What causes mortgage rates to fluctuate?

When purchasing a home, you’re more than likely going to need a mortgage to assist you with the purchase. A main factor that determines the long term financial commitment of your mortgage is the mortgage’s interest rate. Interest rates can fluctuate based on many different external factors. Some fluctuations happen quickly while other times mortgage rates remain more stable over time.

Economic Growth
One major factor in determining mortgage rates is economic growth. The economy will grow and fall based on many different factors including natural disasters, wars and other major events happening throughout the country. During times of economic growth the number of home buyers will typically increase creating a higher demand for mortgages. This will in turn increase mortgage rates. On the other hand if the economy is on the decline, mortgage rates will begin to fall due to reduced demand.

Inflation
Another factor that comes with a growing economy and that can cause mortgage rates to fluctuate is inflation. Inflation happens when prices increase causing the purchasing value of a dollar to drop. This slows the economy. When this happens mortgage rates will rise because fewer people are able to afford to purchase homes.

Housing Market Conditions
A third factor that indirectly causes mortgage rates to fluctuate is the condition of the housing market. When the housing market is in a seller’s market there is a higher demand for mortgages. With fewer homes on the market either being built or re-sold this will cause mortgage rates to rise. On the other hand during a buyer’s market when there is plenty of inventory and less buyer demand, mortgage rates tend to decrease.

The Federal Reserve Board
The Federal Reserve Board is the central bank of the United States and collects economic information to make decisions about how money is allocated. With this economic information the Federal Reserve Board will determine how the money supply needs to fluctuate to stabilize the economy. Although the Federal Reserve Board can not directly change mortgage interest rates, their decisions have a trickle effect. For example if the money supply is increased there is downward pressure put on interest rates, and if the money supply is decreased there is upward pressure on interest rates. This is done in an effort to either stabilize the number of homebuyers by increasing mortgage rates, or spark economic growth by decreasing mortgage rates.

Why you need a Realtor in the Digital Age

As the digital world evolves, there are a wide variety of resources online to aide your home buying or selling process. Because of the large array of tools available, and mostly for free, there can be some questions as to whether or not a Realtor is really necessary. Regardless of the tools available however, Realtors are extremely helpful and a necessary part of selling or buying a home in 2017.

1. Realtors have access to potential homes before anyone else
When searching for a new home, especially when the market is a strong seller’s market, it can be challenging to find the time to look at potential homes before they’re swiftly off the market again. That’s why a Realtor can be an incredibly helpful tool. Realtors will have access to homes immediately, and sometimes even before they hit the market. This gives them a chance to assess their customer’s needs and exclusively show them homes before others have the chance to submit offers. Realtors have strong relationships with other Realtors and community members making this a possible option during your home search. If you were to forego a Realtor, the chances of you having access to potential homes wouldn’t happen nearly as quickly, dragging out your home buying process even more.

2. Realtors know the ever-changing market
A large piece of buying or selling your home is to be able to assess the state of the real estate market. Understanding the state of the market will give you imperative information about when the best time to list your home or search for homes is. For example, during a seller’s market where there are a ton of buyers and low inventory, this is a great time to put your home up for sale to get top dollar. Seeking the assistance of a Realtor will help you expertly assess the market and will give you key information about when the right time to buy or sell is. This will help you get top dollar for your current home, or buy a home at a great price.

3. Realtors have expert negotiation skills
When purchasing a home, it can be overwhelming to consider potential work that needs to be done. On the other hand, when selling your home you want to get top dollar in order to afford your next house. Hiring a Realtor will help you get more house for your money or a higher price for your home by using their expert negotiation skills. Realtors who are experienced consider many factors, including past experiences, when finding a fair price for a home and know how to negotiate with other Realtors. Not all negotiations are straightforward monetary negotiations either. For example, let’s say you’d like to purchase a home but the carpet throughout the home is in bad shape. A Realtor will be able to, in this instance, negotiate either a lower price for the home or updated carpet as a contingency for the seller. These case by case situations are commonly identified by qualified Realtors, making them a valuable resource for your home search.

