How Mortgage Rates Compare

You’ve heard it all across the media. Interest rates are at historic lows. If you are new to the mortgage process, these figures and statements give you little frame of reference. Let's take a moment to look at where interest rates have been over the last few decades, and what today's rates really mean for homebuyers.


Interest rates are affected by a gamut of factors.

According to the Federal Reserve Bank of New York, "Lower interest rates make it easier for people to borrow in order to buy cars and homes. Purchases of homes, in turn, increase the demand for other items, such as furniture and appliances, thus providing an additional boost to the economy. Lower interest rates mean that consumers spend less on interest costs, leaving them with more of their income to spend on goods and services." And this is, after all, what you want people to do in a down economy. You want them to reinvigorate the economy with spending. The Fed continues, "If the rates that consumers and businesses have to pay to borrow rise too rapidly, however, spending may decline, leading to an economic slowdown." So, it is an intricate dance the powers that be must perform in order to steer the economy the best they can. They, namely the Federal Reserve and Banks, are seeking stable prices, high employment rates, and sustainable growth in the economy.

30 years ago, in 1980, when many first-time home buyers parents were making home purchases, Freddie Mac reports that the 30-year fixed rate mortgage hit a staggering 16.32 percent.

Let's compare that in relation to today's interest rate, averaging around 4.5 percent.

• In the most basic terms, a 30-year fixed-rate mortgage for $100,000 at 16.32% will cost you around $1,450 a month.

• For the same mortgage at a 4.5 percent rate, you'll be paying $580 a month.

The difference is astounding, and this is the main reason the media is shouting news about interest rates. If you are in the position to buy, now could very well be the time.

Santa Clara County Market Conditions

Here is a quick snapshot at the Santa Clara County Market Conditions. This will give you an idea of how Santa Clara County real estate is doing now vs last year. Please keep in mind that the real estate market is a matter of neighborhoods and houses. No two are the same. For complete information on a particular neighborhood or property give me a call and I can get you that information.

Prices have gone up Year-Over-Year
 

Single Family Homes:

• Prices for single-family, re-sale homes were up in August, year-over-year, for the eleventh month in a row. The median price rose 13.7%, while the average price was up 15.4%, reflecting a higher share of $1,000,000+ home sales
• Sales of single-family, re-sale homes continued to slide and were lower than the year before for the third straight month: -13.1%.
• Inventory was higher than last year for the second month in a row: 18.4%. 

Condos:

• Median price for condos was up 5.3% year-over-year. This is the tenth month in a row the median price has been higher than the year before. After nine straight months of year-over-year gains, the average prices for condos dropped 1.7%.
• Condo sales were up 0.4% compared to last August. 
• Inventory for condos was higher than the year before for the third month in a row: 40.9%.

Simple ways to make your home more energy efficient

In this economy everyone is looking for ways to save a little extra cash here and there. One way to help save on your gas and electric bill is to make your home more energy efficient.

Now that summer is coming to an end and the cold months are nearly upon us we wanted to share some ideas about how to make your house more energy efficient. As much as 60% of you energy bill can go to heating your house. Here are some tips to cut down on the amount of energy you are losing.

• Set your thermostat on the lowest comfortable setting and leave it alone. You will adjust to lower temperatures and possibly sleep better as well. 68 degrees is a comfortible temperature.
• Insulate and weatherize your home properly. This is not an easy task if you have an old house, but some little things you can do relatively cheaply are: Put plastic on your windows. Use form weather striping around your doors. Close off rooms that you are not using. Shut vents to rooms that you don't use.
• Close drapes or curtains at night and on cloudy days.
• When the sun is shining, open drapes to take advantage of the natural warmth.
• Keep windows on the south side of your house clean to maximize solar gain.
• Keep windows near the thermostat closed, or the furnace may think it is colder than it actually is.
• Keep doors and windows closed. This may sound obvious, but many children tend to leave the door open when they go outside to get firewood.
• Keep your filters clean and check them monthly in your furnace.
• Contact your local energy department to see if they offer a free audit.
• Caulk and weather strip around doors and windows.
• Close your chimney damper when the fireplace is not being used.

Here some other things you can do that require a little more money, time and effort.

• Check your attic to see how much insulation you have. R-30 or R-40 insulation is recommended.
• Install better windows and doors if you don't have storm windows.
• Install an automatic thermostats that adjust the heat to your schedule.
• Plant hedges or install fences to serve as wind breaks. Cold wind usually comes from the northeast.
• Install foam gaskets and plastic plugs in all electrical outlets and switches on outside walls.

List reference - thriftyfun.com 

California Law To Require Carbon Monoxide Detectors

In case you haven't heard...A new law was passed that will affect nearly every California homeowner. Senate Bill 183 requires carbon monoxide detectors be placed in all California dwelling units. They have set a deadline of July 1, 2011 for single family homes, and January 1, 2013 for all other dwelling units (multi-family, apartments, motels, etc.).

Carbon monoxide detectors are a wise precaution to have. According to the American Medical Association, carbon monoxide poisoning is the leading cause of accidental  poisoning deaths in the US.  The California Air Resources Board has determined that 30-40 "avoidable deaths", on average, occur in California each year due to unintentional carbon monoxide poisoning. Additionally this is the cause of 175-700 "avoidable" emergency room visits and hospitalization in the state.

