Austin, Texas REALTOR® Frank Wade says mortgage rates are an element of simple supply and demand.

“The more there is, the cheaper they are

Since the U.S. Government, through the Federal Reserve Board of Governors, or the Fed, is injecting as much money as possible into the market, money is plentiful to lend out, if you happen to be a bank. Since money is plentiful, there is literally more money available than people who want a mortgage. This keeps mortgage rates low.

End of unemployment will end the cheap rates

In order for the Fed to keep inflation from taking over, they have to keep close tabs on other market factors. It is unheard of for someone without a job to buy a house. As the unemployment rate drops, more people will be willing to purchase a house. With more buyers wanting the limited number of mortgages, the price associated with mortgages, the interest rate, will rise. In order to hold off inflation, the Fed will take money out of the market place. This too will force mortgage rates to rise. How high will rates go? It was only 20 years ago that interest rates were over 14 percent.

Watch unemployment

Unemployment will be the key for many other indicators in the market. Where mortgage rates go, so do credit card rates. Where mortgage rates go, so will savings account rates. So even though the cheap mortgage rates may be coming to an end, it is also the beginning of a boon for those of us who are capable of saving their money.”

Click here to read more of Frank Wade’s blog.

Sign up for your own free Featured Blog on Realtor.com.

Now is a perfect time for first-time homebuyers to enter the market, and here’s why:

“Lower property values are making homeownership more attractive than renting in many markets throughout the country. Paying for a mortgage is now less expensive than renting in many large metropolitan areas, including Miami, Las Vegas, Phoenix and Washington, D.C., as well as smaller cities like San Antonio and Fresno, California.

Lower mortgage rates are the result of the current recession. What does this mean for your clients? On a 30-year fixed-rate loan amount of $200,000 at 5%, the interest paid over the life of the loan is $186,512. That brings the total loan payments to $386,512. At 6%, the amount of interest paid rises to $231,676, a 24% increase. At 7%, it’s $279,018, a 49% increase.

Investment opportunities abound as mortgage rates and home prices have dropped dramatically since March 2008. This has created one of the best buyer affordability conditions with the percentage of median household income needed to pay the mortgage on a median priced home at a 30-year low.”

Click here to read more of Keith Vermilyea’s blog.

Realtors: Sign up for your own free Featured Blog on Realtor.com.

Winchester, Virginia REALTOR® Beth Paisley reminds us, however, that this approach may not be the best way to look at the real estate market.

“It’s impossible to generalize about a national housing market that is so fragmented in terms of location, price range and neighborhood. Prices at the low end of the market have dropped so far in some places that they may be good deals.

In areas with a lot of high-end inventory that’s not selling, it may be difficult to find a good buy unless the sellers are motivated and are not in denial about the current market value of their home. Such a market provides a good opportunity for realistic sellers who prepare and price their home at or under market value.

Except for low interest rates, there’s no urgency for most buyers to buy now. Buyers are content to wait for the right house at the right price. When one comes along, it can draw offers from multiple buyers who are also waiting for prime property. It’s telling that the losing buyers don’t snap up overpriced listings.

The contrarian strategy is to buy when others aren’t and sell when the inventory is low. This buy-low, sell-high approach works well for investors. But, when you buy a home, your personal life limits your options. A death in the family, a divorce or job transfer could cause you to move in a down market.

Near record low interest rates are enticing, particularly if your home no longer suits your needs. But, you should only do so if you can live with the fact that the market value of your home could fall further before stabilizing. You should be financially secure and buy a home that will suit your long-term needs — ideally at a price that is less than you can afford.”

Click here to read more of Beth Paisley’s blog.

Realtors: Sign up for your own free Featured Blog on Realtor.com.

Winchester, Virginia REALTOR® Beth Paisley reminds us, however, that this approach may not be the best way to look at the real estate market.

“It’s impossible to generalize about a national housing market that is so fragmented in terms of location, price range and neighborhood. Prices at the low end of the market have dropped so far in some places that they may be good deals.

In areas with a lot of high-end inventory that’s not selling, it may be difficult to find a good buy unless the sellers are motivated and are not in denial about the current market value of their home. Such a market provides a good opportunity for realistic sellers who prepare and price their home at or under market value.

Except for low interest rates, there’s no urgency for most buyers to buy now. Buyers are content to wait for the right house at the right price. When one comes along, it can draw offers from multiple buyers who are also waiting for prime property. It’s telling that the losing buyers don’t snap up overpriced listings.

The contrarian strategy is to buy when others aren’t and sell when the inventory is low. This buy-low, sell-high approach works well for investors. But, when you buy a home, your personal life limits your options. A death in the family, a divorce or job transfer could cause you to move in a down market.

Near record low interest rates are enticing, particularly if your home no longer suits your needs. But, you should only do so if you can live with the fact that the market value of your home could fall further before stabilizing. You should be financially secure and buy a home that will suit your long-term needs — ideally at a price that is less than you can afford.”

Click here to read more of Beth Paisley’s blog.

Realtors: Sign up for your own free Featured Blog on Realtor.com.

Winchester, Virginia REALTOR® Beth Paisley explains the advantages of these returning flexible loans for first-time and move-up buyers.

“The advantage of an 80/10/10 mortgage is to avoid the expense of mortgage insurance for buyers wanting a 90 percent loan.  A buyer can obtain an 80 percent first mortgage and a 10 percent second mortgage with a 10 percent down payment.

