[Samba] Lloyd Segal

[Lloyd Segal]

Lloyd Segal Real Estate News
15-year mortgage rate hits record low

Mortgage rates dropped again this week, with the 15-year fixed-rate loan
 hitting a record low, according to a report from mortgage financier 
Freddie Mac.

The 15-year fixed rate fell to 2.56% from 2.61%. A year ago, it stood at 3.07.

The most popular mortgage, the 30-year fixed rate, came in at 3.35%, a 
drop of 0.05 percentage point and only 0.04 percentage point above its 
record low set the week of November 21, 2012.

The rates provide a welcome boost to the housing market and to the 
overall economy, according to Frank Nothaft, Freddie Mac's chief 
economist.

"Residential fixed investment added to overall economic growth over the 
past eight consecutive quarters and contributed more than 0.3 percentage
 points in growth over the first three months of this year," he said. 
"[N]ear record low mortgage rates should further drive the housing 
market recovery over the near term."

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Buying a House When Inventory Is Tight

As the housing market continues its recovery, prospective home buyers in
 some areas may have found, much to their dismay, that the inventory of 
houses for sale is somewhat limited, and sellers are receiving multiple 
offers.

A recent analysis by the real estate site Zillow, for instance, found 
that while some improvement has occurred, the inventory of homes for 
sale nationally in April was down about 14 percent from the same time 
last year.

The National Association of Realtors, meanwhile, also reported a 
decrease in inventory in many markets compared with a year ago. Some 
markets saw drops of 20 percent or more, indicating “near record lows” 
of available homes.

Specifics vary by market, of course, and there are also some signs that 
the lack of inventory is easing this spring, as home values have risen, 
Zillow found. Rising values bring more sellers off the sidelines, 
putting more homes on the market. Many owners have been waiting to sell 
because their homes are still “underwater,” or worth less than their 
mortgage.

Mark Cenci, broker with ERA Martin & Associates in Chillicothe, 
Ohio, said buyers need to be aware that the market is changing. 
Sometimes home shoppers are confused, he said, because there appear to 
be a lot of houses listed for sale, but many are actually under 
contract.

“They think there’s plenty of  houses, and that they can find what they 
want and get a great price,” he said. But that’s not necessarily the 
case.

So what should a home shopper do, in a market where inventories are tight, and there may be competition for some homes?

Mr. Cenci recommended that if you are eager to buy and have found a home
 you really want, you make your offer as strong as possible — even if 
that means going a bit above the asking price. If you have time to shop 
around, you can be a bit more aggressive — that is, lower — in your 
offer. But, “If they need to move and they find house they love, they 
shouldn’t be afraid to make a good offer,” he said.

Another way to show a buyer that you are serious, and to set your offer 
apart from other buyers’, is to increase the amount of earnest money you
 put up with your offer.  The money goes toward your down payment if 
your offer is accepted, and is returned to you if the seller declines 
your offer. (Of course, if your offer is accepted and you back out, you 
lose your earnest money. So again, it makes sense to up the ante only if
 you’re confident that you want the house.)

If you think there’s a chance you won’t go through with the purchase, he
 said, save everyone a lot of time and “don’t make the offer.”

It also makes sense to consider the type of mortgage you will use, 
according to ERA. While some buyers are attracted to F.H.A. loans 
because they typically require lower down payments, a conventional 
mortgage may be more attractive to a seller. That’s because the 
requirements for the condition of the property are often tougher for 
F.H.A. loans, so some sellers may be wary of being asked to make repairs
 before the sale can proceed. If you can swing a higher down payment, a 
conventional mortgage may help your offer.

In general, limiting the number of contingencies in your offer — whether
 they are related to financing, inspections or other conditions — will 
strengthen your offer, he said.

Are you in the market for a home? Have you had difficulty finding a house, or encountered competition for your chosen property?