So if you don't already have a carbon monoxide detector in your home, grab one next time you are shopping and install it. It's a smart thing to do, and soon, it will be the law.

Improving your Credit Score

When purchasing or refinancing a property your credit score (FICO score) plays a huge factor. Banks want to see a high FICO score. If your FICO score is too low they feel that you are a risky borrower which in turn results in them giving you a higher interest rate on the money you borrow.  To get those amazing interest rates we have been seeing you must have a good credit standing.  If you are amongst the many that are looking for ways to improve your credit score than please keep reading. The following information can help you!  Please be aware of quick fix scams from companies that promise to improve your score fast.  Improving your score takes time and patience.

The following tips are provided from http://www.myfico.com/

Payment History Tips

• Pay your bills on time - Delinquent payments and collections can have a major negative impact on your FICO score.
• If you have missed payments, get current and stay current. - The longer you pay your bills on time, the better your credit score.
• Be aware that paying off a collection account will not remove it from your credit report. - It will stay on your report for seven years.
• If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. - This won't improve your credit score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time.

Amounts Owed Tips

• Keep balances low on credit cards and other “revolving credit” - High outstanding debt can affect a credit score
• Pay off debt rather than moving it around - The most effective way to improve your credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score
• Don't close unused credit cards as a short-term strategy to raise your score
• Don't open a number of new credit cards that you don't need, just to increase your available credit. - This approach could backfire and actually lower your credit score.

Length of Credit History Tips

• If you have been managing credit for a short time, don't open a lot of new accounts too rapidly. - New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

New Credit Tips

• Do your rate shopping for a given loan within a focused period of time. - FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
• Re-establish your credit history if you have had problems. - Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
• Note that it's OK to request and check your own credit report. - This won't affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

Types of Credit Use Tips

• Apply for and open new credit accounts only as needed. - Don't open accounts just to have a better credit mix - it probably won't raise your credit score.
• Have credit cards - but manage them responsibly. - In general, having credit cards and installment loans (and paying timely payments) will raise your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
• Note that closing an account doesn't make it go away. - A closed account will still show up on your credit report, and may be considered by the score.

UNDERSTANDING THE CURRENT SANTA CLARA COUNTY MARKET – IS IT A SELLERS MARKET?

As a homeowner, and a prospective seller, you may be wondering if now is a good time to put your home on the market. But how can you tell if the market is in your favor at this time? Will you lose money or make money? Is it a “sellers market”?These are all very important questions. And the answer is in the market statistics.

As a seller, one of the first things you must evaluate is the desirability of your location. Market conditions are extremely localized statistics. While the national economy and housing market tie every area of the country together to a certain degree, markets and their conditions range widely from state to state, community to community, and even neighborhood to neighborhood within a community.

You must ask yourself, and your real estate agent, “Is my neighborhood up and coming or has it already come and gone?” If you live in a neighborhood that is highly desired due to its school system such as Cupertino, or areas of status and Prestige such as Los Gatos and Saratoga, then you may find yourself in a continual sellers market, where you will always be in the advantage. 

Looking at the most recent sales in your surrounding area is very important. How much are homes selling for? And how does your home compare in size, location, upgrades, and condition?  Unfortunately, an issue completely out of your control can have a direct effect on your ability to sell your home, and for a good profit. Foreclosures in your neighborhood affect your home’s value. This isn’t fair, but it is how the market works. Buyers look for the best home for their dollar. If they are able to buy a home on your street for a foreclosure price, then suddenly your asking price must decrease in order to compete. Be sure to ask your agent for tips on how to make your home stand out again to buyers, despite this issue.  Another important statistic you should be aware of is “days on market.”  This means how long it takes a home to sell from the time it hits the market. In general terms, anything less than 6 months is considered a sellers market. If the average time is longer than 6 months, then the market is in favor of buyers.  This should be a consideration for when you look to buy your next home. Unless you are prepared to carry two mortgages, you will want to make sure your current home has sold before looking for the next. 

How is the local job market faring in your city? If you live in a town that has a healthy economy, then chances are you live in a sellers market. People who have steady jobs are more inclined to look to buy. The bigger the unemployment figures, then fewer buyers on the market. 

Another consideration is “appreciation.” In a healthy market, a home should increase in value each year. Many of the areas of the country, however, experienced a “bubble burst” after seeing years of record appreciation rates. As we all know, California and more specifically Santa Clara County was amongst these areas.  Homes bought during the bubble may very well be worth less now than their owner owes. However, it is important to understand the long term effects the market will provide. Although Santa Clara County has experienced dips in appreciation about every 10 years, the long term data shows that this market continues to consistently appreciate. 

Be sure to discuss all of these issues with your local real estate agent. They will be able to help you determine whether now is a prudent time or not to put your home on the market. 

To give you an idea of how the Santa Clara County market is currently doing we have included the most recent statistics on home appreciation and average sales price for this area.

Santa Clara & San Mateo County Housing Inventory Averages

Santa Clara and San Mateo County Housing Inventory averages on July 28, 2010.

 

*Numbers based MLS data for the specified date