Interest Rates on the Rise

​Two articles all buyers and sellers should read…

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30-year mortgage rate rises again, now at 4.08%

Mortgage Rate Trend Index

Half (50%) of the industry experts polled this week by Bankrate.com think that rates will continue to rise over the short term, though 30% predict relative stability. Only 20% foresee a decline.

WASHINGTON (AP) – Dec. 1, 2016 – Long-term U.S. mortgage rates marked a fifth week of surges in the aftermath of Donald Trump’s election win, reaching their highest levels this year.

Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed rate loan rose to 4.08 percent from 4.03 percent the previous week. The benchmark rate topped its 3.93 percent level of a year ago.

The rate on 15-year home loans, a popular choice for people who are refinancing, jumped to 3.34 percent from 3.25 percent.

Long-term mortgage and interest rates have climbed in the four weeks since Trump’s surprise victory on Nov. 9 to become the country’s next president.

Bond investors are looking toward tax cuts and increased government spending to upgrade roads, bridges and airports under a Trump administration, which could fuel inflation. That would depress prices of long-term Treasury bonds because inflation would erode their value over time. When bond investors foresee rising inflation, they demand higher long-term yields and pay lower prices for bonds. Bond yields move opposite to prices and also influence long-term mortgage rates.

The yield on the 10-year Treasury bond stood at 2.38 percent Wednesday, the same as a week earlier and up from 1.87 percent on Election Day Nov. 8. It climbed to 2.45 percent Thursday morning, its highest level since July 2015.

More immediately, Federal Reserve policymakers are expected to raise the central bank’s benchmark rate at their Dec. 13-14 meeting for the first time in nearly a year. Fed Chair Janet Yellen recently told Congress that the case for a rate boost has “continued to strengthen.”

The effect of advancing mortgage rates could be seen in reduced activity by prospective homebuyers. Applications for mortgage loans fell 9.4 percent in the week ended Nov. 25 from a week earlier, according to the Mortgage Bankers Association. Applications for refinancing dipped 16 percent.

Higher mortgage rates, along with rising house prices, could eventually reduce demand for housing.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.

The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged this week at 0.5 point. The fee on 15-year loans also remained at 0.5 point.

Rates on adjustable five-year loans rose to 3.15 percent from 3.12 percent. The fee was steady at 0.4 point.

Copyright © 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Mortgage rate increases help and hurt homebuyers

NEW YORK – Dec. 1, 2016 – With mortgage rates ticking up as investors anticipate the Federal Reserve raising interest rates in December, the cost of borrowing is increasing, and that’s leading some new homebuyers to speed up their purchases while discouraging homeowners from refinancing existing mortgages.

While mortgage applications for home purchases were essentially flat during the week ended Nov. 25 from the week earlier, refinancings dropped 16 percent. That meant overall applications fell 9.4 percent, according to Mortgage Bankers Association figures released Wednesday and adjusted to accommodate for the Thanksgiving holiday.

MBA chief economist Mike Fratantoni projected mortgage originations would fall in 2017 due to a sharp drop in refinancing. But he said in an email that new-purchase mortgages would increase about 10 percent in 2017 “based on the strengthening economy, employment and housing demand. The housing market will continue to do well so long as the job market remains strong, and we anticipate a further drop in the unemployment rate in 2017.”

Average interest rates for 30-year fixed-rate mortgages hit levels not seen since July 2015, according to MBA. Rates for mortgages with balances of $417,000 or less were 4.23 percent, while rates for mortgages with balances of more than $417,000 were 4.18 percent.

“With mortgage rates going up, affordability is down,” said David Berson, former chief economist of Fannie Mae and current chief economist at Nationwide Insurance, in an interview. But “affordability is still at a fairly high level.”

Dave Liniger, CEO of brokerage franchisor RE/MAX, agreed higher rates shouldn’t harm the housing market “at all. In fact,” he said in an email, “a rising interest- and mortgage-rate environment could actually cause an uptick in demand, with savvy buyers wanting to get into homes and lock in their rates more quickly.”

There are some indications homebuyers might be taking a breather as rate increases accelerate. New-home searches on real estate site Zillow.com have “essentially been flat for the last month,” Zillow senior economist Aaron Terrazas said in an interview. Still, Terrazas said big life decisions and local housing inventory are bigger factors than interest rates for homebuyers.

Mortgages issued to purchase homes, rather than refinancing existing mortgages, are still humming along at an encouraging clip. Some “fence sitters” are buying now to avoid higher rates later, Berson said. What’s more, the strong housing market and wage increases are encouraging many buyers to take the plunge.

Still, higher prices are crowding out some homebuyers. The S&P CoreLogic Case-Shiller Indices reported Tuesday that home prices hit an all-time high in September, rising 5.5 percent from a year earlier and 0.4 percent from August. Prices averaged $184,800 in September, surpassing July 2006’s peak of $184,620.

Copyright © 2016, USATODAY.com, USA TODAY, Nathan Bomey

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So Your House Did Not Sell?

sad-house-didnt-sell

So your listing EXPIRED… Do you still want to SELL your Home? Contact me and I can show you how I can successfully get it SOLD… http://TampaMobileRealty.com

I specialize in getting homes that did not sell GET SOLD!

Two Major Homeowner Tax Provisions to Expire:

Major trade groups urge Congress to renew two major homeowner tax provisions

Set to expire end of 2016

This year two of the biggest tax provisions at the top of Congress’ pile to renew impact housing and homeowners, especially first-time homebuyers.

