Good Morning,
I hope you had a good weekend and haven’t caught a cold with these crazy weather fluctuations. If you watched the Golden Globes last night, did you ever think Jodi Foster was going to stop talking? Well, on to more important things...
On today's call: Markets, Housing, Second Homes, Interest Rates
The markets started the week off slightly mixed as investors are waiting for corporate earnings results from the fourth quarter. Ben Bernanke will speak later today and some are wondering whether there will be any hints about ending the bond buying program. My guess is no. Raising interest rates at this time would be disastrous for the economy; we’re not stable enough to afford it. The US is expected to hit its debt ceiling of $16.4 trillion as soon as mid-February, so yet another crisis looms on the horizon. It’s a no-win situation and if our debt is downgraded again, we are in big trouble. As predicted, Obama and the GOP can’t decide on a solution, and will probably wait until the last second to do something.
In housing, CoreLogic’s latest report results showed that home prices rose 7.5% overall in 2012, the largest increase in six years. Because of the greater demand, high affordability, low rates, and shrinking inventory in the current market, it’s predicted that prices will continue to rise this year. And this will motivate more people to get off the fence and list their property. According to the National Association of Realtors, the supply of homes fell to 4.8 months at the end of the year, the lowest level in over seven years. A six month supply s is considered a balanced market between buyers and sellers.
It is a goal of many people to purchase a vacation home. It’s important to know what’s considerations are necessary when beginning the process of buying a “second home.” First, the minimum required down payment is 20%, no exceptions. Second, you’ll need to have reserves (what’s left over after you purchase) that cover the entire mortgage payment (including taxes, insurance, etc., even if you do not escrow) for both the new home and your primary residence for at least 2 months. Typically, the property must be at least 50 miles away from your primary residence or in a “resort/lake” village of some sorts. It’s a gray area for sure, so each case is unique. For example, if you live in the suburbs of Chicago and want to buy a condo (or “in-town” ) this is usually ok. Keep these things in mind when you want to purchase a second home, and give me a call, of course, when you’re ready to get pre-approved!
Interest rates are trying to go lower, with the bond market yields up today, following gains at the end of last week. We are really excited to bring on a new Jumbo lender, whose rates are flat out unbeatable…yes, 30 year fixed at under 4%. We also added another HELOC lender so our program list continues to grow.
I’d appreciate it if you’d pass this along to your networks. And if you have any questions, please don’t hesitate to contact me.
Have a great week......
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