Which Is Better : 15-Year Fixed Rate Mortgage Or 30-Year Fixed Rate Mortgage?

15-year fixed rate or 30-year fixed rate?As a home buyer or refinancing household in Renton , you have choices with respect to your mortgage.

You can choose a loan with accompanying discount points in exchange for lower mortgage rates; you can choose adjustable-rate loans over fixed rate ones; and, you can choose loans with principal + interest repayment schedules or repayments which are interest only, as examples.

For borrowers using fixed rate loans, there’s also the choice between the 30-year and 15-year fixed rate mortgage. Each has its positives and negatives and neither is “better” than the other.

Choosing your most appropriate fixed-rate term is a matter of preference and, sometimes, of budget.

The 15-Year Mortgage
With a 15-year fixed rate mortgage, mortgage rates are often lower as compared to a comparable 30-year fixed rate mortgage. However, because loan repayment is compressed into half as many years, the monthly payment will necessarily be higher, all things equal. On the other side, though, homeowners using a 15-year fixed rate mortgage will build equity faster, and will pay less mortgage interest over time.

The 30-Year Mortgage
With a 30-year fixed rate mortgage, mortgage rates tend to be higher as compared to a 15-year fixed rate loan, but payments are much lower — sometimes by as much as 50%. Lower payments come at a cost, however, as mortgage interest costs add up over 30 years. Regardless, 30-year fixed rate mortgages remain the most common mortgage product for their simplicity and low relative payment.

Which One Is Right For You?
There is no “best” choice between the 15-year fixed rate mortgage and the 30-year fixed rate mortgage. Choose a product based on your short- and long-term financial goals, and your personal feelings regarding debt. Mortgage applicants choosing the 30-year fixed rate mortgage can qualify to purchase homes at higher price points, but those using the 15-year fixed rate product will stop making payments a decade-and-a-half sooner.

There are benefits with both product types so, if you’re unsure of which path works best for you, speak with your loan officer for guidance and advice.

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Simple, Inexpensive Ways To Prep Your Home For Sale

Tips for better home staging

When Renton homeowners get ready to list, advice will often come from all corners of their personal and social network — what within the home to upgrade; what to repair; what to replace.

And, although some advice remains valuable, much of it can be ignored.

The costs of an expensive upgrade are rarely recouped at the time of sale and studies show that smaller, simpler actions can yield a bigger return on your investment of time and money.

Here are four inexpensive, yet highly effective, ways to prepare your home for sale.

Improve the curb appeal
It’s not just the inside of your home which should be inviting to buyers — the outside of your home should be, too. Trim hedges, maintain the lawn, power wash the walls and try to inject some color, where possible. Your yard is your home’s first impression on buyers. Make it a great one.

Lighten up the place
Extra sunlight lends an airy feeling to your home, and interior lights provide cozy glow. Therefore, wash your windows, pullback your drapes, replace burnt-out bulbs, and add outdoor lighting to your landscaping, if possible. Also, keep your home lit in the evenings in the event that potential buyers drive by after-hours. With the lights on, your home will look cheery instead of dark and gloomy.

Store unnecessary furniture and personal objects
Less can be more when it comes to showing your home so put your knick-knacks, your stacks of books and your fridge-covering artwork in storage. Be sure to avoid stashing personal items in closets because buyers expect closets to be clutter-free as well.

Paint a pretty home
A new coat of paint will freshen up any room so paint where needed. However, stick to neutrals such as grays and tans. Also, consider repainting rooms bathed in bright, fun colors — this can divert a buyer’s attention away from the home and toward money-costing “projects” that would come with buying the home.

With the help of your REALTOR® and a little hard work, these tips should help you increase your home’s appeal to a wide variety of buyers without breaking the bank. It may even help you sell your home more quickly.

More Bullish Data : Housing Starts Climb 3.6%

Housing StartsAccording to a joint release from the U.S. Census Bureau and the Department of Housing and Urban Development, Housing Starts rose 3.6% in October 2012, climbing to a seasonally-adjusted, annualized rate of 894,000 units.

A “housing start” is a new home on which construction has started and the report gives buyers and sellers across WA yet one more reason to be optimistic for the 2013 housing market.

Regionally, Housing Starts varied.

The West and Midwest Regions posted gains between September and October 2012; and, the South and Northeast Regions posted declines. The latter was affected by the effects of Hurricane Sandy.

