Category Archives: Understanding Real Estate Contracts

Can I still buy a home with rising interes t rates?

The Real Deal on Rising Rates: What It Means for Your Home-Buying Plans

rising_interest_rates

You’ve taken all the necessary steps to get ready to buy a home. You’ve saved for a down payment, improved your credit score, got all your financial documentation in line, and figured out what price range you can afford. And then the interest rates went up. Is your dream of homeownership now unachievable?

According to recent data from realtor.com®, the share of first-time buyers planning to buy a home this spring fell sharply when mortgage rates began to rise toward the end of 2016. According to realtor.com®’s January survey of active homebuyers, 44 percent of buyers planning to buy in spring 2017 are first-time buyers. This has dropped significantly since the survey was conducted in October, when 55 percent of buyers planning a spring purchase indicated they were looking for their first home.

However, with inventory shortages and rising home prices, the urgency to buy now has never been greater. So before you shelve your plans for buying a home this spring, know the facts about rising rates and home prices.

The average 30-year conforming rate rose to more than 4.2 percent by the end of December 2016 from 3.4 percent at the end of September 2016. With average rates today about half a percentage point higher than they were in 2016, a median-priced home financed with 20 percent down would cost an additional $720 per year in added interest. That equals more than 1 percent of the median household’s income.

With affordability being a top concern for first-time buyers, a rising interest rate can be enough to scare you off. Kiplinger’s expects the 30-year mortgage rate to reach 4.6 percent by year’s end, with the 15-year rate at 3.8 percent. Add to that the continued increase in home prices due to low inventories in many parts of the country and you can see that holding off on a home purchase will probably only cost you more down the line.

Take a cue from repeat homebuyers who are actually being spurred into action by rising rates. Even with the current increases, interest rates remain historically low, and the movement in rates hasn’t yet tipped overall buyer demand down. Experienced buyers, in fact, are trying to close before rates increase further, as evidenced by increased realtor.com® listing views and decreased inventory. In the short term, the rate movement seems to have encouraged, rather than dampened, overall demand.

While concerns about affordability are valid, waiting may not help your long-term financial picture. Instead, consider looking for a home in a slightly lower price range, finding a way to increase your down payment, or looking in a neighborhood that may be more affordable. The good news? In today’s competitive market, your home will most likely increase in value and prove to be one of the smartest investments you could’ve made.

For more information about how rising interest rates will impact your home purchase, contact me today. 206-276-3289

The Most Expensive Homes on the Market This Fall

The Most Expensive Homes on the Market This Fall

By Adrienn Takacs
The word “luxurious” doesn’t even begin to cover the extravagance of Point2Homes’ recently released list of America’s most expensive homes. These incredible listings offer everything you can dream of—home theaters, large swimming pools, many acres of meticulously landscaped grounds, and more!

1. 594 Mapleton Drive
Los Angeles, Calif.

Bedrooms: 14
Bathrooms: 27
$200,000,000

This estate, known as ‘The Manor,’ was designed in the French chateau style for TV producer Aaron Spelling and his wife in 1988—and if that weren’t enough, there have also been updates to the property since then. The mansion is situated on five acres of beautifully landscaped grounds, and is the largest and grandest private residence in Los Angeles.

2. 2000 S Ocean Boulevard
Manalapan, Fla.

Bedrooms: 33
Bathrooms: 47
$195,000,000

Standing on a 15-acre tropical compound is this exquisite home boasting 33 bedrooms, 47 baths and a total of 62,873 square feet of living space. Regarded as one of the grandest estates in the world, this impressive listing is an island paradise, offering plenty of privacy and luxury to the happy new owner.

3. Great Island Road
Darien, Conn.

Bedrooms: 10
Bathrooms: 10
$175,000,000

This 65-acre property is another waterfront island estate that will definitely sweep you off your feet. The listing boasts an incredible 10-bedroom Italian stone manor, a beach house, a boat house, and even your own private polo field!

4. 935 Hillsboro Mile
Hillsboro Beach, Fla.

Bedrooms: 11
Bathrooms: 17
$159,000,000

This 60,000-square-foot palatial estate, nicknamed “Le Palais Royal,” was the first French-inspired palace in the U.S. If you want to feel like royalty, enter this Beaux Arts masterpiece to be greeted by lavish landscaping, 26-foot fountains and Versailles-esque waterfalls. The interior will leave you speechless—it’s decorated with imposing fireplaces, crystal chandeliers, Corinthian-marbled columns and floor-to-ceiling windows.

5. 90 Briar Patch Road
East Hampton, N.Y.

Bedrooms: 10
Bathrooms: 10
$140,000,000

If you’d love to enjoy the ocean breezes each morning whilst sipping your coffee in your perfectly-landscaped back yard, then you need to check out this awesome property in New York. The listing comes with two large homes designed by Peter Marino, offering a total of 10 bedrooms and 10 baths, a large tennis court, a beautiful sundeck and a 4-car garage.

Guess the price of the most expensive home in the Puget Sound region.  Let me know what you think our local most expensive home is.  The answer that comes closest by Friday November 18th  at 5:00pm  wins a $20.00 QFC Gift Certificate!

 

Real Estate word of the week: “Earnest Money”

There are many words that are used in a real estate transaction that most people don’t understand.  This week we are going to talk about the word(s) “Earnest money.”

Earnest Money. A sum of money paid by a buyer upon entering a contract to indicate the intention and ability of the buyer to carry out the contract. Normally such earnest money is applied against the purchase price. … A deposit of part payment of purchase price on sale to be consummated in future.

Earnest money is something many buyers don’t anticipate when buying a house.  But it’s an important part of presenting a strong offer to a seller.  As mentioned above, earnest money is paid upfront by a buyer when making an offer on a home.  If the offer is accepted generally the money must be deposited with the escrow company handling the transaction immediately. It can be in the form of a personal check made out to the escrow company. This money is part of your down payment.  It is your way as a buyer of showing that you are making this offer in good faith.

There is no set amount for earnest money.  The more you put down the stronger you look as a buyer.  However, if for some reason you break the contract to purchase the home the earnest money could be forfeited to the seller as a remedy for taking the home off the market while under contract with you.  In Washington state, a seller cannot take more than 5% of the purchase price as damages from earnest money though.

An experienced Realtor knows that part of their job is to make sure that the buyer is informed of all the time constraints on the contract, to make sure that they understand and perform the required acts during those time frames, and the risks if they don’t.  The biggest risk for the most part is losing the earnest money.  As long as you the buyer perform according to the contract there is no risk.  But, make sure you know when and what you are required to do to stay in contract.