Top Ten Reasons to Own a Home

“Real Estate segment with our Residential Expert Cheryl Marlow, at Keller Williams Realty!”

Good morning, Cheryl! So today you want to give us some great reasons to own a home, is that right?

Good morning, Bob! Yes, I do! Let me start off by saying that home ownership is an intrinsic part of the American Dream, and it is an amazing feeling to walk through the front door of a home, and know that it’s yours. Not only does owning your own home give you a reason to be proud, but it’s also a great financial move. Purchasing a house is probably one of the largest investments you’ll ever put so much effort and fiscal responsibility into; with time and patience, it reaps great rewards!

What are some of these great rewards?

In my opinion, the top ten reasons to own a home are:

1.   Real estate appreciates in the long term, giving you a good return on your investment.

2.   The alternative is to pay rent, which benefits your landlord and does nothing to improve your finances!

3.   The interest on your mortgage is tax deductible!

4.   In an emergency, you can borrow against your home equity.

5.   A home is a leveraged investment using the bank’s money if you’re financing a mortgage. Who wouldn’t be excited about that?

6.   A home purchased with a fixed rate mortgage has a stable payment schedule that becomes easier to pay over time because of inflation.

7.   Owning a home is a good way to diversify your assets.

8.   Home ownership clear of debt will help you retire comfortably.

9.   Owning a home is still one of the most important steps towards financial success and security!

10. And, of course, you can always change your home by painting, remodeling, landscaping, etc., and the only person that benefits is you!

Great reasons! Is there anything else you’d like to touch on?

Bob, when the real estate market changes, concerns rise about whether or not it makes sense to purchase a home in a particular market environment. With today’s affordable home prices and low interest rates now is a great time to buy your first home or to sell your current home and purchase your dream home!

Forecast for 2014

I know everyone is wondering about how the real estate market is going to perform in 2014. Can you give us your predicted forecast?

My real estate crystal ball remains cautiously optimistic for 2014! I predict that we will see the Greater Albuquerque areas continue to slowly stabilize. We will continue to be in a price war and a beauty contest with realistically priced homes selling well. I expect inventory will increase dramatically in the first and second quarters, which may create downward pressure on pricing as supply and demand drives home values either up or down. Overall, 2014 should see a higher number of sales than the previous year. I predicted 2013 to increase over 2012, and the final yearend figures should show an increase of over 1,000 sales. I’m optimistic that we may even experience home value appreciation.

Stabilizing sounds good. What about all of these foreclosures we’re hearing about?

As part of the market stabilization, we expect to see a continued decrease in bank controlled sales in 2014. A bank controlled sale is a home that either is bank owned through a foreclosure action or bank controlled through their willingness to accept a short sale whereby they’re accepting less than the homeowner owes on the property. In 2012, 30-35% of sales were bank controlled. As I predicted last January, the 2013 bank controlled sales dropped to approximately 25% of all sales.

Your crystal ball tends to be really clear! Cheryl, tell us a bit about mortgages and interest rates in 2014.

When historically low interest rates are enjoyed for an extended period of time, the only way to go is up. Interest rates will continue to slowly increase. This is a great motivator to buy now, instead of paying more later! Momentum continues to build in the housing market and there are still many opportunities to take advantage of the past few years of lower home prices and unbelievably affordable interest rates. These favourable conditions will not last.

Overall, you’re prediction is positive?    

                     

Again, I’m cautiously optimistic about the Albuquerque real estate market for 2014. For many reasons, New Mexico is a great place to live and own real estate. Whether you are a seller, a first-time buyer, or a move-up buyer, there are great opportunities in this market to take advantage of. Call me today and let’s get started. 

Preservation of Homeownership Tax Policies

Next week I'll be doing my monthly Albuquerque market report, but I wanted to speak about a broader, national topic today. Owning a home is still the American dream, and we're definitely seeing a renewed sense of optimism. Offering more evidence of a swing toward homeownership as the housing market continues to recover, a recent survey states that there has been a dramatic increase in the number who now say that they intend to buy in the near future. 49% simply want the chance to call themselves homeowners, 44% view owning a home as good financial investment, and 36% need more space for their family and/or children.

What can you tell us about the comprehensive tax reform?

Currently, you are able to take an income tax deduction for the amount of interest you have paid on your mortgage. The mortgage interest deduction helps many families become homeowners, and it is vital to the health and stability of housing markets. 65% of families who claim the deduction earn less than $100,000 per year, and as a percentage of income, the biggest beneficiaries are younger middle-class families.

What is the stance of the National Association of Realtors and yourself?

