What Lower Interest Rates Mean For You

In REAL dollars and cents

As I write this, interest rates are close to the lowest they’ve been in 3 years, making this a GREAT TIME to buy (or possibly to refinance your existing mortgage).

As an example, I created a little side-by-side comparison of a 30-year fixed conventional loan, using a $300,000 purchase price, 20% down payment, and a buyer with a 740 credit score – your interest rate could be as low as 3.625% in today’s market!

Comparing that to the exact same loan with a 4.875% interest rate (which is where rates were at 3 years ago and is still a great rate in itself, especially when you look at the big picture of mortgage interest rates over the last 30 years  ** for details on this keep scrolling down **) and notice the difference in monthly payment:

 

 

 

 

 

 

 

 

 

 

Now obviously, your individual credit score and down payment amount, as well as the loan type you’re using will impact your interest rate, but you get the picture — using the example above that’s a monthly difference in payment of $176!

Next, of course, we need to talk about how that same difference in interest rate effects the amount of money you’d be paying in interest over the life of the loan: it would cost you over $63,000 MORE with a 4.875% interest rate versus a 3.625% rate on that same $240,000 loan — and that’s not nothing!

Historical Perspective

For a quick trip down memory lane you can click on this interactive chart (provided by one of my favorite lenders, Cheryl Bullard at Premier Nationwide Lending) to see what interest rates have been doing over the last 30 years, and you’ll see what I mean when I say that that 4.875 rate is still nothing to sneeze at. (Seriously: look at where we were at in 1989!)

If you’d like more information on this topic or are ready take advantage of near historically low interest rates I’d love to chat with you about it.  You know where to find me! 😉

Veteran’s Benefits

News & updates for homebuying veterans

Usually around Veteran’s Day or other patriotic holidays I like to post reminders about some of the home buying benefits or specific programs offered to our nation’s vets, or updates about same.  And then it occurred to me: why am I waiting for just those few occasions? It’s not like those are the only days our armed services members need to know this kind of stuff.  So with that thought in mind, here are a few updates on new and existing home buying programs all service members, whatever their status, should be aware of.

VA LOAN LIMIT INCREASES

The Veteran’s Administration has announced an increase of VA loan limits  to $484,350 in Texas, up from $453,100.  And just to clarify, VA loan limits are not a cap on how much an eligible veteran can borrow, but a determination how much money qualified veterans can borrow before needing to make a down payment.  Meaning VA borrowers can definitely buy a home with a pricetag higher than $484,350, but anything above that amount will require a down payment, usually about 25% of the difference between the VA loan limit and the purchase price of the home.

M.O.M. – MILITARY ON THE MOVE

U.S. Military on the Move is a FREE REAL ESTATE REBATE PROGRAM for anyone who has served in the US armed forces. Not only does JB Goodwin Realtors offer superior, military-specific real estate knowledge to aid  with your real estate needs, we also offer you CASH BACK when we help you buy or sell a home.

There is no gimmick.  When we help you buy or sell a home, we will give 20% of our commission to you at closing.

Who qualifies?

Whether you are active duty, retired, wounded warrior, or separated, if you have served any period of time in our US armed forces, we wish to thank you for your service by offering this program to you.

What are the Benefits?

  • The rebate is given to you at closing
  • No waiting for a rebate check
  • No rebate limit
  • The freedom to choose your lender
  • Our agent partners are trained in national & state-specific veteran benefits

AMERICA’S FINEST

Through one of our preferred mortgage lenders, Premier Nationwide Lending, all active duty or retired military are eligible to take part in their “America’s Finest” program, which allows for a $500 credit toward your closing costs, whether or not you are using your VA eligibility to purchase.    This program is currently being offered through the end of this this year; if you have any questions about or would like to take advantage of this offer I will happily put you in touch with a loan originator from Premier.

As always, a huge thank you to all our current or former military service members (and their families) for making the sacrifices you do.  Please reach out to me if home buying is a dream of yours I can help you achieve; it will be my honor.

To Inspect or Not to Inspect

Why is this even a question?

