Hi many of you keep asking to share list of homes that are built after 2005 so please see list and let me know
Yes that correct Mortgage Rates Increase By 1% a Buyer Loses 10% in Affordability!
Did you know that with every 1% rise in rates, the buyer loses 10% in affordability. It is now very important that buyers understand that rising interest rates will eat away any savings they could get from waiting for prices to dip again. Eventually a buyer needs to make a decision what is most important, their monthly payment or “finding the bottom of the market in terms of price”.
Cost vs price. What is the difference?
A lot of buyers have a tendency to look at just the PRICE of the house instead of the overall COST to buy the home. The cost is actually more important. So what is the difference between cost vs price and why is this so important for a buyer to understand? Cost is what a buyer will pay for a home overall, including financing costs. Price is just the actual price tag the buyer will pay the seller for the home not including any financing costs.
This is why it is so important for buyers to understand that rising rates have a tremendous impact on a buyer’s overall cost and monthly payment. We all know there are home buyers still standing on the sidelines waiting for the prices of real estate to hit rock bottom. But buyers need to be concerned about the monthly COST as much as they are concerned about the PRICE of the home. Here is why.
Impact of higher rates on payment
Let’s take a look at some numbers to see what rising interest rates do to the monthly payment on a loan. Here is a great chart below that shows as the rate goes up the affordability of the buyer goes down. As you can see, with every 1% increase in rates, the buyer loses 10% in affordability.
So lets say if someone was shopping in the $400k range a month ago because that was their maximum mortgage budget, unfortunately that same buyer will now need to be looking in the $360k price range today to keep the same monthly mortgage budget.
Making sure buyers still qualify at higher rates
Unfortunately higher interest rates are going to affect a buyer’s purchasing power and monthly mortgage budget. So it is going to be very important that buyers know if they can still qualify and can afford higher rates. For example, a pre approval that the buyer has had for 3-6 months putting in offers at 4% that stretched their budget, might be unaffordable now because rates are at 5%. For example, on a $400k loan the payment increases $238 a month when the rate jumps from 4% to 5%. This is almost a car payment for some families.
Higher rates will also affect any current purchase offers or loan approvals that buyers may have. So for someone that was shopping in the $400k range a month ago and the rate was 4%, that same monthly payment will only get a home for $360k now with rates at 5%. Remember also, lenders have been tightening their qualifying ratios recently and are constantly changing their rules, so make sure any increase in rates/payments do not disqualify a buyer from a certain price range either.
What are rates at now? They are still at 40 year lows!
With rates now historically lowest in history of USA, which is 2.65%, the question is where will they go from here? All experts are predicting they are on their way to up soon, But on a positive note, they are still at historical lows when you compare them with interest rates over the past 40 years.
So for anyone still looking at buying a home, you can let them know they can still qualify for the lowest rates in 40 years. Hopefully this will lessen the blow for those folks that did not get an opportunity to purchase when they were in the low 4% range.
1% interest rate drop could save you whopping $60,276.16 in $300000 loan in 30 years . Check your at our calculator https://njfind.com/financial-calculators
Mortgages and Interest Rates
When you purchase a 15-year fixed-rate or 30 year fixed rate mortgage, the interest rate will stay the same for the entire life of the loan. Your monthly payment is based on the interest rate you negotiate with your lender and is structured to pay off your mortgage by the end of the 15-year period or 30 year period resp. 15 year is typically the shortest fixed-rate period offered by lenders and will allow you to pay off your mortgage faster and pay less interest than with a longer term loan. However, the shorter term means your monthly payment will be higher, so consider whether you can afford it. Also when you take 30 year fixed, you are stretching your dollar which is depreciating in years or what dollar can buy today, will be lot less in 30 years.
So as per calculator,
|loan amount in $||Interest %||# of years||Monthly Payment:||Number of Payments:||Total Payments:||Total Interest:||saving||
per month saving
This table made by Anil Aggarwal using Financial Calculator provided free at his website :https://njfind.com/financial-calculators
Search properties for sale in NEW JERSEY and SEE FOR YOURSELF
Open house call 732-877-8585 62 Marconi ave iselin nj 5 bed 3 full bath , full finished basement , one garage , built 2008 ground zero .
For Comparative Market Analysis please see this video https://www.youtube.com/watch?v=MSCkm4LGY-Y&feature=youtu.be
- Check cma . https://youtu.be/MSCkm4LGY-Y
- Check marketing video http://www.youtube.com/watch?v=s-_eJ04EkoM
- Check Inside video https://youtu.be/pTFZrvKmDjU
- Check Website 62marconi.IsForSale.com And come to meet me 62chat.njfind.com
Please see the links below.