4. Realtors handle the behind the scenes work for you
Another reason to hire a Realtor in 2017 is for the work they do behind the scenes. There are many steps that take place throughout the process of buying or selling a home that a Realtor handles throughout the process. They will typically have relationships with mortgage lenders, title companies and other Realtors which will help them aide you throughout the entire process. There are many pieces of crucial paperwork that are ultimately required throughout the process from the initial seller’s agreement to lead based paint disclosure agreements for example that a Realtor knows like the back of their hand. Without their help it can be extremely cumbersome to ensure each detail is taken care of on your own.

Low mortgage rates & low inventory continue though the Spring

By now, just about every buyer knows there simply aren’t enough homes for sale in the Greater Lansing market to satisfy the current housing demand. But despite the shortages, rising prices, and bidding wars, the number of homes to be sold in 2017 is expected to increase about 3.5 percent.

Mortgage rates continue to be below 4.0%
Contrary to earlier projections of higher interest, mortgage rates continue to be below 4.0%.  This week’s average low of 3.85% is consistent with the 2016 rates which helped drive a huge spike in home sales.  Thus far, 2017 sales have continued at the same pace.

Low inventory = strong seller’s market
The number of available homes for sales is currently at approximately 1900 units for the five county Greater Lansing Area.  This is an increase of 200 units over the number of available home listed on April 1st, but well below the normal average of 2800 units.  Buyers can expect homes to have offers within a few days of being listed for sale.

Home’s are increasing in value
Buyers should expect to see higher price tags on homes in 2017.  First Quarter Sales Statistics from the Greater Lansing Association of Realtors shows that the average sales price of a home was 2.3%  lower than this time last year and nearly 7.2% less that the average sales price reported in the Forth Quarter of 2016.

While the average sales price for the entire Greater Lansing Association of Realtors was $139,690, the BHHS Tomie Raines average was nearly $170,000.

Flat sales due to historically low inventory during the First Quarter do not indicate a trend.  Area home values are expected to increase 5 to 7 percent in 2017 and another 3 to 5 percent in 2018.

 

2017 Housing Inventory Shortage Leads to Mid-Michigan Seller’s Market

There has consistently been a housing inventory shortage in Mid-Michigan this season. This means the number of buyers outweighs sellers and the number of properties available, pushing the market into a seller’s market. With housing inventory shortages, an atmosphere is created where we see quick home sales that often result in an auction mentality, which can be difficult for homebuyers.

How low is the housing inventory in Mid-Michigan?
The absorption rate is what is used to assess the state of the market to determine whether there is currently a buyer’s or seller’s market. The absorption rate is the number of months it would take to sell all of the available listings on the market. A balanced market, where there is no advantage for buyers or sellers is usually an absorption rate of 6 months. However, currently the absorption rate has dropped to 2.5 months and in many markets at many price points is below 2 months. This means that there are few listings available, and when they become available they are getting purchased quickly.

What the housing inventory shortage means for homebuyers
If you’re considering buying a home in Mid-Michigan, don’t let the low inventory and seller’s market deter you. It’s still possible to get an ideal home in your price range, you’ll just need to be in the mindset to move quickly. Buyers need to work with a great agent with the best tools to be successful. Experienced agents will be able to get buyers in front of new properties quickly, and will be able to write reasonable and competitive offers  to help get buyers into their dream homes. As a buyer in a seller’s market, it’s important to be patient and fast moving. You may find that for a period of time you won’t find a property that suits your needs and all of the sudden, within a few days, you’re bidding on multiple properties that suit your family. During a seller’s market you’ll most likely end up bidding on multiple properties until you make an offer that sticks.

A seller’s strategy during a seller’s market
If you are considering selling your home, but haven’t taken the plunge yet, now is an ideal time to put your home up for sale. When the market has a short absorption rate, seller’s will be in the driver’s seat leaving them in a position of multiple offers, higher bids and a shorter sale period. A seller will need to be completely ready to move in a seller’s market, because chances are their home won’t stay on the market for long.  A seller should look for a qualified and savvy agent that helps them take advantage of the current state of the market. They should find an agent with the best tools available to market their home properly to extract the highest possible price, in the shortest time,  with the least inconvenience to them.