At this point, it’s standard practice for Congress to renew a handful of tax extensions at the end of the year, given that these provisions are constantly reaching their expiration date.

The Mortgage Bankers Association, the National Association of Home Builders, and the National Association of Realtors wrote a joint letter to House Speaker Paul Ryan, R-Wis., and Minority Leaders Nancy Pelosi, D-Calif., Mitch McConnell, R-Ky., and Leader Harry Reid, D Nev., to urge Congress to act on two critical tax provisions that are scheduled to expire at the end of 2016.

There are only 36 temporary provisions that are set to expire at the end of 2016, compared to the 52 that expired at the end of 2014, according to the Tax Foundation.

The foundation added that these 36 provisions are expected to reduce federal revenue by about $17.7 billion a year.

Here are the comments in the letter on each tax provision:

  1. Mortgage debt provision:

The first provision ensures that any mortgage debt that is forgiven by a lender in connection with a principal residence will continue to be excluded from the taxable income of the borrower.

This prevents “underwater” homeowners from being taxed if their lender reduces the principal balance or a portion of their mortgage debt is forgiven in connection with a so-called “short sale.”

Consequence:

If Congress fails to act, struggling homeowners who accept short sales or a loan modification offer could be faced with a substantial tax assessment. The current provision, if extended, would aid many loss mitigation efforts and provide borrowers with the certainty that they will not be faced with a large, unexpected tax bill.

  1. Mortgage insurance premiums

We believe that Congress should extend the tax deduction for mortgage insurance premiums paid by homeowners. For a $200,000 home, many homeowners are presently able to deduct between $600 and $1,000 from their taxes.

Consequence:

Retaining this deduction beyond 2016 will greatly benefit the large number of homeowners, particularly first time home buyers, who cannot afford a 20% or greater down payment and who use mortgage insurance in order to purchase a home.

The Tax Foundation stated that these two provisions, which are two of the biggest on the list, were projected to cost $7.5 billion in 2016.

Question About Escrow Deposit

By Margy Grant, ESQ

November 21, 2016 — It’s a question we often get on the Florida Realtors Legal Hotline: Is earnest money required to make a contract legal and binding. The answer: no.

Deposits are often provided as evidence of a buyer’s commitment to the purchase, but they are not required by law. A binding contract to purchase real estate only requires consideration. Consideration is defined as something of value offered for something else of value.

According to the Florida Bar, “The formation of a contract is accomplished when there is an offer and acceptance between the contracting parties of the exchange of ‘consideration’ (that is, something of value). This offer and acceptance are sometimes referred to as a ‘meeting of the minds.’ If the parties have not reached a meeting of the minds, then there is no agreement.” In the case of a real estate purchase contract, the consideration the buyer is offering is the purchase price in exchange for the deed to the property.

Most purchase contracts contain a section to indicate the amount of an escrow deposit and when it’s due. Purchase contracts also usually contain a liquidated damages clause that entitles the seller to keep the deposit if the buyer defaults. Liquidated damages are common in real estate purchase contracts, even though the parties are agreeing what the remedy is for the other side in the event the buyer defaults.

If you as the listing broker receive a contract that is either cash or 100 percent financing with a deposit amount of “0,” you must present it to the seller. This contract is valid despite the lack of an earnest money deposit. You may explain to the seller that because there’s no deposit, there is nothing for the seller to keep as liquidated damages if the buyer defaults. Buyers and sellers can negotiate these terms just like all other terms of the agreement.

Some sellers look at a lack of deposit as unfair. Why, they ask, would they remove their house from the market if the buyer is not serious enough to put down a deposit? A seller certainly may insist on a deposit before agreeing to the contract; this is allowable if the buyer agrees. However, it is not legally required. In addition to a deposit, sellers will also sometimes ask for other requirements like proof of funds or a prequalification letter.

Transactions come in all shapes and sizes. Realtors do well to understand some components of contract law to assist them in working with buyers and sellers. All parties should review purchase contracts carefully, preferably with an attorney, to understand their rights under the agreement in the event the other party does not perform as promised.

Margy Grant is vice president and general counsel of Florida Realtors

© 2016 Florida Realtors®

Important Home Buying Tip

When buying a home be careful to check if permits were pulled as required or closed with a final inspection…

No permits… who ever is the deeded owner of the property at the time the municipality discovers the code violation of doing work without a permit will  become the violator. 

They could be made to hire an engineer to inspect the work, draw an as built plan or wtite a report to submit to the municipality to issue a permit, usually at double fee and sometimes with a fine. 

Further if work is found not to be up to code, they will have to fix it which could mean removal of part or all of the code defficent areas and do the repairs correctly including all required permits and inspections. 

If this involves a set back violation then a varrience will need to be filed to wave the set back. If that is not granted then the section over the set back violation will have to be removed.

 Non-permitted work can be very exoensive to remedy. I am addressing this as a retired designer & general contractor of 22 years prior to my current real estate practice.

Seller Q&A Series No.9

Question 9 of 43 in the Seller Q&A Series.

Q: Do I need an attorney to sell a home?

A: Although most sellers can handle routine real estate purchase contracts, some experts say it is a good idea to be represented by an attorney, particularly if you are selling on your own.  You should choose one with expertise in real estate transactions.  Before hiring someone discuss all the details of the transaction, including all legal costs you will incur.  A good attorney will assist you in completing the deal swiftly and with confidence.