Everyone knows the jumbo loan market has been out of whack for nearly 18 months. “jumbo” loans, those amounting to more than $417,000, took it on the chin when mortgage investors stopped buying subprime and alternative loans. For that reason, jumbo rates can be as much as 1.50 percent higher than conforming rates. Historically, jumbo rates were only about a quarter of a percent higher than a conforming rate, but this new spread has kept many out of the housing market: especially those that I call, “just jumbo.”
So what exactly is “just jumbo?” It’s a loan amount that just exceeds the conforming limit of $417,000 and typically reflects a sales price in the $500,000–$600,000 range. Many local markets offer homes in this price category, but the marked difference in rate from conforming to jumbo is slowing down sales. What is the difference in payment between a conforming loan at 6 percent and a jumbo loan at 7.50 percent? On a $500,000 jumbo loan, mortgage payments jump from $2,997 to $3,496 a month. That’s almost $500 more!
Fortunately, with some changes in strategy, we can put a major dent in that increase in payment by buying a property with two loans — a first mortgage and a second. With the first mortgage at or below the conforming limit, the second mortgage then eliminates the need for private mortgage insurance, or PMI. And still, with only 10 percent down on a $500,000 sale.
For example, let’s say we have a sales price of $500,000 and you put 10 percent down. With a jumbo loan at 7.50 percent, the monthly payment on a 30-year note is $3,146 plus a PMI payment of about $188, for a total of $3,334. Using a 40 percent debt ratio means that you need to make about $9,700 per month to qualify.
Now, let’s make the first mortgage for $400,000 at 6 percent (conforming) with a second mortgage at 7 percent on a $50,000, 30-year note. The mortgage payments would be $2,398 and $332 respectively, for a combined total of $2,730. That’s a savings of over $600 per month, and now the income to qualify is almost $1,500 less at $8,200 per month! Do you think that has an impact on affordabilty? I do.
Here's another idea: sellers can carry back that second note to provide some additional income, providing an even better second rate for the buyer!
Monday, May 26, 2008
Saturday, May 17, 2008
Build It And They Will Come
Today I had an incredible opportunity to experience a behind-the-scenes tour of Lucas Oil Stadium!
For years we've heard conversation around whether or not to build a new stadium with plenty of spirited opinions on both sides. Two years ago, while going through the Real Estate Academy of Leadership, I heard a presentation by the Indianapolis Convention & Visitors Association that explained how taking down the RCA Dome was the easiest way for the convention center to expand. As I toured the new stadium I saw the possibilities for events that are now possible for Indianapolis to host. Of course, the 2012 Super Bowl, in addition to major political and business conventions that we don't have the facilities to accomodate right now.
Several things really struck me about the new stadium:
- Its 4.5 times the size of The Fashion Mall at Keystone at the Crossing.
- The outside brick is, well...rather fake. It is in sections, not built brick by brick. (No wonder it seemed to appear overnight!)
- There are four HUGE steel beams that anchor each corner. Each one is buried in 300 truck loads of concrete!
- The roof takes 9 minutes to open and when it does, the walls bow out under the weight. Of course all of this was taken into consideration and the support moves with it.
- There are lots of ceiling fans that are 25 feet in diameter! Yah, they're actually made by a company called Big Ass Fans.
- And the biggest surprise of all? For those of you who live in Indy, you know that old factory downtown that you can't believe is still there? Guess what creates the steam that heats half of downtown and now Lucas Oil Stadium? Yep, it's there to stay!
Thursday, May 15, 2008
2008 YTD Stats
I thought I'd check in with the stats so far this year and here is what I found:
Since January 1st: 570 condos have sold and closed.
Same time last year: 761
That's a drop of 25% over last year. About what I expected to find.
Here's what was listed during the same time frame:
2008: 1,733
2007: 2,082
216 condos are now under contract with an accepted offer and have not yet closed.
Okay, so what's that all mean?
Simply put, it means condos are selling...just not as many as last year.
If you're looking to Buy, congrats! You've timed the market perfectly! Contact me and we'll find the one that's right for you.
If you're looking to sell there are two things:
Since January 1st: 570 condos have sold and closed.
Same time last year: 761
That's a drop of 25% over last year. About what I expected to find.
Here's what was listed during the same time frame:
2008: 1,733
2007: 2,082
216 condos are now under contract with an accepted offer and have not yet closed.
Okay, so what's that all mean?
Simply put, it means condos are selling...just not as many as last year.
If you're looking to Buy, congrats! You've timed the market perfectly! Contact me and we'll find the one that's right for you.
