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Home Ownership is Still the Best Option

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Home Ownership is Still the Best Option, According to Lenders

Home ownership is still the best option in the market areas of Owensboro, Bowling Green, Huntingburg, Evansville, Newburgh, and Louisville .  Affordability constraints have emerged as one of the biggest challenges to the continued housing recovery since the 2008 crash. However, based on the breakeven rate, it will be a long time before renting becomes the more sensible and attractive option.

home ownership

Today, mortgage rates are still at an all-time low – 4.00% for a 30-year conventional loan. Even if mortgage rates were to rise by a considerate amount, they are not likely to impact home buying nationally to any significant degree. That is the conclusion that many have reached when looking at the so-called mortgage breakeven rate, which refers to the rate at which mortgages would need to be at to make rent the more sensible option.

On a national level, the mortgage breakeven rate is generally believed to be around 8% or higher. This means that, all things being equal, the cost of buying would be the same as the cost of renting when mortgage finance rates are 8%. Of course, the breakeven rate varies across regions and is said to be much lower – perhaps 5% to 6% – in places like San Francisco and new York City.

While mortgage rates are widely expected to rise as policymakers roll back post-crisis stimulus programs, they remain less than half of the breakeven rate. The average commitment rate on a 30-year fixed-rate mortgage averaged 3.90% in the week ended August 10, according to Freddie Mac. The 15-year fixed rate was 3.18% and the 5-year adjustable rate was 3.14%. Rates peaked in December, when the 30-year fixed rate climbed to 4.32%. They have been in general decline ever since, partly in response to monetary policy expectations.

Of course, the breakeven rate doesn’t tell the whole story. It doesn’t consider the myriad of other affordability challenges that have made homeownership less attractive than rent, especially for first-time buyers. Stagnant wages, surging home values and supply-side constraints have all made homeownership out of reach for many Americans.

However, there is no denying that an increased demand for housing is on the rise, especially with low inventory numbers. Unemployment is the lowest it has been in 16 years and job creation remains steady. As a result, home prices are up in 64 consecutive months when measured in year-over-year terms. For now, the housing market appears to be on even keel as there are more positive factors boosting it than dragging it down.

Based on the trajectory of home values, buying remains the logical choice.  While rates and homes prices remain low they are steadily moving upward, so NOW is the right time to take advantage of your Buying Power!
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Six Reasons You Should Buy a Home in 2017

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If you’re thinking about purchasing a home in 2017, you’re not the only one. Here’s why…

This is the perfect time of the year to “warm up” for the house hunt so that you can hit the ground running in 2017 as soon as you’re ready to buy your new home. Whether you’re looking in Southern Indiana or Western Kentucky, the prep work is relatively the same.

Check your Credit Score

A credit score is a numerical representation of your credit report. FICO scores range from 300 to 850, and the higher your score, the better. Typically, you’ll get the best interest rate on a loan if your score is 740 and above. A higher credit score should warrant you a lower mortgage rate. A lower rate, although it may only be one or two percent lower, can mean saving you thousands of dollars a year. If your credit score falls short, get busy repairing it!

Don’t Open New Credit Cards

Tempting as saving at checkout can be, opening new credit in 2017 may hurt your chances of getting a mortgage, or at least of getting the best rate on a loan. By opening a new credit card account, you’ve created a new line of credit. That credit line, and what is borrowed, can change the application numbers and jeopardize the application.

Keep Tabs on Interest Rates

If you hear that interest rates are at historic lows, or that interest rates are on the rise, you should not assume that you can get the rock-bottom rate in 2017. Not everyone gets the same interest rate on a mortgage loan. It depends on your financial picture and on the lender you choose. Closing costs can vary as well, although Jagoe Homes currently offers up to $2000 in closing costs with our new incentive based on using our approved lender, American Mortgage Services Company.

2017

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Purchasing a Home is now 38% Cheaper Than Renting

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Is renting or buying a better financial bet?  Although the gap between renting and buying is narrowing across the U.S., home ownership is still 38% cheaper than renting.  Rising mortgage rates and home prices have narrowed the gap over the past year, though rates have recently dropped and price gains are slowing.  Now, at a 30-year fixed rate of 4.5%, buying is 38% cheaper than renting nationally.

Even though prices increased sharply in many markets over the past year, low mortgage rates have kept home ownership from becoming more expensive than renting.  Perhaps the best financial reason to buy is that it enables you to gradually acquire ownership, or equity.  Renting has the serious downside of not acquiring equity, so renters never end up owning and must continue to pay rent, perhaps for their entire lives.  Yet, if people rent at low enough costs, they may have money left over to invest and make up for their lack of home equity — if they have the discipline to put money aside.