  • West Region : +17.2% from the month prior
  • Midwest Region : +8.9% from the month prior
  • South Region : -2.5% from the month prior
  • Northeast Region : -6.5% from the month prior

Single-family housing starts — starts for homes not considered multi-unit properties or to be apartment buildings — was mostly unchanged, slipping 1,000 units on a seasonally-adjusted annualized basis.

The Housing Starts data is the third housing-related release this week that hints at a strong start for the 2013 housing market.

Early in the week, the National Association of Homebuilders released its Housing Market Index (HMI), a measure of home builder confidence in the new construction market. The HMI posted 46 — the highest reading since 2006. With mortgage rates low and buyer traffic high, builders are expecting a rash of sales between now and the New Year, and an elevated number of closing over the next six months, in general.

The HMI is scored on a scale of 1-100. One year ago, it read 19.

Then, the National Association of REALTORS® showed Existing Home Sales climbing 2.1% and home supply fell to a multi-year low. At the current sales pace, the entire U.S. home inventory would be sold in just 5.4 months. Analysts believe that a home supply of less than 6.0 months favors home sellers.

In unison, these three housing market reports suggest a sustained, national housing market recovery. Home prices are expected to rise into next year’s housing market.

Existing Home Sales Move Higher In October

Existing Home Sales October 2012After a small decline in September, Existing Home Sales rebounded in October, increasing a modest 2.1%.

The housing market’s slow, steady recovery continues as sales volume in all four regions expanded last month with the exception of the Hurricane Sandy-affected Northeast.

The National Association of REALTORS® monthly Existing Home Sales Report comprises completed sales of single-family homes, townhomes, condominiums, and co-ops. The Existing Home Sales report is compiled on a seasonally-adjusted, annualized basis. It shows a 10.9 percent sales increase as compared last year.

Sales volume might otherwise be higher, however, if not for a lack of homes for sale.

Total housing inventory fell 1.4 percent to 2.14 million homes last month which, at the current sales pace, represents a 5.4-month national supply — the lowest in more than 6 years.

The lack of supply amid burgeoning demand has led home prices higher nationwide. October’s median existing home sale price was $178,600 — an 11.1% increase from October 2011 and the eighth consecutive month during which the median sales price rose.

The last time that occurred was during the eight months ending May 2006.

In addition, the Existing Home Sales report showed that the median time on market in October rose to 71 days, up 1 day from September 2012. As compared to October 2011, however, median time on market is down 26% from 96 days.

Other noteworthy statistics from the October Existing Home Sales report include : 

  • Foreclosures and short sales accounted for 24% of sales
  • Foreclosures sold for an average discount of 20% to market
  • Short sales sold for an average discount of 14% to market

Furthermore, thirty-two percent of homes sold in October were on the market for less than one month. 20% were on the market for six months or longer.

Record-low mortgage interest rates continue to spur housing, as do low prices. Neither will last indefinitely. If you plan to purchase a home in Seattle in 2013, therefore, consider moving up your time frame. Home ownership will likely increase in cost as the year moves on.

Homebuilder Confidence Spikes To 6-Year High

NAHB Housing Market IndexThe National Association of Home Builders (NAHB) released its Housing Market Index (HMI) Tuesday, which showed sharp, 5-point increase to 46 for November 2012, marking the seventh consecutive monthly gain for the HMI, and lifting the index to its highest point since May 2006.

Readings under 50 indicate unfavorable housing conditions for builders. Readings over 50 signal “good” conditions. 

The Housing Market Index is a measure of builder confidence, published monthly, based on a survey sent to NAHB members which asks them to rate housing market conditions.

In November, home builders reported gains in two of the three areas surveyed:

  • Current Single-Family Sales: 49 (+8 from October 2012)
  • Projected Single-Family Sales: 53 (+2 from October 2012)
  • Buyer Foot Traffic: 35 (unchanged from October 2012)

Builders report growing demand for new homes as inventories for alternative properties — distressed and foreclosed homes, for example — shrink nationwide.

Even Hurricane Sandy did little to suppress builder confidence.

The NAHB survey was conducted in the two weeks immediately following Hurricane Sandy so the Housing Market Index does reflect builder sentiment during that period. All regions of the country posted confidence gains in November.

The South Region showed a 4-point gain to 43; the West Region showed a 3-point gain to 47; the Midwest Region showed a 3-point gain to 45; and the Northeast Region showed a 2-point gain to 31.  

