According to an article at Bankrate.com , the Feds did not raise short term interest rates. This move is intended to encourage continued consumer use of credit cards and home equity lines of credit.
For current information on the Wenatchee housing market, contact:
Carol@TopPropertiesWenatchee.com
Or visit her (information laden) website at:
www.TopPropertiesWenatchee.com
source: Feds Hold Interest Rates
I’ve been watching the "Flip That House" program on TV lately and find it interesting. I am, however, quite bothered by the way they calculate "profit". They have a very simple (and misleading) formula for calculating profit. They take the difference between the final sales price and the original purchase price (plus the cost of renovation):
(Selling Price) - (Original Purchase Price + cost of renovation) = Profit. WRONG!
What they have not plugged into the formula were the loan origin fees (to finance the purchase price) OR the selling costs involved to sell the house at the end. Loan origination fees generally run from 1.5% - 3% (and up). Selling costs will run about 8.5%, depending on the county and state. When working with a real estate agent to sell the property, the fees are negotiable so there is some flexibility… but I’m trying to show you a realistic picture of buying and selling costs. And, be sure if you’re getting a loan on a property you intend to "flip" (selling quickly), be sure you do NOT get a loan that has a pre-payment penalty. These penalties can be substantial.
Anyway, let me show you a couple of scenarios from yesterday’s programs:
Home #1
Purchase Price $152,000
Cost of renovation 58,000
Total cost of acquisition: $210,000
Sales Price $315,000
Reported profit: $105,000 WRONG!
Reality:
Purchase Price $152,000
Cost of renovation 58,000
Finance fees @ 1.5% on 80% LTV $1,824
Total cost of acquisition $211,824
Sales Price $315,000
Less 8.5% selling costs: $26,775
Net Sales Value: $288,225 (less original cost of $211,824)
Actual profit: $76,401
* * * * *
Home #2: This one is very alarming when you look at the bottom line!
Purchase Price $1,050,000
Cost of renovation 85,000
Total cost of acquisition: $1,135,000
Sales Price $1,249,000
Reported profit: $114,000 WRONG!
Reality:
Purchase Price $1,050,000
Cost of renovation 85,000
Finance fees @ 1.5% on 80% LTV $15,750
Total cost of acquisition $1,150,750
Sales Price $1,249,000
Less 8.5% selling costs: $106,165
Net Sales Value: $1,142,835 (less original cost of $1,150,750)
Actual profit: <$7915> NET LOSS
* * * * *
Do you see the point I’m trying to make here. When you are calculating profit, please be sure to include ALL costs of acquisition and ALL costs of selling. It’s critical to the actual bottom line.
For answers to your real estate questions, please contact:
Carol@TopPropertiesWenatchee.com
www.TopPropertiesWenatchee.com
source: Profit From Flipping Houses
Here is an excerpt from the Bankrate website about what’s happening with home mortgage interest rates:
"Rate: 6.49 percent (30-year fixed) Average points: 0.36
Mortgage rates rose a tiny amount after falling five weeks in a row. Rates didn’t move much because there has been little economic news of note in the past two weeks. That is set to change later in the week, with the second-quarter GDP report coming Wednesday and the August employment report arriving Friday. The bond markets will scrutinize the employment report for signs that the economy is weakening or that it is unexpectedly strong. The average 30-year fixed rate rose to 6.49 percent from 6.48 percent. The average 15-year fixed, which is a popular option for refinancing, rose 1 basis point, to 6.2 percent. A basis point is one-hundredth of a percentage point. On bigger loans, the average jumbo 30-year fell to 6.73 percent from 6.74 percent. Adjustable-rate mortgages fell. The popular 5/1 ARM dropped 2 basis points to 6.22, while the one-year ARM slipped 2 basis points to 5.98 percent".
* * * *
I like Bankrate as a source of current information on mortgage rates, but they also have articles on just about anything involving money. Bankrate.com is only one source of information and it’s good to shop, but this is definitely a site worth bookmarking and checking in on occasionally. From a customer service point of view, I almost always prefer to have my clients work with a local Wenatchee area lender (versus internet lender). In my experience, the rates are competitive… and transactions generally close faster and smoother.