The National Association of Realtors' President Gary Thomas recently testified before the U.S. House Ways and Means Committee concerning federal tax provisions that affect residential real estate. Thomas said that homeownership has had long-standing support in the country because of its many benefits to individuals and families, communities and to the nation's economy. Realtors know that homeownership is an investment in your future and for many people, owning a home helps them gain a financial foothold and a feeling of security, especially once you own your home free and clear.

And this tax deduction helps improve the overall real estate market, correct?

Since we're in the midst of a fragile recovery, additional housing taxes would crush the real estate market just as it is poised to help lift us out of the economic doldrums. Our goal is to see that the tax code will continue to reflect the fundamental American value that homeownership helps build financial stability. Not only is this the right policy for housing, it's also the best for homeowners, for communities, and for the economy.

7 Reasons to Buy Now

The top 7 reasons everyone listening should buy a home are:

#1: Interest rates are still low, below 5%, making your dream home more affordable.

#2: Sellers are willing to negotiate and there are some great values available in almost all price ranges.

#3: There is plenty of mortgage money available. The key is to have good credit and stable income.

#4: If you buy now, your long-term return can be a very large and profitable number.

#5: Terrific incentives are available for first-time home buyers.

#6: There is plenty of inventory, and great homes to select from!

And #7: This is a great time to invest in rental homes. Purchase a home, your tenant makes the payment, and you gain equity. The investors I am currently working with are averaging a 6-10% rate of return on their investment real estate portfolio. Significantly better than a CD, a treasury bill, or many other common forms of investing!

Those are great! Can you give us a little more insight into the rates today?

The record-breaking, amazingly low rates of the last few years are now officially out of sight, but they are still historically affordable! Last year’s rate of 3.3% has been increased by more than a point with the recent 30-year mortgage rate of 4.35%. As we continue to see improvements in the economy, rates will continue to increase.

Do you have any advice on taking advantage of the rates?

One of the best things you can do is lock in your loan rate as soon as possible. So, after calling me to help you find a home, once you sign that Purchase Agreement, lock that rate in! Adjustable Rate Mortgages (ARMs) have increased in popularity, but it’s critical to get a loan that matches your needs. Approximate monthly payments on a $250,000 mortgage are $1,194 with a 30-year-loan at 4%, or $999 on a five-year ARM at 2.6%. If your plans are to stay in the home long term or to invest in a rental property, a fixed rate mortgage is definitely the best course of action.

So, if our listeners are planning on buying or selling, you are the one who can help them make the best decision based upon their situation?

I’d love to be of assistance! Call me on my cell at 238-3272, or email me at cheryl@cherylmarlow.com.

As always, who do you know that needs to buy or sell real estate today? Thanks!!

Buy Now or Pay More Later?

“Real Estate segment with our Residential Expert Cheryl Marlow!”

A recent article on Realtor.com by Brian O’Connell raises a lot of questions. So, today I wanted to ask our listeners: would you rather buy a home now, or pay more later? With mortgage rates inching towards 5% as this year draws to a close, potential home buyers have some decisions to make – and soon. A laundry list of economic issues, including inflation, consumer credit, and rising home prices has the U.S. housing market on the way to making a clean break from the days of the 3.5%, 30-year fixed-rate mortgage for the foreseeable future. The danger isn't that mortgage rates are nearing 5%; the real threat is that rates could go higher, to 5.5% or even 6% in 2014.

Can you give an example as to why there’s such danger?

Think of it this way: say a buyer snares a $300,000 fixed-rate, 30-year mortgage at 5% interest rate with the following payments: monthly payment of $1,610.46, total payment of $579,569.69, and total interest of $279,769.69. Another buyer grabs the same mortgage at 6% interest rate, they have the following payments: monthly payment of $1,798.65, total payment of $647,515.44, and total interest of $347,515.44. The buyer with 6% interest pays more almost $200 more per month and approximately $67,746 total compared to the buyer with 5% interest.

Wow, that’s an incredible difference!

It sure is! The Federal Reserve has embraced a policy of low interest rates since the real estate tsunami hit, primarily by buying up securities in the U.S. mortgage market. Experts say the Fed will soon be pulling out of their mortgage backed securities purchasing program thus driving interest rates up even higher. Rates in the 3% range are gone forever.

What are rates at now?

Rates are currently at 4.25%. While rates have been in decline the last few weeks, the big picture shows a general rise in rates to 4.5% before the end of 2013. Which raises the question for potential homebuyers: should you jump off the fence now, with rates still fairly reasonable, or do you wait and risk having to pay significantly more with mortgage rates as potentially high as 5-6% in the next year?

Give us your thoughts below!