- Sold at 585,000 – 4 bed 3 bath 2513 sq ft. https://www.zillow.com/homedetails/66-Berkley-Blvd-Iselin-NJ-08830/299477665_zpid/
- Sold at 570,000 – 4 bed 3 bath 2630 sq ft. https://www.zillow.com/homedetails/80-Warwick-St-Iselin-NJ-08830/39200959_zpid/
- Sold at 585,000 – 5 bed 3 bath 2800 sq ft. https://www.zillow.com/homedetails/125-Elmhurst-Ave-Iselin-NJ-08830/39196194_zpid/
- Sold at 585,000 – 4 bed 4 bath 2207 sq ft. https://www.zillow.com/homedetails/49-Hunt-St-Iselin-NJ-08830/39201021_zpid/
- Sold at 595,000 – 4 bed 3 bath 2541 sq ft. https://www.zillow.com/homedetails/260-Correja-Ave-Iselin-NJ-08830/39200609_zpid/
- Sold at 600,000 – 4 beds 5 bath 2490 sq ft. https://www.zillow.com/homedetails/245-Correja-Ave-Iselin-NJ-08830/39200487_zpid/
None of the above houses have completely finished basement with built in home theater, composite deck, stone patio, vinyl fence, storage shed, kids play area which 62 Marconi Ave has.
For more information go to 62marconi.IsForSale.com
hi please see virtual home
As experts and advisers, real estate agents have always played an important role for homebuyers. But it’s clear that during the coronavirus era, they have even more responsibility to educate clients on what’s happening in today’s market
The COVID-19 pandemic has caused several negative ripple effects across the U.S. including a huge increase of Americans asking to delay mortgage payments. With mortgages, the rate volatility is mostly constrained to non-conforming loans such as jumbo loans, high-balance conforming loans and investment property loans. For conforming borrowers, rates are still historically low.
How COVID-19 changed the mortgage market
Lenders are increasingly moving away from or raising rates on more risky loans like jumbo loans, high-balance conforming loans and investment property loans.
But since lenders don’t face the same liquidity risk with conforming loans, rates on conforming loans under $510,400 are still competitively priced. Some of the other significant reasons for volatility and disruption include:
· Lenders are raising qualification thresholds from mortgages including jumbo loans, high-balance conforming loans and investment property loans. This means that, generally speaking, borrowers will need better-than-usual credit scores (above 680), a steady job, more cash on hand and more willingness to close a deal on short notice. Mortgage application volume is high across the U.S. With many people trying to obtain mortgages and bank workers adjusting to working from home, banks have struggled to keep up with demand. This means the buying process and getting a mortgage approved is taking longer than usual.
Preparing prospective homebuyers
The process of getting a mortgage is emotional and stressful . Here are a few examples.
· What kind of loan will they need — conventional, FHA or VA?
· What sort of job security do they have?
· How good is their credit score, and will it likely remain steady during the buying process?
· How quickly can they decide to close on a purchase given the current environment and fluctuations?
· Have they gathered all the required financial information (pay stubs, credit reports, W-2, bank statements, etc.) before starting paperwork?
These sorts of questions can help clients think about obtaining a mortgage while COVID-19 causes uncertainty for so many people and businesses.
In all likelihood, the coronavirus crisis will be with us ,it’s prudent to set expectations and explain to buyers that getting a mortgage during the coronavirus can be a little challenging. For some people — those with safe jobs and savings who are seeking a loan within the conforming limit — rates should remain low. However, there may be more documentation needed than usual. Although homebuying now might be technically feasible for many buyers, agents should ensure their clients are entering the process with their eyes open. And if buyers do want to go through the process now, they need the ability to close quickly on a property and adjust to the quirks of pandemic buying.
Mortgage rates ticked down just slightly this week and remain at all-time lows. Rates have consistently trended downward for the last two weeks, but the daily movements have been very modest, despite a slew of economic data series that have seen record one-month improvements.
The reality is that these monthly gains were largely expected – and likely already “priced-in” – and, despite the improvements, the economic recovery still has a long way to go. What’s more, the recent surge in coronavirus case volumes across the country has called into the question the viability of economic recovery. As a result, investors appear to be hanging tight, waiting for surprising data and/or evidence of our society’s ability to function – or not function – amid rising COVID-19 case volumes before acting in a way that would force mortgage rates to respond.
Absent this information, it’s difficult to call where rates are likely to go from here. Positive news could easily jolt rates back upward, making these record-low levels a fond memory, but the gradual reduction of rates could also continue if new developments disappoint. Whichever way they go, mortgage rate movements will be driven by the spread of the virus and our ability to live with it.
With that being said, remember 1% saving in RATE OF INTEREST, can save you approx $12000 so take your pick wisely. RATES ARE LOWEST AND THIS TIME WONT COME