The reason they were temporarily not available was the lack of investors who were willing to loan the second mortgage.  The decline in property values in the past few years have wiped out the equity of many homeowners and even the security of the 2nd lien holder.  Now that values have stabilized in most markets, and are even on the rise in some, investors are willing to consider the 80/10/10 again. However, the interest rate on the second loan will be higher than the first because there is more risk to the investor.

There are different ways to pay for mortgage insurance but a common method is a monthly factor which is added to the interest.  Helping buyers make better decisions is a valuable service real estate professionals can provide; having the right tools and information can make the decisions easier to understand.”

Click here to read more of Beth Paisley’s blog.

Realtors: Sign up for your own free Featured Blog on Realtor.com.

Manteca, CA REALTOR® Jeffrey Reyes believes that using a loan modification to avoid foreclosure has gotten a lot of bad press lately.

“I share the same serious questions that homeowners ask me all the time, ‘Why don’t they work?’ and ‘What is the bank looking for? What is the secret formula?’

So I went on a search to the answer to those questions and here it is. According to a large mortgage lender, the formula that they use is fairly simple to pre-qualify a loan modification  When you add the current loan principle balance with all late payments, charges and fees together, if the total is less than the original loan principal, then you pass.

Unfortunately in the lending world of five years ago, when interest-only loans were all the rage, no one has paid down their mortgage principle enough to make that formula work. That’s the first big problem.

The second big problem with a loan modification is it’s not a principle reduction. When you have to move for some reason a few years from now, you still owe the full principle left on the loan. This illustrates that a loan modification to avoid foreclosure is really just delaying the inevitable.

The third and maybe biggest issue in the whole loan modification process is the investor. Let’s assume that you fit the initial criteria and you are put into a trial loan modification. You make your payments on time every month for six months and then we all know what happens next. The bank denies you and you now owe full payments for the last six months on top of the old late fees and other missed payments. WHY? Why were you denied? You did what they asked, right? The reason is not the bank mostly, but the investor.”

Click here to read more of Jeffrey Reyes’ blogs.

Sign up for your own free Featured Blog on Realtor.com.

Whatever the reason, there’s no denying this can be a great time to enter the real estate market and own your first home.

Houston-based REALTOR® Mark Martin offers his advice to first time home buyers to keep them from making typical newbie mistakes.

“Before signing on the dotted line, though, be mindful of some common first time home buyer mistakes.

Buy only what you can afford. OK, this is a no-brainer but given the role this issue played in our current financial situation, it bears repeating. It’s great to fall in love with a house, but don’t get so swept up by emotion that you get in over your head. Conventional wisdom says you should limit your housing costs – including mortgage, taxes and insurance – to 28 percent of your gross monthly income.

Consider financing first. Even if you’ve done the calculations and know what you can afford, get pre-qualified for a mortgage before you shop. Mortgage lenders are necessarily being more stringent on their loan qualifications these days, and you could find yourself eligible to borrow less – or getting a higher interest rate – than you’d anticipated. Also, your qualification is contingent on your current financial situation, so avoid any major changes like switching jobs if possible, and put off purchases that require financing until after you’ve closed on the house.

Budget for extras. Your mortgage, taxes and insurance aren’t the sum total of the costs involved in owning a house. Some properties will have monthly homeowners’ dues, as will condo and townhouse communities. Consider maintenance costs as well if you’re buying a single-family home. A general guideline is to budget 1 percent of your home’s value annually for maintenance and repairs, plus any you might need for up-front purchases such as a lawnmower, ladder, etc.”

Click here to read more of Mark Martin’s blog.

Sign up for your own free Featured Blog on Realtor.com.

Cincinnati REALTOR® Karen Schlosser penned this lighthearted yet informative poem about the home buyer’s dilemma.

“Is it the time,
Could it be now,
To refinance my loan,
Or to buy a new home?

I know rates are low,
Inventory is plentiful,
And pricing is right,
It is an incredible time to buy.

I like my house,
I like my neighbors,
I think I’ll stay,
And lower my payments.

No more tax credit,
Why should I buy,
But with rates this low,
I think I will give it a try.

Do I stay or do I go,
Is the question of the day,
I want a place to call my own,
There is no place like home!”

Click here to read more of Karen Schlosser’s blog.

Sign up for your own free Featured Blog on Realtor.com.

Cincinnati REALTOR® Karen Schlosser penned this lighthearted yet informative poem about the home buyer’s dilemma.

“Is it the time,
Could it be now,
To refinance my loan,
Or to buy a new home?

I know rates are low,
Inventory is plentiful,
And pricing is right,
It is an incredible time to buy.

I like my house,
I like my neighbors,
I think I’ll stay,
And lower my payments.

No more tax credit,
Why should I buy,
But with rates this low,
I think I will give it a try.

Do I stay or do I go,
Is the question of the day,
I want a place to call my own,
There is no place like home!”

Click here to read more of Karen Schlosser’s blog.

Sign up for your own free Featured Blog on Realtor.com.

REALTOR® Kay Kammeyer encourages home buyers to relax and follow these tips to make finding a home a peaceful process.

“First, find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the Realtor you choose is both highly skilled and a good fit with your personality.

2. Remember, there’s no ‘right’ time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to second-guess interest rates or the housing market by waiting longer — you risk losing out on the home of your dreams. The housing market usually doesn’t change fast enough to make that much difference in price and a good home won’t stay on the market long.

3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family — the people who will be living in the home.

4. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.

5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to ‘win’ by getting an extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.

6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.”

Click here to read more of Kay Kammeyer’s blog.

Sign up for your own free Featured Blog on Realtor.com today.