Finance Solutions for Today’s Real Estate Market
Interest rates have gone up substantially in the last 90 days, but experts have also seen the market flatten out a bit, and the rates aren't going up near as fast as anticipated.
One thing that has a significant bearing on what direction the interest rates go is inflation. People tend to get frazzled when the feds start raising the interest rate. But when the feds raise the interest rate, it has more to do with short-term than long-term rates.
When discussing mortgage rates, it is more about finding the home you want and the product that works for you. Interest rates are still at all-time lows. Buyers get nervous because they hear things are going up, which is not necessarily bad. It’s a complete package, not just the rate but also the home's value, location, and everything that fits within your lifestyle.
What about your down payment?
So you can make a significant deposit, but you can also put more down. Putting more down will help decrease the interest rate, and having a good credit score helps bring that rate down too. But if you feel the fixed rates right now are a little bit higher than what you want to pay, you can always move into an adjustable-rate mortgage and fix the rate for a seven-year or ten-year adjustable-rate mortgage to help keep the payment down.
"When the feds raise the interest rate, it has more to do with short-term than long-term rates."
Is there a market bubble?
“The reality of a recession would be pretty unusual since we live in a district and region with high employment. There are many Fortune 500 companies within our area, and they're constantly hiring, so people are moving to our region and looking for housing. We have little inventory, even though you might be seeing an increase in inventory right now, which is natural.
This sentiment might be a crowd reaction to the fact that the stock market is going up and down and can be psychological. But the reality is, there's still low inventory in the market here.”
What is an adjustable rate?
An adjustable rate is a rate that is fixed for a period of time. So this rate will be fixed for either seven or ten years. Then, beginning in the eighth or the 11th year, you'll start seeing adjustments in your principal and interest payment every six months. You will see an adjustment every six months if you're still in that home. However, you can refinance out of it at any point in time without any penalties for doing that.
“The best place to park your cash is in real estate. Real estate, over time, has consistent growth. And so what they’re finding, it's like an inflation insulator. The economy is experiencing high inflation, so if you put money in real estate or have real estate, it will gradually grow and help you beat that inflation.
I'm asking my clients if they have another home and they're looking to purchase another, “can you keep the home?”. And we get them qualified to buy another home, keeping the first home as an asset. If you can hold onto real estate and keep it and put it in your portfolio, you can grow your wealth tremendously.
One of the other things that have happened in the marketplaces with financing is if you buy a new home and keep your primary residence for a while, use it as an investment. And if you decide you’re not a landlord and want to sell that house, you can take the equity from that house, reduce your mortgage on the primary residence and then have your payment recast.
So when it's recast, you keep the original terms, the interest rate, and the term. The only change is the monthly payment because you may have dropped $300,000 or $400,000 on principle.
And there is another option for all individuals who get stock options. You can use that stock to reduce that principle and re-amortize the payment an unlimited amount so you can add money into the principle anytime you want. I don't think people know you can constantly buy down your principal.”
"I don't think people know you can constantly buy down your principal."
What can JayMarc do to help you?
One thing JayMarc can do is an extended rate lock, and that lock can be put in for 180 days up to a year. JayMarc will re-credit the borrowers back for that $50,000 cost. So it's ultimately at no cost to the borrower. But we can lock it in for 180 days up to a year.
Another thing JayMarc can do is take and buy down that interest rate. So we can take that money from a 5% interest rate down to 4%, making it a much more desirable payment for consumers.
Something else we can do is take that money and use it to pay for closing costs in anything that's left over. We can apply it to the principle. So you may have a hypothetical loan amount of $2 million and have $25,000 left over. You can take and drop that loan amount down by $25,000 and reduce your loan amount.
How does this positively affect your payment?
For example, if you had a rate of 5.25% and brought it down to 3.25% for a $2.8M home. The difference in what you would save would be over $800 a month. This adds up to huge savings.
The extended lock gives you the security of knowing the rate isn't going to go up. So if rates go up, you won't go up with it. But if rates also come down 60 days prior, you'd have a free float down to take advantage of any improvements in the market.
You can lock in a rate today using that $50,000 incentive JayMarc is giving you. This is with anticipation that rates will continue to go up this year.
When you get into the financing piece, we want to tailor it to what meets your needs. So based on the length of time it's going to take for the home to be completed, is this your forever home? Because the one thing that you want to remember is you marry your home, but you date the interest rate. So that interest rate is something you can change down the road if you get into a rate slightly higher than what you're comfortable with.
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