Tagged: low mortgage rates

Low Mortgage Rates are Enticing Potential Homebuyers

For many people who have been recently considering purchasing a home they are just one step closer to making a decision to purchase a home because of another recent drop in mortgage rates.  Low mortgage rates are driving potential homebuyers to purchase the homes that they have been considering and with the housing tax credit this may just be the thing to push a lot of people who were undecided off of the fence.

Making a decision to purchase a home is something that many people are considering with the home prices as low as they are, foreclosures and short sales as high as they are and mortgage rates as low as they are.  Currently 30 year fixed mortgages have dropped for the 5th straight week in a row to 4.71% (Freddie Mac).

The cause for the recent drop of mortgage rates is two fold.

  • The Federal Reserve has indicated their intents to extend the period of time that they will be offering short-term interest rates.
  • Strong demand for government issued funds

If you would like more information about purchasing a home or have legal questions concerning purchasing a home your best move is to contact a real estate attorney.  A real estate attorney will be able to explain the process you need to go through to purchase a home from beginning to end.  Understanding the importance of a contact of sale, getting your mortgage committment, having a clear title and closing title are all things that can be explained by an experienced real estate attorney.

If you would like to speak with a real estate attorney regarding the purchase of a home in New York or New Jersey contact Steven T. Decker Staten Island real estate lawyer.  Steven T. Decker will be able to assist you with understanding the legal side of purchasing a home and will also be able to represent you throughout the entire real estate purchasing process.  To speak with Steven Decker you can either call 718.979.4300 or 800.976.4904 or fill out our web form.

Also, if you are considering using our Staten Island real estate law firm for your real estate transaction and closing of title we recommend that you read Steven T. Decker’s book “5 Myths that Can Ruin the Purchase of Your Home“.  If you would like a copy we are currently offering this real estate book at no cost and no obligation to those considering purchasing property in New York or New Jersey.

Lower Mortgage Interest Rates: Should I Refinance or Modify my Mortgage?

If you are currently a homeowner and have a high mortgage rate that you are locked into or if you have an adjustable rate you may be interested in lowering your mortgage rate or locking into the current rate.  Recently the mortgage rates dropped down to under 5% for the first time in months.

The governments efforts to make sure new buyers and current homeowners receive low mortgage rates are not only benefiting the new buyers and homeowners seeking to purchase a new home but it is also benefiting those who are looking to modify or refinance their mortgage (although studies have shown that many people have not been choosing to modify their mortgage but rather prefer to refinance). A study which was done over the past year showed that only approximately 10,000 people modified their mortgages whereas approximately 3 million mortgages were refinanced and on average the people who refinanced their mortgages saved an average of $150 per month.

A lot of people believe that the reason mortgage modifiications are not as popular as refinancing is simply because banks have offered refinancing options to their clients for years and it is a simple process that they are used to doing.  Another reason for mortgage modifications being less popular among homeowners looking to lower their monthly payments is possibly because they are not fully aware of what modification to their mortgage is whereas, similar to the banks, they are used to the idea of refinancing.

To help you understand what mortgage modifications are and what refinancing is here is a description of both:

  • Loan Modification – The process where the terms of the mortgage is modified outside of the original terms of the mortgage agreement (contract) agreed to by the borrower and lender.  The loan may be modified to change the terms of the interest rate, loan terms, loan balances, the length of the loan or any other part of the loan agreement.
  • Loan Refinance – The process where an existing debt obligation is replaced with a new debt obligation with different terms.  You are essentially paying off an old loan with a new loan with different terms.

Refinancing or modifying your loan may be a smart thing for you to consider if you:

  • Currently have a high mortgage rate
  • Have an adjustable rate mortgage (commonly known as ARM)
  • Need extra cash
  • Want to consolidate high interst credit cards

If you would like to discuss the legal side of refinancing with a real estate attorney to make sure your best interest is being looked after contact Steven T. Decker Staten Island real estate attorney at 800.976.4904 or 718.979.4300.

NY & NJ Real Estate Transactions: Top Reasons to Buy a Home in New York or New Jersey

Deciding to purchase a home for the first time or purchasing a new home if you are an existing home owner is a big decision to make in this market.  You may be wondering if it is safe to buy a home or if it is in your best interest to buy a home with the economy not fully back to normal.  While these are all valid concerns the market may actually be the reason you should buy a home.  First, before we get into the reasons you should buy a home, I want to start by saying you should never feel pressured into purchasing a home.  Always make sure that when purchasing a home you feel comfortable with your purchase.  Keep in mind that you will be in this house probably for many years to come and you want to be happy with your house purchase.   You will also want to make sure you are able to afford a mortgage payment if you will be considering getting a loan for your home purchase and you will also want to make sure you get a home inspection.

