How is the real estate market going? Good for Buyers and Sellers – The Ukiah Daily Journal
Since buyers want to buy their new home at the lowest possible price and sellers want to sell that house at the highest possible price, this is usually a buyer’s market or a sellers’ market. . At present, however, it is both. How? ‘Or’ What? Lowest interest rates.
Because interest rates are so ridiculously low right now, buyers can afford properties at a higher purchase price, which in turn benefits sellers. When people buy a home, they bear the cost of monthly mortgage payments as well as other costs such as taxes, insurance, and maintenance, which add up to an additional 3% of the purchase price over the course of the year. . Today, interest rates are about one percent lower than they were a year ago. Last year, the average monthly cost of homeownership on a $ 400,000 property would have been $ 2,850; this year it is only $ 2,580, a decrease of 10.5%.
If it’s good for buyers and sellers, you might be wondering who this market is bad for – it’s the lenders. They’re basically subsidizing the housing market right now. Even though house prices were up about 10% from last year around this time, just one 1% drop in interest rates makes this house cheaper to buy today than it is. was a year ago.
If, like most people, you need a home loan to buy a home, a good rule of thumb for determining the most expensive home you can afford is that your monthly mortgage payment is $ 40 or less. % of your gross income (including taxes, insurance and maintenance).
So, to buy a $ 400,000 house now, you would need a combined family income of around $ 65,000; whereas, if the rates were one percent higher, you would need a combined household income closer to $ 72,000. Let me summarize this: If you and your partner or spouse work full time and earn about $ 20 an hour each, you can afford a mortgage payment on a house of $ 400,000. Keep in mind that income is not the only financial consideration when qualifying for a home loan. If you’re curious about what you can afford, make an appointment with your real estate agent to review the details of your particular financial situation and they can refer you to a local loan officer.
There are basically two levels of loan qualification. You can be pre-qualified or pre-approved. To be prequalified all you need to do is sit down with your loan officer and do some simple math based on your income, how much debt you carry, and if you have any savings to use. for a down payment and closing costs. . Being pre-qualified is much better than not being pre-qualified, but it’s not as good as being pre-approved.
Getting pre-approved for a loan is more complex, but it’s a great way to increase the chances of getting the property you want. Becoming pre-approved means working with a loan officer who will review all of your assets, liabilities, tax returns, W-2s, credit history, and any other relevant financial information to begin the loan application process. The loan officer will also perform a credit check, verify employment, and make sure you have documents proving you have enough cash for the down payment. The main difference between being pre-approved for a loan and applying for it is that when you are pre-approved, you simply haven’t found the property you want to buy. The only remaining step to secure the loan is appraisal.
When you are pre-approved, sellers are much more likely to accept your offer than that of a potential buyer who cannot prove that they can afford the property in question.
If you have any questions about property management or real estate, please contact me at [email protected] or call (707) 462-4000. If you have an idea for a future column, please share it with me and if I use it I will send you a $ 25 gift certificate to Schat’s Bakery. To view previous articles, visit www.selzerrealty.com and click on “How’s the Market”.
Dick Selzer is a real estate broker who has worked in the field for over 45 years.