Despite the gains, builders in Renton and nationwide still report challenges with home appraisals and tight credit conditions. In addition, a shortage of buildable lots in some areas is limiting the ability for home builders to put more single-family homes on the market.

As builder confidence grows, today’s buyers throughout WA should prepare for the possibility of higher home prices. Confident sellers are less likely to make price concessions or to offer free upgrades.

If you are in the market for a new home, therefore, the time between now and the New Year may be the best opportunity to make a bid on a home. Starting next year, low prices may be gone.

Federal Reserve : New Economic Stimulus May Be Warranted

Is more Fed stimulus in store for 2013?The Federal Reserve released its October Federal Open Market Committee (FOMC) meeting minutes last week, revealing a Fed in disagreement about the future of the U.S. economy and about what, if any, stimulus may be warranted in the next 12 months.

The “Fed Minutes” recaps the conversations and debates that transpire during an FOMC meeting, and is published 3 weeks after the meeting adjourns. 

According to the October minutes, FOMC members “generally agreed” that a housing recovery is under way nationwide, citing increased housing prices, higher sales volume, and rising construction in many parts of the country.

FOMC members made no major policy changes at their last meeting, but agreed that a continuation of additional asset purchases would likely be necessary in 2013, in order to achieve a substantial improvement in the labor market.

Other notes from within the Fed Minutes included:

  • On housing: Signs of improvement are “encouraging”, and mortgage rates are at historic lows
  • On inflation: Essentially “unchanged”, notwithstanding recent increases in energy prices
  • On Europe: Production indicators signal contraction in business activity and expansion
  • On employment: Employment is rising, and unemployment remains high

The economic forecast prepared by the FOMC staff shows an uptick in consumer spending, residential construction, and labor market conditions which more than offset recent downgrades in the business fixed investment and the industrial production outlooks.

Through 2013, economic activity is projected to accelerate gradually, supported by a lessening in fiscal policy restraints. The Fed also anticipates that Seattle home buyers will benefit from looser credit standards.

Low mortgage rates are helping home buyers, too.

According to Freddie Mac, the average 30-year fixed rate mortgage rate was 3.34% last week, down from 3.55% in September. This has given a boost to buyer purchasing power nationwide and the year-end housing market may reflect it. Demand for homes remains strong.

The next FOMC meeting is scheduled for December 11-12, 2012.

Bank Repossessions Slip For 24th Consecutive Month

Foreclosures per household October 2012

According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings increased 3 percent in October as compared to September 2012, climbing to 186,455 U.S. properties.

RealtyTrac defines a “foreclosure filing” as any foreclosure-related action including a Notice of Default, a Scheduled Auction, or a Bank Repossession. On average, 1 in every 706 U.S. homes had a foreclosure filing during the month of October.

For the 24th consecutive month, the number of bank repossessions fell, down less than 1% from the previous month and down 21% from October 2011. Bank repossessions dropped in 37 states, plus the District of Columbia, indicating that banks are seeking alternatives to foreclosure.

Distressed home sales, which include foreclosures and short sales, represented 23% of sales in the second quarter of 2012, down from 30% a year ago, according to the National Association of REALTORS®.

Florida again posted the top foreclosure rate nationwide.

One in every 312 Florida housing units had some sort of foreclosure filing in October as foreclosure starts moved to a 12-month high. Monthly filings increased 2% from last month.

In Nevada, the monthly increase was larger, rising 41% month-over-month, lifting it from the fifth-highest rate in September 2012, to the second-highest in October 2012.

Third-ranked Illinois saw a 6% increase in foreclosure filings over September 2012. California and Arizona rounded out the top five.

Hurricane Sandy made an impact on the foreclosure market, too, with a foreclosure moratorium being put into effect in the states most affected such as New Jersey, New York, and Connecticut.

For Renton home buyers planning to venture into the home foreclosure market, there are well-priced homes for sale. However, understand that a foreclosure property is often sold “as is,” and that you may not be allowed into the property prior to the sale to inspect for damage. Home may have termites, been gutted by previous tenants or owners, or be filled with lead paint or asbestos.

For this reason, it’s a good idea to engage an experienced real estate professional when buying foreclosure properties. Real estate agents can guide you through the foreclosure process and give advice regarding contracts and home inspections.