You have options to safeguard yourself from fluctuating rates.


The Federal Reserve has increased rates multiple times this year so far and will continue to do so throughout 2022. That means if you’re in the process of buying a home, the rate your lender quotes could increase sometime in the future. So what happens if interest rates increase after you’ve already gone under contract? Is there any way to protect yourself?

First of all, when we’re writing an offer with a financing contingency, we typically determine whether your rate is fixed or variable and what terms would allow you to cancel the contract. In a rising market like this, you should get a mortgage rate lock as soon as possible in the process to prevent your rate from increasing further. Some lenders have products that let you lock before your offer gets accepted, but you may have to pay a higher interest rate to do this.

 

“Float-down options typically come with an extra cost in exchange for a lower rate.” 

 

Second, ask your lender if they provide float-down options, which prevent your rate from rising but allow it to lower if market rates begin to fall again. Be advised, though, that float-down options typically come with an extra cost in exchange for a lower rate. 

If you have any questions or would like to learn more about mortgage rate locks and float-down options, don’t hesitate to give me a call or send an email. I’d be happy to help you.


Interest rates are shooting up; how does that affect buyers’ affordability?


Interest rates have increased recently; they’ve crested 5% on a 30-year fixed home loan.
They’re still low compared to historical averages, but with what’s happening with the economy and inflation, the cost of everything is rising. Escalating interest rates will affect buyers’ affordability. 

A 1% higher rate increases your monthly payment by about 10%. For example, a 30-year fixed loan with a 4% interest rate might cost $2,000 per month, but when the rate climbs 1%, that monthly payment will be $2,200. That extra 10% you’ll pay monthly is simply going to the bank; it’s not giving you anything more than you had. 

 

“Escalating interest rates will affect buyers’ affordability.”

 

The other day, interest rates at two of the larger institutions in our Madison market were 5% and 5.125%, which is shocking when we recently were in the 3.5% range. However, let’s look at it a different way; if you have your money in other investments or IRAs, your interest rates are much higher than that. Also, inflation is currently at a 40-year highmuch higher than 5.1%. So though our rates are trending upward, they aren’t appallingly high by any means. 

Many experts agree that we’ll continue to see rates tick up until buyers get to the point where they refuse to pay. There are programs available to help you in the short term; adjustable-rate mortgages, for example. 

I hope this answered a few of your questions, but if it brought up additional ones, you can always reach out directly via phone or email. We would love to help you.


 Here are a few of the many ways to sell your home based on your situation.

It’s no secret that this is a tough market. People looking to buy and sell a home at the same time are in a tricky spot. Sure, you can sell your old house easily, but how can you buy a new one without going homeless? 

In a balanced market, it isn’t too difficult to line up your home sale with your purchase, but we are far from a balanced market. There are many ways to accomplish this goal, but I can only share a couple in this short video. Please reach out to me to go through your specific situation.

In a hot seller’s market like ours, you have two main options:

 

 

 

If you have questions about which option is right for you, please give me a call or shoot me an email. I’d love to talk with you about your options and your specific circumstances.

These are the ten commandments of applying for a house loan.

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There are ten specific things that you shouldn’t do from the time when you’re applying for a home loan until after you close. We discuss these with all of our buyers during our consultation, and it’s very relevant since people are refinancing because of low mortgage rates. Here’s the list:

1. Don’t change jobs, become self-employed, or quit your job. Discuss any sort of job move with your loan officer. They may say it’s okay, but as a rule, do not change jobs.

2. Don’t buy or lease any type of vehicle.

3. Don’t max out your credit cards or close any accounts.

4. Don’t spend money that you have set aside for closing.

5. Don’t omit any debts and liabilities from your loan application. Once they do your final poll, those will show up and could cause some problems.

Make sure to check with your loan officer before attempting any of these things.

6. Don’t buy furniture or put it on layaway.

7. Don’t do anything to cause any additional inquiries into your credit.

8. Don’t make any large deposits. Make sure to check with your loan officer before doing this.

9. Don’t change banks or bank accounts.

10. Don’t co-sign a loan for anyone. This will create additional liability for you on your credit.

If you have any questions or if you’re looking to purchase a home, we’d love to help you. Don’t hesitate to reach out to us by phone or email.

The costs associated with homeownership you may not have considered.

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There are more costs associated with owning a home than the monthly payment. Just when buying the home, you’ll have to pay for closing costs, the down payment, earnest money, title insurance, inspections, appraisals, the recording of the deed, etc. You need your real estate agent to lay out those costs for you ahead of time. Then after you own the house, there are five main things you should remember to budget for:

1. Furniture. Many people buy a house and then realize they need to buy furniture, which can cost thousands of dollars depending on what you’re getting. 

2. Ongoing maintenance. Things are going to go wrong with your new house, and you no longer have a landlord to repair it. It’s a good idea to set a little money aside each month so you have it when things need to be fixed.