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Six Stellar Reasons to Purchase a Home in 2016

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We are well on our way into 2016, and counting down the days until we can walk outside without becoming a human popsicle.  For those of you who plan on purchasing a home in this new year there’s a whole lot to celebrate.  Why, you ask?  A variety of financial vectors have dovetailed to make this the perfect storm for home buyers to get out there and make a fantastic offer.  Here are six reasons to be thankful for home builders while ringing in the new year:

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Three Often Overlooked Real Estate Tax Breaks

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Minimize what you’ll owe and maximize what you’ll get back at tax time by reviewing these often overlooked real estate tax breaks.

Like clockwork, at the beginning of each new year, it seems that folks start making plans to either buy a home, move up or downsize, or simply spruce up and upgrade their current home as part of a New Year’s resolution.  And then, of course, there’s tax season. Prep work begins as soon as those big envelopes start arriving in the mail, containing an assortment of tax forms — documenting everything from what we earned last year to what we paid out for mortgage interest.

The first step is to make sure you’re not actually missing any tax deductions and breaks. The tax code is 4 million words and more than 70,000 pages long. But here’s a dirty little secret: most Americans tap into fewer than 15 pages of it.

To ensure you’re not missing out on anything you’re due, consider these three real estate–related tax breaks that are often missed, overlooked, and underused.

taxState and Local Tax Breaks for Green Home Improvements

As the recession recovery made its way into full swing back in 2013, many renters and current homeowners began embarking down a path of buying homes that are energy efficient for a variety of reasons, including cash savings on utility bills.  Many of those improvements are eligible for state, county, and/or city tax credits — or tax breaks. If you’ve installed low-E windows, insulation, low-flow plumbing appliances, tankless water heaters, or solar panels last year, dig up your receipts. Trust us, it’s worth the time.

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The Difference Your Interest Rate Makes

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Do you know the difference your interest rate makes?  With interest rates on the rise, make sure that the money you spend on housing is well spent.

Senior economic analysts suggest that mortgage rates have been rising and are expected to increase in the near future​Home sales and home prices are generally impacted negatively ​when mortgage rates ​rise.

Personal income and family budgets usually remain the same, whether interest rates are up or down.  However, when interest rates​ are up,  people’s purchasing power is less.   With knowing that much of a monthly mortgage payment depends on the interest rate, you should be making your home purchase decisions now, or in the real near future.   Why wait, when you can get what you want now, for less?  

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Where are Mortgage Rates Headed?

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Where are Mortgage Rates Headed?  This Fall?  Next Year?  The interest rate you pay on your home mortgage has a direct impact on your monthly payment.  The higher the rate, the greater the payment will be.  That is why it is important to look at where rates are headed when deciding to buy now or wait until next year.

Below is a chart created using Freddie Mac’s July 2015 U.S. Economic & Housing Marketing Outlook. As you can see interest rates are projected to increase steadily over the course of the next 12 months.

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New 3% Down Mortgage Program!

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Freddie Mac is now offering its new 3% down mortgage program — Home Possible Advantage.

The loan program requires 3% purchase down payment. The program enables a borrower to possibly reduce their interest rate while at the same time reducing their expensive monthly mortgage insurance.

For Freddie Mac’s program, borrowers do not have to be first-time home buyers. The GSE enables those who are purchasing to use 100% gift funds for their down payment, closing costs and escrow impounds. It is not required to have any sort of payment reserves.

Home Possible Advantage is a smart choice…. offering affordable lending, flexibility and many other benefits.

Your Top Questions Answered:

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A Quick Look at USDA Loan Benefits

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usdaThe United States Department of Agriculture (USDA) offers a guaranteed loan program for single family housing.  From USDA’s website, they explain that, “This program assists approved lenders in providing low-and-moderate-income households the opportunity to own adequate, modest, decent, safe, and sanitary dwellings as their primary residence in eligible rural areas.  Eligible applicants may build a dwelling in an eligible rural area.  The program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural homebuyers.”  Here is a quick look at USDA loan benefits:

 

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‘There may never be a better time to buy a home,’ says analysts.

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If you’ve been considering buying a home, 2015 might be the year to do it.  The next six months tipped to be a unique ‘window’ to lock into historically low mortgage interest rates.

Experts predict this will be the year the Federal Reserve starts to raise interest rates. If it does, mortgage rates will rise as well, which is why we are saying this should also be the year you become a homeowner.

Why now?

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