I’ve always thought buyer’s inspections were kind of a no-brainer when it comes to purchasing a home.  If I’m dropping a quarter of a million dollars (or much, much more) on something, you better believe I’m gonna want to have someone who knows what to look for give it a good going-over before I commit to paying for it for the next 30 years!  I mean, it’s not like you can just browse through Amazon Reviews to get the lowdown on your potential new house — only a trained professional can provide a comprehensive picture of the home’s overall condition.

So I was quite surprised to find, when reading the comments section of a recent online real estate magazine article on this very topic, that so many Realtors seem to disagree, or are at least on the fence about whether or not to encourage buyers to get an inspection.  As I’m reading the negative comments I’m shaking my head and thinking, are you nuts!?

First of all, yes I know: if you want to keep your faith in humankind NEVER READ THE COMMENTS!  Having already broken that golden rule, however, my curiosity was piqued.  I decided I should conduct my own small, informal survey of other real estate agents to get their thoughts on the subject.

Now let me backtrack a moment, for anyone unfamiliar with the home buying/home inspection process:

When we write an offer to purchase a home, it’s common practice to include an option period (generally 5 – 10 days) for which a buyer will pay a nominal fee (like $100, say) and which gives them the unrestricted right to terminate the contract for any reason without losing their earnest money deposit (which will probably be several thousand dollars, depending on the price of the home).  And this option period is used, in most cases, to hire an inspector to come out and go over the house very carefully, making sure buyers know exactly what they’re getting before buying.

The inspector will check out the the electrical and plumbing systems, the HVAC and any appliances that will convey with the home, like the stove and the dishwasher.  They will look at the water heater, check out the condition of the roof, measure attic insulation levels, look for any evidence of foundation troubles or wood-destroying insect activity.  They will make sure windows and doors latch properly and check all the home’s safety features like smoke detectors and stair rails. Outside, the inspector will check out how sprinkler systems and garage doors are functioning, as well as make note of any tree limbs brushing the roof (which can lead to damage/displacement of shingles) or vegetation growing too close to the foundation (which can trap moisture and lead to erosion).

While sellers are legally required to disclose to buyers any of the home’s known defects or anything which might negatively impact its value, oftentimes they are unaware of their home’s flaws.  For instance, I can’t say I have EVER crawled out on my roof to make sure all the shingles are intact; I just assume they are.  Or if a seller listed their home for sale during our scorching central Texas summer, would they know their heating system was malfunctioning, or would that fact only be discovered by the new buyers the following January?

You can see why having this information is key, especially if this is the buyer’s first home where they might not necessarily know what kinds of things to look for themselves, or in an older home which is prone to age-related defects like we all are.

So why would a real estate agent, especially one representing the buyers, not encourage them to get an inspection?

What I gathered from my little survey was that it really comes down to the quality of the inspector themselves, and to what they uncover.  While some agents complained that inspectors overlooked obvious defects in the home which then caused big problems when they were later discovered, a far more common complaint was the reverse: the inspector uncovered too many little, inconsequential flaws (their words, not mine) which then jeopardized the sale by scaring off the buyers, or inciting them to present a massive list of demands for seller repairs or giving them apparent grounds to renegotiate the sales price.

And this is where Realtors can help by setting proper expectations up front with buyers with regard to what they can and should be looking for in a home inspection.  Yes, inspectors will (and should) disclose even minor defects, like interior doors that stick or bathroom faucets in need of re-caulking, but agents need to work with buyers in understanding that just because a small flaw exists doesn’t mean it needs to be addressed prior to the sale.

I encourage my buyers to focus on big ticket items or safety risks and not to get bogged down with minor defects.  I remind them that the purpose of the inspection is to make sure the home they are considering is solid and safe to live in.  I try to convey that the things to ask a seller to repair need to be reasonable.  Or if a seller has indicated they don’t wish to make any repairs, that they be reasonable in making a financial allowance to the buyers so that they may have it repaired after the sale.  I try to appeal to everybody’s sense of decency and fairness, and remind them (if need be) that we are all working toward the same goal, which is the sale of a particular home!  The inspector just provides the information needed so we can all work together to accomplish this.

Don’t shoot the messenger, you know? 🙂