Buyer Tips
All real estate is good to buy now!
(Residential, Multi-units, Commercial and Industrial)
With lending regulations changing all the time it’s important to work with a knowledgeable mortgage professional, we can help you with this process. We work with lending institutions that have been in business for years, plus have a well respected name in the industry. There are dozens of programs out there to meet your needs. I will coordinate & consult with your mortgage representative to make sure it’s a smooth transaction all the way to closing. We will go over Adjustable Rate Mortgages (ARM’s), 15 year verses a 30 year mortgage, interest only mortgage, what is a balloon payment, conforming verses a non-conforming mortgage, conventional verses insured conventional mortgage, how to buy down your interest rate and the advantages/dis-advantages of putting more or less down on a property. I have used several programs personal so I can give you a solid foundation to go from then we will have the mortgage representative fine tune the process and explain your options in more detail. Contact us to get started.
Interest rates are historically great, plenty of inventory to choose from including more foreclosures, sellers are willing to do what ever it takes to sell including help pay for buyers closing costs. The media has everyone freaked out. There is plenty of money to lend. If you have good credit and good debt to income ratio's (36%-Conventional to 41%-FHA) you can still get a mortgage with the best interest rates and terms available. They are using the same qualifing guidelines they did 20 years ago. There is money to lend!
Interest rates will rise at some point during the economic recovery, the key is when! Please keep inflation in mind. Inflation may kick in sometime in the 2nd half of 2010 or in 2011.
When do I buy?
If you are waiting for rates to drop further you are losing money. It does sound strange, how am I losing money? What we mean is losing equity. Homes have come down 8% to 20% depending on location. Everyone’s situation is different, this is where Dave's number crunching and research experience will help you. Equity Out Weights Monthly Savings.
When buying real estate the first thing we need to know is "what do you plan on doing with it" and "how long you plan on holding on to it". Once we have this information we can evaluate your purchase like no other brokerage company. Remember Dave has “been there done that” for himself many times over as a Realtor, Investor, Construction & Property Management Company Owner.
As a buyer, these are the questions you have to ask yourself:
- Should I wait to see how far home prices fall?
- Should I wait to see how low interest rates go?
Below are examples ONLY, interest rates change daily. I just want to give you a foundation to start from and to get you thinking when the market stabilizes and begins the up-ward swing on the curve.
As far as interest rates:
If rates averaged 5.75% and home prices went up was is it worth it? No not for $128.58 a month savings. $2462.87 (6.25% if this is the current rate) minus $2334.29 (5.75%) = $128.58 Why you ask? Because if home prices rise 6% to 10% because homes are selling, you lose all that equity. $128.58 a month for 7 years is $10,800.72 The reason I use 7 years this is how long the average family lives in a home before they sell to purchase another one. If you do not buy you may lose $20,000 to $50,000 or more in equity depending on the market the home is located. Just substitute the numbers below with your figures at the bottom of this page (loan calculator). Equity out weights monthly savings in this market we are in right now. You can always re-finance but you can not change the market (equity)!
Examples:
$400,000 loan at 6.25% for 30 years is $2462.87 a month*
$400,000 loan at 6.00% for 30 years is $2398.20 a month*
$400,000 loan at 5.75% for 30 years is $2334.29 a month*
$400,000 loan at 5.50% for 30 years is $2271.16 a month*
$400,000 loan at 5.25% for 30 years is $2208.81 a month*
$400,000 loan at 5.00% for 30 years is $2147.29 a month*
*principal & interest only
FORECLOSURES
We are HUD (Housing and Urban Development) Registered to help Buyers! There also is FHA 203K Mortgage Programs for Repairs and Up-dates.Contact Us Today!