3. Home warranty. Consider purchasing a home warranty or having the seller purchase it for you (though having the seller pay isn’t as common in this strong seller’s market). For about $450 to $550, you can cover some of the major things in your house, at least for your first year of ownership.

Things are going to go wrong with your new house.

4. Taxes and insurance. Your lender will require you to insure the property, and if you don’t pay your taxes, the government will take your house away from you at some point.

5. Utility bills. These include things such as heat, electricity, water, sewer, etc. You can search an address online to see what a property’s high, low, and average bills have been for the past year. To search locally, visit the Madison Gas and Electric or Alliant Energy websites.

If you have questions about these hidden costs or any other real estate matter, don’t hesitate to give us a call or send an email. If you’re a first-time buyer, we’d love to help educate you about the entire process. 

Here’s why you should have your dryer vents cleaned at least once a year.

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If you haven’t already this year, make sure you get your dryer vents cleaned out. We just did ours, and it looked like we were trying to make a quilt. One of the main causes of home fires comes from dryer vent lint. 

Cleaning out your lint trap between loads isn’t enough. Having your vents cleaned out with compressed air once a year isn’t too expensive, and it can save you from even bigger expenses and a potential fire. Reach out to us if you need a good company to take care of this and we’ll get you connected.

If you have any questions for me about your home or anything related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.

Here in Dane County, the spring market is back with a vengeance.

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The spring market is back with a vengeance. After a full year of dealing with COVID-19 here in the U.S., a vaccine surge is on the horizon, and the economic outlook is positive. March, a historically active month for the market, is once again poised for strong performance. 

Home prices continue to surge despite a slight dip in demand. The recently released S&P CoreLogic Case-Shiller 20-city price index shows that home prices have been increasing at the fastest rate since 2014. Of the 20 cities surveyed, Phoenix, Seattle, and San Diego led the pack. In Dane County, median home prices rose 15.5% in February year over year. 

It was also reported at the end of February that total mortgage application volume fell by 11.4%. That’s largely due to interest rates climbing back up into the high 2s and low 3s. While it’s clear that 2021 won’t be a second consecutive year of watching rates limbo to new lows on an almost monthly basis, the Fed still intends to keep rates artificially low. Furthermore, millennials—the largest generation in American history—will continue to pour into the market after helping Zillow’s traffic skyrocket to 9.6 billion visits last year. 

What can thaw our market? An uptick in inventory would certainly do the trick. An intensified seller’s market emerged in the wake of the pandemic. It has led to homes in some markets fetching a jaw-dropping number of bids before going under contract for tens of thousands of dollars over list price. 

However, it also hampered sales a bit. “Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” said Lawrence Yun, chief economist for the National Association of Realtors. With more sellers primed to enter the market, weary homebuyers may find a smidgen of relief—but they still won’t be calling the shots. (Offers over list price will still be par for the course). 

Home prices have been increasing at the fastest rate since 2014.

Would-be sellers who sidelined their plans last spring due to COVID-19 may feel more optimistic this year. They’ve watched the 2020 housing market triumph in the face of adversity, and they’re seeing consumer confidence rise. 

More inventory this spring could grease the wheels of the housing market and lead to huge increases in sales. What does this mean for you? Though some buyers may be deterred by interest rates ratcheting up a bit, many more are rushing to lock in affordable monthly payments while they still can. 

For sellers, the competition will increase markedly over the next few months. Netting top dollar is still more than possible, but overpricing a home and failing to prepare it for the market are losing strategies. Buyers and sellers alike need to work with a skilled professional to navigate this March market madness. 

If you’ve even been entertaining the idea of selling your home at all this year, I invite you to use my home valuation link to see what your property is worth. If you want an even more accurate picture of what your home could sell for, reach out to me personally. I’m talking to both buyers and sellers around Dane County every day, and I can help you make the right decision for whatever you decide to do.

Here are some tips for navigating this seller’s market as a buyer.

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Buying a home in a seller’s market is always a tricky process. With low inventory and high demand, sellers have the upper hand and they know it. Right now in Madison, there are just 315 listed properties, of which only 132 are available for purchase; the others have already accepted offers. That equates to less than a half-month of inventory. Thankfully, there are a few aspects of this crazy 2021 market that will do homebuyers a world of good to know. 

For starters, interest rates remain at all-time lows. The average rate for a 30-year fixed mortgage dropped to 2.79% during the week of January 11. As of the morning of this recording, we had a pre-approval come through at a mind-blowing 2.6% for a 30-year fixed mortgage with 3% down. What’s even better news is that all the major industry players predict these rates will stay around the low 3s throughout 2021. 

Now, given that these low rates are fueling such prolific demand, home prices will likely continue to rise, albeit at a slower pace. Our research shows that prices should increase by a rate somewhere between 4% to 5%. The Mortgage Bankers Association projected a modest 2.4% jump in home prices, and Freddie Mac didn’t get much bolder with its projection of 2.6%.

All the major industry players predict that interest rates will stay around the low 3s throughout 2021.