 

 

Homes selling at the fastest pace in a decade

“Severe” housing shortages are prompting existing homes to sell significantly faster this year, propelling home sales to the highest pace in more than a decade. In the Greater Lansing market, 48% of homes are selling in less than a month.

Lansing area buyers are finding available properties to buy is a strenuous task. Showings are occurring immediately after the listing appears and multiple offers may follow within hours. To secure a home, a buyer must have financing in place, be prepared to make a quick decision, consider a full price offer and expect the possibility of being in competition with other buyers.

Lower Mortgage Rates
Mortgage rates have dropped below 4 percent for the first time since November, with home buyers taking advantage of the lower borrowing costs. The average 30-year fixed-rate mortgage fell to 3.85 percent for the week ending April 20. “We are in the spring, and people are out looking to buy homes,” says Len Kiefer, deputy chief economist at Freddie Mac. “These low rates are really going to help out with affordability.

How a Smart Home Is at Risk

Smart homes can be susceptible to viruses, if homeowners aren’t careful.

A flood of inexpensive security cameras, thermostats, and other internet-connected devices have come to the market, and many of them are carrying minimal safeguards against remote hacking. This is a privacy threat allowing hackers to access internet-enabled cameras, infect digital thermostats, and attack computers where bank account information or sensitive data is available.

These are some of tips experts suggest for how to better secure a smart home:

  • Do a hard reset: Some basic computer viruses that lurk on home routers and digital video recorders are unable to survive a hard reset. If an infection is ever suspected, power off the machine.
  • Update your password: Don’t use simple passwords like “12345” or “admin.” Have a unique username and password to protect the machine from threats.
  • Perform updates: Some companies offer software patches if a security vulnerability threatens a device. But the user is the one who has to initiate these updates. Enable automatic updates, whenever possible.

How a Realtor’s Market Analysis and an Appraisal Differ

property valueEstablishing a home’s market sales price is equally important to buyers, sellers, lenders and real estate professionals. To help transactions proceed quickly and efficiently, Realtors and appraisers both utilize information from the local Multiple Listing Service (MLS).

The MLS is a professional member-based cooperative that contains a wealth of information including active listings, homes that have recently sold, tax roll data, historical data, and market trends such as how quickly homes are selling and how close they sell to the original listing prices.

Using this data, licensed real estate professionals prepare a comparative market analysis (CMA) to help sellers choose a listing price for their homes and to help buyers make offers. The CMA is a report that includes recently sold homes and homes for sale that are similar to the seller’s home in location, appearance, features, and general price range.

If the buyer is receiving financing through a bank, the bank will order an appraisal, using the same MLS data, but with some differences. A bank appraisal is performed by a licensed appraiser to determine market value. Comparable homes similar to those in a CMA are used to compare physical features, property tax records and recent solds to determine whether values are trending up or down.

In short, the CMA introduces consumers to the ever-changing marketplace of homes for sale and those properties that have recently sold. The appraisal determines market value for the bank so that the bank doesn’t lend too much money on a single property. Together, CMAs and appraisals help consumers buy and sell homes.

Why You Shouldn’t Worry About Rising Interest Rates

When mortgage interest rates rise, you may be tempted to put your home buying plans on hold, but there are three reasons you shouldn’t let higher interest rates deter your home buying plans.
mortgage rate
1. Interest rates fluctuate. Mortgage interest rates rise and fall based on the lender’s viewpoint toward the economic outlook. News that suggests a slowing economy tends to bring rates down, while a rosy jobs report can send them back up.
Solution? When you shop for rates, shop lenders using the same type of loan (– 30-year fixed rate, adjustable, etc.) and compare closing costs.

2. You have some control over rates. The rates you see advertised aren’t what you’ll necessarily pay. They’re available only to those with the best credit histories, those who are able to put at least 20 percent down, and those borrowing well within their means.
Solution? Talk with your lender about ways to improve your credit profile. If you’re stretching to buy a home, expect to pay higher interest rates.

