lenders are allowing buyers to put less money down.

Are they really allowing them....or is it because buyers are paying over appraised value and due to the amount of funds they have available, they are putting less down?

Case in point:

Buyer writes an offer on one of my listings. Writes it for 46k over list price. Suspecting an appraisal problem, we counter with 'No Appraisal Contingency'. Many of us working Realtors are having to do it that way these days. Buyer counters back with willing to pay 10k over appraised value.

Couple of issues here. Well, really, that doesn't mean 'No Appraisal Contingency', and it really only means an offer for about 10k over list price as most of the time, if the seller listens, I price them where I feel there won't be an appraisal problem.

So, I go to the lender and ask a bit more about cash reserves and alternate financing for this buyer. How much can they pay over appraised value? How low of a down can they do and still afford the monthly payment?

So, with that 'Case in Point' splayed in front of you....what do you think? Are they allowing less down? Or is it that buyers have to be imaginative as they are paying over appraisal value?