If you're looking to sell there are two things:
- You need an agent that knows condos and knows how to market your condo to Buyers.
- If you're selling your condo and moving to another...look on the bright side, you too have timed it perfectly to buy!
Keller Williams Offices shine on Industry Surveys
RISMedia Power Broker Report and Survey
Every year, RISMedia and REAL Trends release two of the real estate’s most comprehensive surveys: the RISMedia Power Broker Report and the REAL Trends 500. Both surveys rank the largest residential real estate brokerages in the U.S. based on both transaction sides and sales-dollar volume, and these reports are frequently used as referral tools and are referenced by thousands. This year, Keller Williams stormed onto the lists with a very strong showing.
KW offices dominated the Power Broker Report – with more offices listed in their top 700 list than any other franchise brand. The survey also named Keller Williams Realty as the industry leader in terms of number of agent teams. And, 102 KW offices were listed in the Companies to Watch section – making up 55% of the total list!
As for the Real Trends 500, which lists the top 500 brokerages in the nation, Keller Williams Realty had the second highest amount of offices listed both transaction sides and sales volume, among the top franchise brands.
Even further proof that it's always a great day at Keller Williams!
Every year, RISMedia and REAL Trends release two of the real estate’s most comprehensive surveys: the RISMedia Power Broker Report and the REAL Trends 500. Both surveys rank the largest residential real estate brokerages in the U.S. based on both transaction sides and sales-dollar volume, and these reports are frequently used as referral tools and are referenced by thousands. This year, Keller Williams stormed onto the lists with a very strong showing.
KW offices dominated the Power Broker Report – with more offices listed in their top 700 list than any other franchise brand. The survey also named Keller Williams Realty as the industry leader in terms of number of agent teams. And, 102 KW offices were listed in the Companies to Watch section – making up 55% of the total list!
As for the Real Trends 500, which lists the top 500 brokerages in the nation, Keller Williams Realty had the second highest amount of offices listed both transaction sides and sales volume, among the top franchise brands.
Even further proof that it's always a great day at Keller Williams!
Monday, May 12, 2008
What interest rates really mean
The Fed did this! The Fed did that! Rates are up! Rates are down! Aaaagggh! Okay, now exhale. In turbulent economic times the media can’t wait to report what interest rates are doing. Pundits prognosticate, forecasters forecast and soothsayers sooth. When should you buy a home based upon interest rates and when is it the right time?
The fact is that interest rates, while important, have little impact when it comes to buying a home. Alright, alright, I’ll admit: it’s important…but it’s not a deal-killer.
There is a fixation on what rates are doing. A fixation on what rates will be in the future and what rates were in the past. I’ve heard potential home buyers tell me, “I’m not sure I want to buy now because rates are ¼ percent higher now and I think I’ll wait.” I say, “Wait for what?” I say let’s not look at the rate but instead concentrate on what that rate actually represents … your monthly payment.
Let’s look at what an interest rate move of ¼ percent really does to a $200,000 mortgage. Say a 30-year interest rate at 6.00 percent “jumps” to 6 ¼ percent. Shall we sit on the sidelines, thinking such a move is suddenly unaffordable? No. The payment on a $200,000 loan “jumps” by about $32 a month!
Now let’s get a bit more draconian and look at a ½ percent increase and the monthly payment increases by $64. Putting that into daily financial terms, $64 is about a tank of gas. While not insignificant, it’s hardly a reason to stay on the sidelines of home ownership. Right now, buyers should have more urgency than ever. Home prices have declined enough to make buying more affordable than it's been in recent memory and interest rates (whether at 6 percent or 6 1/4 percent) are historically low. It's time to act.
Are rates important? Sure they are. But are they the end-all? Heck no. Interest rates over the past few years have been in a very tight range, with few major swings. Just remember what interest rates represent, your monthly payment, and pay less attention to the headlines.
Written by David Reed, author of Mortgage 101 and Mortgage Confidential.
The fact is that interest rates, while important, have little impact when it comes to buying a home. Alright, alright, I’ll admit: it’s important…but it’s not a deal-killer.
There is a fixation on what rates are doing. A fixation on what rates will be in the future and what rates were in the past. I’ve heard potential home buyers tell me, “I’m not sure I want to buy now because rates are ¼ percent higher now and I think I’ll wait.” I say, “Wait for what?” I say let’s not look at the rate but instead concentrate on what that rate actually represents … your monthly payment.
Let’s look at what an interest rate move of ¼ percent really does to a $200,000 mortgage. Say a 30-year interest rate at 6.00 percent “jumps” to 6 ¼ percent. Shall we sit on the sidelines, thinking such a move is suddenly unaffordable? No. The payment on a $200,000 loan “jumps” by about $32 a month!
