Posts Tagged ‘interest rates’

First let’s congratulate the Morris Plains Marlins Swim Team for their third undefeated season.  The Marlins are 21 and 0 over the last three years.  Coach Tina Cecala and her staff should be congratulated for their tremendous effort.  The swim team is one of the best recreation programs in the county.  The coaches have succeeded   in combining personal achievement and solid team work to produce a great summer swim team.  Good luck in the County Championships

There are at least 11 million people in the US that owe more than their home is worth, and a ton more whose property is worth a bunch less than they paid for it.  If you fall in this category you may not be as trapped as you think. 

According to the Wall Street Journal, record low Mortgage rates and a new slump in home prices are presenting some unusual opportunities in the housing market.  Even underwater home owners may benefit.

Many home owners are intentionally taking a hit on their current house writing a check to retire the loan in order to buy a much larger house for not that much more money.  Some are throwing conservative financial advice to the dogs.  They are opting to cash in refinancing.   They are paying thousands out of their pocket to settle their loans and then taking out new mortgages with lower payments and shorter terms.

Essentially these people are doubling down on their homes and taking a chance that when the economy recovers they will have put themselves in a position where there new properties will appreciate faster than if they had waited for their older home to do so.  Economists are saying that this may not be such a bad idea.  Christopher Mayer from Columbia Business School says that “If you are trading up, what better time than now”  Interest rates are rock bottom and the cost of a larger home is much less then what it was 2,3 4 years ago. Someone who wants to refinance is home could plunk down cash to retire the  higher rate loan then refinance the new loan and might be able to reduce his monthly payments as well as shortening is loan term.  Look at the graphs below

For example, 2 years ago someone bought a home for 246,000. That same home has appraised for 228,000 today.  Our home owner has paid 29,000 in principle and closing costs to refinance his current 30 year loan at 5.87% into a 20 year loan at 4.5%.  This will save the home owner 95,000 in interest over the life of his loan and lowers his monthly payment by 148.00 dollars.  If you do the math our home owners not only saves the 95 grand over the course of his loan.  He also earns a return of about 10% a year for 5 years on his investment of 29,000.

It is not easy for many of us to accept the fact that we have lost tens of thousands of dollars on our homes.  However for scores of home owners summoning the courage to take a loss now could lead to large gains later. 

This is agreat time to be a buyer especially in Morris Plains.  There are a number of homes in town that are competively priced to the current market.  These homes will sell very quickly, I know of one that already has had alot of interest in it.  If you need any information about the town give me a call and I will be happy to assist you.

Thanks for reading my blog on Morris Plains Homes NJ and here is the Quote.”Go back a little to leap further.”  John Clarke

It has been a few weeks since the last time I wrote.  The past few weeks have been very busy but I am back.

What’s going on in the world economy?  Most people think very little.  However things are getting better.  The trade deficit in the US widen in May.  The cause of this is that the value of the dollar has gone up making US goods less attractive to foreign buyers, the European debt crisis has limited overseas demand, and China’s economy slow down have all contributed to the increased. 

Although the deficit has grown what is important to note is that the business is still picking up.  Exports grew in May with the sales of industrial equipment, business machines, and semiconductors.  Imports rose as well with an increase in cars, pharmaceuticals toys and clothing. 

The shining star is the earnings report from Alcoa Inc.  They have reported an increase in sales to the automotive industry by 8 percent and sales to the truck and trailer manufactures by up to 17 percent.  The business environment continues to get better and the Alcoa news is important.  A few weeks ago I spoke of the world wide increase in demand for diesel fuel.  The increase in sales of aluminum to the truck manufactures indicates an increase in demand for trucks.  Trucks haul the majority of goods in the world and more trucks on the road indicate and greater demand for consumer goods Consumers are coming out from under the bed and are back buying.

The Housing Market in Morris Plains has slowed down for the summer.  35 Homes are for sale.  The absorption rate is about 8 to 9 months.  Things should pick up as we move into the fall when people are back from vacation. 

Interest rates for a 30 year fixed rate loan are around 4.5 to 4.75 percent.  Recently I entered the interest rate market for a 5 year adjustable rate loan.  I have been quoted a rate of 3.5.  Not bad mi amigo.  Low interest rates, contrary to popular opinion, are here to stay for at least another 6 months or so.  There is no inflation and unemployment although high has stabilized.  This news maybe an  indication of an improving  economy at least on the local level three people on my street have found jobs. 

So things are getting better just keep the faith and keep moving forward.  Remember “Be the Shark always swimming always moving “

Thank you for reading my Blog Morris Plains NJ Homes.  Here is the Quote;   Act as if what you do makes a difference. It does. “   William James

The Fed Promise’s to Keep Interest Rates at Current Levels. 

 We dodged the interest rate bullet again.  The Fed promise not raises rates for the near term.  Most people believe that rates will hold at these levels for the balance of the year.  Unemployment numbers need to be lower before they will act. 

 However the economy has shown some serious signs that it is improving.  The stock market has pushed through the 11,000 mark and seems to be comfortable there. Consumer confidence numbers have been showing strength, manufacturing has seen some gains.  But most important of all is that home prices have stabilized and have begun to rise.  Not just in Morris County and Morris Plains but in some of the sections of the country that have been hit the hardest.  California Nevada and Arizona where home values have fallen the farthest have seen a lot of the inventory getting absorbed.  What will be most telling in this market is the home buyers credit will be going away and the chances of it getting extended is slim.

 What does that mean to us in Morris Plains?  There are 27 homes for sale in town, thirteen homes are under contract and are waiting to close and 5 homes have closed for the month of April.  The absorption rate for homes priced under 500,000 is 2 months and homes over a half million is slightly over 4.

 Some change in the market as far as home buyers are concerned is that buyer will expect the seller to give concessions at close.  These concessions could consist of the seller offering to  paying closing costs and points.  Sellers can expect buyers to be a bit more demanding in their negotiations in buying their home. 

Buyers on the other hand have to understand that the inventory of well priced and desirable home is slowly getting bought up, Some of these buyers need to know that they can over shop for a house.  Some buyers will keep looking for their perfect house, what I call the A+ property meanwhile all the B+,A- and A properties are all getting picked up.  

 The next couple of weeks will tell.  The spring home buying season is for all intents is over. In less then a month the kids will be out of school, vacations will be taken, people will not be in such a hurry to be out to look for a home.  All the Sellers out there whose homes have been on the market for over 30 days should seriously look at dropping their price.  And buyers should step up their efforts to purchase a home.  Homes are still affordable and rates are low now.

 The economy is improving and this situation will not last for to much longer. 

 Thanks for reading my Blog Morris Plains Homes and the quote for the day is “When opportunity Is knocking at your front door don’t be out back looking for 4 leaf clovers” Unknown