With the market moving as fast as it is today, it’s so important to have all your financial ducks in a row. That means getting pre-approved and being ready to throw out an offer when the right home hits the market. You’ll likely find yourself in a bidding war, so here’s some advice: 

Don’t just focus on price alone. The other terms of your offer can be just as important. For example, you may want to waive certain contingencies or add an escalation clause that will automatically increase your offer price if other higher offers come in. This shows the seller you’re serious about buying their house without forcing your hand financially. 

You could also consider doing an inspection but set a limit to the number of repairs that you’ll be able to request. In certain circumstances, we’ve also found that writing a personalized cover letter to the seller can help a buyer’s chances. If price and terms are all equal, it just might be the thing that sets yours apart from other offers. 

So, if a home purchase or sale is a major part of your 2021 plans, it’s time to start the process. You can get a jump on the spring market by taking a look at all the homes and condos that are available for sale in Madison and Dane County right now; just head to madisonneighborhoods.com and danecountymarket.com. As always, if you have questions about this or any other real estate topic, don’t hesitate to reach out to us via phone or email. We’d love the opportunity to have a chat with you soon.

Today I’ll discuss how we’re keeping clients safe in our real estate process.

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In light of the pandemic, people are frequently asking us if they can still buy or sell houses.

Fortunately, the answer is yes—we’ve just had to change our process to comply with certain public health measures.

If you’re a buyer, your buyer’s agent can take you on a virtual walk-through of a home you’re interested in, using Skype, Zoom, FaceTime, or similar apps to show off the house’s features in real-time, answer any questions you have, and highlight points of interest. We can even use the tools in our arsenal to give you a 3D tour that will show you the floor plan, room dimensions, and allow you to measure out spaces for your furniture.

If you’re interested in going to see the home in person, there are measures we can take to mitigate the risk to you and the sellers. We ask that you wear masks and disposable gloves when you enter the house, and we’ll designate someone to open doors and drawers so you can get a closer look. We’ll also note surfaces that are touched so that we can wipe them down and sanitize them once the showing is finished.

Even with those measures, is now the best time to buy?

I can’t tell the future with certainty, so I can’t say for sure whether or not it’s best for your situation to buy a home right now. I can, however, share that interest rates for a 30-year fixed mortgage are at 3%, which is very, very low. If you already own a house and don’t plan to move, now is a fantastic time to consider refinancing your home.

Real estate will continue to be bought and sold, but we’ll do everything we can to help keep those involved in the transaction safe and healthy.

One very real concern at this time is someone losing their job or getting furloughed between having their offer accepted and the closing table. The Wisconsin Realtors Association created a document that offers further protections in cases such as if the title company or real estate brokerage closes or you can’t close your transaction due to the pandemic.

One of our local title companies, Homestead Title, has been offering drive-up signings where the buyer and seller pull up in separate cars and a title officer will come outside to give you the papers you’ll need to sign and answer any of your questions. It’s worked out very smoothly as an added measure to keep everyone safe. Electronic notaries are also something that we anticipate will soon become a reality for us.

In the end, real estate will continue to be bought and sold, but we’ll do everything we can to help keep those involved in the transaction safe and healthy. If you have any questions or would like more details on any of these safety measures, don’t hesitate to reach out to us.

These tips may have worked in the past, but things in our market have changed. Here’s the outdated advice you should avoid.

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If you’re in the market to buy a home, you’ve probably heard all sorts of advice from friends and relatives about what you should be doing. However, some of the tips you’re being given don’t exactly work anymore in our market, so today we’ll be going over the outdated home buying advice you’ll want to ignore.

“You should wait until prices decrease.” We’ve been in a seller’s market, meaning there are too many buyers and too few homes. As a result, prices have gone up as people compete for listings. So while the advice makes sense, my argument is this: Rent is also high. In almost all cases, you’ll find that renting is more expensive than paying a mortgage, and paying rent means you’re not building any equity. On top of this, interest rates are still historically low. If you miss out on these rates by waiting, you’ll likely be paying more later on.

Renting is more expensive than paying a mortgage, and paying rent means you’re not building any equity.

“You should make an offer with room to negotiate.” For most transactions, this doesn’t work well anymore. Homes are selling close to or even above list price, and with multiple-offer situations occurring on many properties, you’re unlikely to hear a response if you don’t make a great or decent offer initially. Look at sold comparable properties with your agent and see what the market value is. If you keep hearing nothing back after submitting your offers, you may run into buyer fatigue and resign yourself to renting for the foreseeable future.

“You should wait for spring.” The time before the spring market is the best time to be out there. By waiting until spring, you’ll be competing with more people than you would be now. So if you can find the right property now, take the opportunity and avoid springtime competition.

“You should make an offer right away.” Yes, it’s important to get an offer in quickly, but you still need to have a comparable market analysis to ensure that what you’re doing is a good idea. It protects you in case it doesn’t appraise or big problems turn up during an inspection.

If you have any questions or would like to learn more, feel free to reach out to us for some answers. We look forward to hearing from you soon.

Thanks!

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