Now let’s get a bit more draconian and look at a ½ percent increase and the monthly payment increases by $64. Putting that into daily financial terms, $64 is about a tank of gas. While not insignificant, it’s hardly a reason to stay on the sidelines of home ownership. Right now, buyers should have more urgency than ever. Home prices have declined enough to make buying more affordable than it's been in recent memory and interest rates (whether at 6 percent or 6 1/4 percent) are historically low. It's time to act.
Are rates important? Sure they are. But are they the end-all? Heck no. Interest rates over the past few years have been in a very tight range, with few major swings. Just remember what interest rates represent, your monthly payment, and pay less attention to the headlines.
Written by David Reed, author of Mortgage 101 and Mortgage Confidential.
Sunday, May 11, 2008
Mother's Day celebration reaches 100th anniversary
Very fun trivia! I just saw this at http://www.yahoo.com/
By APRIL VITELLO, Associated Press Writer
GRAFTON, W.Va. - On this 100th anniversary of Mother's Day, the woman credited with creating one of the world's most celebrated holidays probably wouldn't be pleased with all the flowers, candy or gifts.
Anna Jarvis would want us to give mothers a white carnation — she felt it signified the purity of a mother's love.
Jarvis, who never married and never had children, got the Mother's Day idea after her mother said it would be nice if someone created a memorial to mothers.
Three years after her mother died in 1905, she organized the first official mother's day service at a church where her mother had spent more than 20 years teaching Sunday school.
Today, the former Andrews Methodist Episcopal Church is the official shrine to mothers around the world. On Sunday, the shrine will celebrate the 100th anniversary, giving each mother attending a special service a white carnation.
The shrine also serves as a "reminder to the accomplishments of these women and to the issues mothers still deal with today, trying to do the balancing act of being everything to everyone," said Cindi Mason, the shrine's director.
CLICK HERE to read the rest of the article.
Oh...and Happy Mother's Day!
By APRIL VITELLO, Associated Press Writer
GRAFTON, W.Va. - On this 100th anniversary of Mother's Day, the woman credited with creating one of the world's most celebrated holidays probably wouldn't be pleased with all the flowers, candy or gifts.
Anna Jarvis would want us to give mothers a white carnation — she felt it signified the purity of a mother's love.
Jarvis, who never married and never had children, got the Mother's Day idea after her mother said it would be nice if someone created a memorial to mothers.
Three years after her mother died in 1905, she organized the first official mother's day service at a church where her mother had spent more than 20 years teaching Sunday school.
Today, the former Andrews Methodist Episcopal Church is the official shrine to mothers around the world. On Sunday, the shrine will celebrate the 100th anniversary, giving each mother attending a special service a white carnation.
The shrine also serves as a "reminder to the accomplishments of these women and to the issues mothers still deal with today, trying to do the balancing act of being everything to everyone," said Cindi Mason, the shrine's director.
CLICK HERE to read the rest of the article.
Oh...and Happy Mother's Day!
Thursday, May 8, 2008
Roger in the studio!
Yesterday was my first trip into the studio!
I was asked to do a voice-over for a video clip about The REALTOR Foundation's "Awareness Week" in April. I was a little nervous about how it would go, but Chris Thornberry with Green Sky Media put me right at ease.
Click below to hear my voice for yourself:
http://www.youtube.com/watch?v=GTI4wkE1Zj4
I was asked to do a voice-over for a video clip about The REALTOR Foundation's "Awareness Week" in April. I was a little nervous about how it would go, but Chris Thornberry with Green Sky Media put me right at ease.
Click below to hear my voice for yourself:
http://www.youtube.com/watch?v=GTI4wkE1Zj4
Thursday, May 1, 2008
May Observances
I had fun with my April Fool's Day posting, so why not make it a monthly feature? May has much more besides Mother's Day and Memorial Day!
Offbeat May Observances:
Offbeat May Observances:
- Gifts From The Garden Month
- National Hamburger Month (My Favorite: Bub's in Carmel)
- National Moving Month (Wanna celebrate with a move?)
- Prepare To Buy A Home Month
Weekly:
- 1-7 National Fairy Godmother Week
- 5-11 Lifecoach Recognition Week (Or in my case: I love Michele Corey Week!)
- 19-25 Work At Home Mom's Week
Daily:
- 1 New Homeowner's Day
- 4 Respect For Chicken's Day
- 14 Donate A Day's Wages To Charity Day
- 30 Hug Your Cat Day
CLICK HERE to see where I find all of these observances!
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