Now that we have established some ground rules for purchasing a house here are some things to may help you decide to stop just thinking about buying a home and actually go do it within the next few months:

  • Reason #1Housing Tax Credit – If the extension of the housing tax credit is approved (which more than likely it will be approved by the end of the week) not only will the provisions of the First Time Homebuyers Tax Credit be extended until the end of April 2010 but it will also be extended in the sense that a reduced credit will now be available to certain existing homeowners.   The new tax credit would consist of a tax credit that is 10% of the house’s purchase price up to $8,000 if they have a sales agreement in hand by April 30 and close title on the house by June 30, 2010.  This credit would be available to first time home buyers of those interested in buying a house that have not owned property in the past three years.  The limit for the household income if single will be $125,000 or $250,000 for a couple.  The next credit is a new incentive to take advantage of the housing tax credit which offers a reduced tax credit of up to $6,500 to certain existing homeowners.
  • Reason #2 – Prices are Low – Because the economy is not stable enough to say it has fully recovered or come close to fully recovering yet housing prices are still low.  In fact, sellers in Staten Island, Brooklyn, Bronx, Manhattan Queens, most areas of New Jersey and nationwide are faced with having to list their houses at a low price and are sometimes forced to lower that price even more to sell their house.   For buyers this is a great thing because they are able to get a house that a few years ago would have cost tens of thousands more than what they are selling for now.
  • Reason #3 – Foreclosures and Short Sales are at Record Highs – Distressed homes accounted for a significant number of houses sold this year.  Distressed homes include foreclosure’s being sold and short sales which usually sell for anywhere between 15 -20% less of market value.  Taking advantage of these types of homes can potentially benefit you as a buyer but buyers should also beware of the possible risks associated with short sales and foreclosures.
  • Reason #4 – Low Mortgage Rates – Rates for mortgages currently run around the 5% APR range for a 30-year fixed mortgage.  This is much lower than previous years and the rate of a mortgage that you are eligible for is a huge factor in deciding factor in whether or not you will purchase a house and how much you are willing to spend on it.  The lowered mortgage rates are a big incentive for many people who are deciding to purchase homes right now.
  • Reason #5 (applicable if you are purchasing a home in New York) – Mortgage Tax Credit – A mortgage tax credit is available if you are purchasing a home in New York City.  The tax credit can be used if you are a first time homebuyer and can be combined with the federal First Time Homebuyers Tax Credit.   If you do a real estate transaction in New York for a New York City home and obtain a new fixed rate mortgage through certain types of loans you will be eligible to receive up to 20% off of your mortgage tax for the entire life of the loan.
  • Reason #6 (applicable if you are purchasing a home in New Jersey) – State Housing Grants – There are many New Jersey state housing grants available to first time home buyers looking to complete a real estate transaction for a New Jersey home.  There are many different types of New Jersey housing grants and the terms to each vary.


Am I foolish for purchasing a home in thie down market?

Should I wait for the market to go lower or will the Presidents plan lead to a rise in housing prices and interest rates?
President Obama’s economic policies are attempting to rescue the real estate market and aid floundering lenders and homeowners.  If successful his policies will cause housing prices and interest rates to rise.  While this is good news for banks and hurting homeowners this change will adversely affect two groups who should be benefiting from the current real estate downturn, owners who can refinance and people looking to purchase homes.  By continuing to wait to refinance or purchase members of these groups may very well miss a once in a lifetime opportunity to lock in low interest rates and acquire homes for record low prices.

Today, the great fear of people considering refinancing their mortgage or those seeking to buy a home is that they should wait as the market may go lower.  The fear that interest rates will go lower or that they will overpay for a property that may decrease in value.  While understandable these fears will cause many people to miss the tremendous house pricing and interest rate values currently available.  The market may go lower and interest rates and prices could go a little lower but these risks must be weighed against the benefits currently available with interest rates below 5% and record foreclosures driving prices down.  My concern for people waiting on the sidelines is how quickly interest rates and prices will rise once the new economic stimulus policies kick in and the recession ends.  Will increased economic activity lead to inflation and increased interest rates? Will a bailout plan for banks and homeowners lead to more people keeping their homes?  Either of these outcomes will increase the cost of homeownership to those who miss the current market opportunity.

Mortgage interest rates are at remarkable lows and I have many clients refinancing or purchasing with loans closing at interest rates below 5%.  These rates are a function of the US governments attempts to help ailing banks and aid the depressed real estate market.  In order to help lenders drowning in sub prime foreclosures the Federal Reserve is lending to banks at historic low rates.  The Fed is lending to banks at ¼% interest to encourage them to make mortgages.  When borrowing from the Fed at a low rate lenders have been happy to lend it on mortgages paying 5%.   This can’t last forever so two groups need to take immediate advantage of these low rates, current owners and homebuyers.  Homeowners can get an immediate benefit by refinancing their current loans.  They can lower their monthly payments and if they have an adjustable rate get a low fixed rate.  Homebuyers can get more for their mortgage dollars by getting a lower payment or a higher loan amount to allow them to buy a more expensive house. The current interest rate climate will change once the housing crisis starts to abate.  This will lead to the Fed increasing rates and the mortgage rates will rise.

Foreclosure sales are driving the market lower.  With the record increase in foreclosures more distressed homes are for sale and this has lead to a decrease in median home prices.  It also affects the psychology of buyers who believe that lower prices are real.  With an increase in bank owned properties and short sellers looking to dump properties the effect on non-distressed properties is evident.  Looking at the residential market in Staten Island, Brooklyn and Queens I see the effects rising foreclosures have on the market.  There is a direct correlation between foreclosure activity and price reductions.  In areas with large numbers (Port Richmond in Staten Island, St Albans in Queens, East New York in Brooklyn) prices are down markedly whereas in areas with little foreclosure activity prices have not fallen nearly as much.  If the number of foreclosures is decreased the number of homes for sale will fall and prices will rise.  President Obama’s stated goal to reduce foreclosures can only lead to a decrease in the number of homes for sale as lenders and homeowners will have less pressure to sell overvalued properties.

The President’s stated goal to help the real estate market is still being developed and implemented.  Once it takes effect the results could be startling.  Make sure you don’t miss the opportunity the current market offers.