For answers to your real estate questions contact:
Carol@TopPropertiesWenatchee.com
Stay current with real estate news, info, and trends in the Wenatchee area
source: The State of Mortgage Rates
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Carol@TopPropertiesWenatchee.com
"Falling" may not be the proper term to describe what’s currently happening with mortgage rates because I think of "falling" as a drastic drop. Rates have come down for several weeks, though. Here’s a link to additional information and some details on what’s happening with mortgage rates.
Rates are still good and it’s a good time to buy, before values go up any more. Remember, our local home appreciation rate in the Wenatchee area is forecast at 16% for the next 12 months. If this holds true, that means a $200,000 home on today’s market will cost $232,000 next year at this time.
For answers to your real estate questions in North Central Washington contact:
Carol@TopPropertiesWenatchee.com
Search homes and land for sale in Wenatchee and the surrounding area
source: Mortgage Rates Falling
For those people who really want to buy a home but are not in a position to get financing because of low credit scores, I have good news! There is a program available that may allow you to get into a lease/purchase, with up to 2 years to raise your credit scores in order to get financing. The greatest advantage to this program is that the selection of homes is very large. We’ve always had a severe shortage of lease/purchase homes in the Wenatchee area. Now the inventory has opened up dramatically… and we offer the advisory staff to walk you through the process of improving your credit scores, so you can finance the home as soon as possible.
If you’d like additional information on the lease/purchase program, please contact me:
Carol@TopPropertiesWenatchee.com
Search homes and land in the MLS (local, statewide, nationwide)
Current Wenatchee real estate news, info & trends (through pictures & commentary)
|
Here are today’s rates, as quoted at Bankrate.com
LOAN TYPE |
TODAY | +/- | LAST WEEK |  |
|||
| 30 yr fixed mtg |  |
5.81% |  |
5.86% | |||
| 15 yr fixed mtg | |
5.46% | |
5.48% | |||
| 5/1 ARM | |
5.50% |  |
5.49% | |||
| 30 yr fixed jumbo mtg | |
6.08% | |
6.12% | |||
| 5/1 jumbo ARM | |
5.63% | |
5.62 |
Rates are bobbing up and down at bit, but it is expected rates will
rise overall during this calendar year, and I anticipate by the end
of the year we will see a rate of about 6.25% for a fixed 30 year loan.
This is still an excellent rate and should not affect real estate sales
activity overall.
As I mentioned in one of my previous articles, I recommend utilizing
the internet as a source of information, but suggest interviewing several
local lenders to actually work with on a specific transaction. If you’d
like some pointers on how to negotiate with (and choose) a lender, please
contact me:
Carol@TopPropertiesWenatchee.com
http://TopPropertiesWenatchee.com
source: Current Interest Rates
Not surprisingly, mortgage rates are inching up. For daily updates on current interest rates, visit my Mortgage 101 site or Bankrate.com .
Whether you’re considering buying real estate in the Wenatchee area or some other part of the country, keeping up with the trend of current rates is useful. When shopping for rates, the internet can be very useful but I, personally, recommend working with a banker or mortgage company in your local market. You can use the information you gleen from the internet in negotiating with any lender, but I’ve found local mortgage professionals give more personalized service and are easier to communicate with than an unknown entity from some website. Just as importantly, I have also found that loans are processed much more efficiently when utilizing local lenders who are familiar with the local market.
Please contact me if I can provide additional information.
Carol@TopPropertiesWenatchee.com
http://TopPropertiesWenatchee.com
source: Interest Rates Are Rising
Bankrate.com has an interesting article, with a link to compare closing costs in your state to those in any other states. "Closing costs" include a long list of various charges for securing a mortgage, or when refinancing a home. The total of closing costs can really drive up the cost of buying a home, so it’s worth paying close attention. I recommend you check out the article and use it to your advantage when you are shopping for a mortgage. Here is a direct link to a sample closing cost list in Washington state.
When shopping for a mortgage, whether it’s in Wenatchee, Washington or any other city in the country… the closing costs are a significant factor in determining the actual cost of your mortgage.
source: Closing Costs
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