This is a fast and growing market for buyers with great opportunities if done right. Traditional owner-occupied homes have dropped in price by 8% to 20% depending on where the property is located. That's still a good market to buy in but what would happen if you made 20% or more in instant equity purchasing a foreclosure! Yes, WOW! There are homes in everyone’s price range with a wide range of inventory to choose from; new construction, newer and older homes. Some just need a fresh coat of paint and cleaning. The key to purchasing one of these homes is knowing how and what to look for. This is why you need KUNO Real Estate. Dave Kuno purchased dozens of these homes and completely re-habbed them to new. He knows this market like no other real estate company, period!
Here in the Midwest we do not have huge market swings like they do in California, Arizona, Vegas and Florida. Please do not listen to the media.
Our area has about 4% to 6% average appreciation a year under normal market conditions which we have not had since 2001. Home values are based on economics but values were inflated due to above normal market activity that was created by non-traditional lending practices. We are in a deflationary period and will continue to be for a while. All of 2010 will be like 2009 unless interest rates stay below 4% for a fixed 30 year term, unemployment numbers really start declining but creating sustainable jobs were the average person is earning 75K to 100K, this will stabilize the market. These are the three main points but incomes have to keep up with the price of goods/services and inflation. It will continue to be a buyers market. Some areas have experienced an 8% to12% decline and others 12% to 20% decline. The 12% to 20% declines are homes in the 500K to 1 million and above price range. Why? because of wage earnings. Majority of the homes built were in this price range, hence deflation. The homes up to 400K are selling. We have to keep watching; commodities, interest rates, dollar, economic growth, GDP, employment numbers, wage numbers, how globalization is affecting our area, how many foreclosures in a subdivision and investor confidence.
The more homes that are for sale in a subdivision and no buyers, then that will lead to more deflation in home values. If one home in a subdivision is for sale we do not care what the market conditions are home values will stay high. Supply & Demand! There is always one family looking to live in that subdivision. It's when you have a lot of homes for sale in a subdivision that lead to falling prices because sellers keep lowering their price to sell. As a buyer even if prices come down another 3% to 5% you are still ahead of the game. Especially if you buy a foreclosure! You can not lose because of the equity you have made. But again it’s all about economics in an area!
Hopefully we gave you some points to think about please call us if you have any questions. We are here to help you succeed. We have only scratched the surface on information.
Contact Kuno Real Estate Today
If you need to sell your home to purchase another it can be a challenge but not impossible. Please do not listen to what you hear, every market is different. Dave has 14 years of market research experience. He will take the time to go over all your options in your market and the market you want to be in. This is what sets KUNO Real Estate apart from the rest, Market Research and presenting it to you were it makes sense. An educated consumer is our best customer!
You may lose equity in selling your home but you make it up in buying one. If you were to sell and not purchase anything then you will lose money (equity). Just like when it was a sellers market, you received top dollar when you sold and you paid top dollar when you purchased.
For example, we helped our client purchase a home 4 years ago for $585,000 at the time the market was peaking out. Now our client is married with a growing family and in need for a larger home. We sold their home for $500,000, an $85,000 loss.
As soon as we gathered all the information we needed on what type of home they were looking for we started searching the Multiple Listing Service (MLS) and found 3 different subdivisions with the school system they wanted to be in. Each subdivision homes were selling differently than the other based on age, square feet, beds, baths and so on. We compared all options and told them this particular subdivision will give them more dollar value with the criteria they were looking for plus the "function" they wanted. They purchased a home for $689,000 which sold for $825,000 four years ago.
Now you can see the $85,000 loss on their home gave a total gain of $51,000 on their new one ($825,000 minus $689,000 = $136,000 minus the $85,000 loss = $51,000). It’s researching different markets to get the best value for the dollar. Another example: a home that sold for $500,000 four years ago is still worth $500,000 today. Our clients upgraded to a $700,000 home which 4 years ago sold for $790,000. Our clients did not make any money on the home they sold but they made $90,000 in equity on their new purchase.
The key is when will prices bottom and which markets will bottom first! This is why Dave Kuno will break down everything you need to know. He is the best when it comes to researching markets!
Contact Kuno Real Estate Today