3. Rates are currently a bargain. Between 1972 and 2008, mortgage interest rates averaged about 9%. Today, they’re a little over four percent. During the summer of 2016, rates were typically between 3.6% ($4.60/thousand) and 3.8% ($4.80/thousand). This difference of 20 cents translates to about $20 a month in monthly payments on a $100,000 loan.
The solution? Have some perspective. Is a small increase in the monthly cost of a home mortgage a good reason to continue paying rent?

Six Easy Low-cost Energy Savers

According to EnergyStar.gov, the energy saving average American household spends more than $2,200 a year on energy bills, with nearly half of that amount spent on heating and cooling. Here are six easy, low-cost ideas to cut those bills down.

1. Change your air filters. It’s a chore that’s easily forgotten, so put it on your calendar every one month to three months. Dirty filters slow air flow causing your heat and air conditioning units to work harder and break down faster.

2. Wash clothes in cold water. This one’s a surprise, but energystar.gov claims that cold water saves energy and can be just as effective as hot. For dark, bright colors that bleed or delicate fabrics, use cold water (80°F). For man-made fibers, knits and jeans, use warm water (90°F). For whites, typical dirty clothes and diapers, hot water (130°F or above) is best to remove germs and heavy soil.

3. Seal and insulate your heating and cooling ducts. Air ducts can waste energy, so sealing and insulation can save as much as 20 percent on our energy bill or more.

4. Seal windows and outside doors. All it takes is a little caulk and you can stop small leaks that add up to big money. Test for leaks on a windy day by lighting a candle and holding it near window seals. If the flame moves, you’ve got a leak.

5. Upgrade to a programmable thermostat. If you’re gone at the same time every day, a programmable thermostat can lower or raise the temperature which saves energy… and saves, you nearly $200 a year.

6. Have your HVAC serviced regularly. A service check of you Air Conditioner in the spring and your furnace in the fall can improve efficiency and possibly prevent equipment breakdowns. The technician will test air flow and parts that may need replacement.

5 Advantages of Selling Your Home in The Winter

winter-home-sale

In the winter the housing market naturally slows down. Because of this, many home sellers follow suit and will either pull their listing off the market to be listed again in the spring, or hold off on putting their home on the market at all. However, even with the winter months being notoriously slow, it could be an advantageous time to put your home up for sale.

1. Less Competition
In the winter months, the number of houses listed on the market drastically drop. This is because of a number of different reasons including the weather, the holiday season and other factors that typically put winter into a slow season. However, this could be viewed as an advantage to some home sellers. Placing your home for sale in the winter drastically reduces competition and appeals to homebuyers that are ready to buy now.

2. Motivated & Flexible Buyers
During the winter season you’ll typically be able to find motivated and flexible homebuyers. If a homebuyer is moving because of a job change for example, they need to purchase a home now in order to begin their new position. Home buyers may be more flexible during this time as well because of the time off they have during the holiday season. This will allow them to spend more time working with a realtor to view available houses and make a strategic offer. Motivated and flexible buyers mixed with low competition will mean higher return on your property.

3. Home Offers Consistent With Asking Price
Because the market is less competitive in the winter months, there’s a chance that a motivated buyer will be more competitive with their offer. If they have less options on the table to choose from, and have really fallen in love with your for sale home, they are more likely to give a home offer closer if not at or above the asking price. Use the low competition of homes in the price range of your home to your advantage to get a strong offer.

4. Higher Return For Heating Tune-Ups And Replacements
If you’ve spent time and money updating or replacing your furnace or other heating system, this big ticket update will be more top of mind for buyers. During cold winter months home buyers are more conscious about what type of heat the home has and how up to date the heating system is. Because of this, selling your home with a recently updated heating system will give you a greater return on your investment in the winter months.

5. Appeal To Buyers With Cozy Home Staging
Home staging is simple in the winter months. This time of the year homebuyers are looking for a warm and cozy feeling in the homes they walk through. Adding fabrics, candles and lighting the fireplace are quick and easy ways to set the stage for an effective home walk through.