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2012-01-23 09:08:33
Dec. Home Sales, Rates and Preparing to Buy Home

The National Association of Realtors just released the numbers for home sales for December 2011 and they look very encouraging. Amount of homes sold rose, interest rates dropped, inventory dropped, and experts are expecting the housing market to stabilize and begin appreciating again.

These numbers are nationwide and almost everything I have read puts Utah ahead of the curve. In fact, it seems that Utah is 6 month to a year ahead of the national trends and that most real estate markets within the Wasatch Front are stable, and I expect appreciation in some of these markets this year. 

 To read the full article on Realtor.org, visit: http://www.realtor.org/press_room/news_releases/2012/01/ehs_dec



Mortgage rates have continued to decrease to new record lows. This is a big deal!! This is a huge deal!! I cannot overemphasize this enough. These rates will save you tens of thousands of dollars in interest over the life of your loan, will help you qualify for more loan, and will help you purchase much more home for the same price!!

Here is a recent article with an update on mortgage interest rates: http://www.monitorbankrates.com/mortgages/mortgage-rates-lower-this-week-30-year-mortgage-rates-at-3-94

As I have explained before, the determination of a 'great deal' on a home purchase, for those taking out a mortgage, is equally determined by both purchase price AND interest rate. 

For every percentage point (1%) on a mortgage, monthly payments increase $83/month for every hundred thousand dollars that you borrow. So the difference between a 4.25% and a 5.25% interest rate on a $200,000 loan is an additional $167/month, or $2000/year, JUST IN INTEREST!!

The additional $167/month is the same as purchasing a home that is about $25,000 more expensive at current interest rates. In other words, mortgage payments would be about the same for a $225,000 mortgage at 4.25% interest as a $200,000 mortgage at 5.25% interest. 

Here is a graph which shows how much interest rates affect monthly mortgage payments (very approximate and assuming very little down payment; principle, interest, taxes and insurance):


Loan Amount Payment at 3.75% interest (2012) Payment at 4.25% interest (2010-2011) Payment at 5% interest (2009) Payment at 6.25% interest (2002-2008) Payment at 8% interest (92-02)
$100,000 $580 $605 $650 $730 $850
$120,000 $695 $730 $780 $875 $1,015
$150,000 $855 $900 $975 $1,090 $1,265
$200,000 $1,135 $1,200 $1,300 $1,450 $1,680
$300,000 $1,700 $1,800 $1,950 $2,180 $2,530


If you are ready and able to purchase a home, it is highly recommended that you consider moving forward as quickly as you can. Let me know what I can do to be of assistance.




Trulia released an article entitled '5 Things To Do NOW if You Want to Buy a Home in 2012' that I thought was incredibly informative and summarized last month for you. I decided to repost the summary for those of you planning to purchase a home in 2012.

You can read the complete article here: http://www.trulia.com/blog/taranelson/2011/12/5_things_to_do_now_if_you_want_to_buy_a_home_in_2012?ecampaign=cnews201112C&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2011%2F12%2F5_things_to_do_now_if_you_want_to_buy_a_home_in_2012


5 Things To Do NOW If You Want to Buy A Home In 2012:


1. Check your credit: decide on a lender and set up a meeting to discuss your financial situation and your credit report. Better to discover problems now and have them resolved ina few months than to discover a problem when you are ready to make an offer. 


2. Do your research: In other words, educate yourself and prepare to make a big decision. One of my goals with MyProvoHome.com is to help educate all of my clients so that they can be better prepared to make educated decisions. Learn the difference between Equity Listings, Short Sales, Bank Owned and For Sale By Owners. Discuss the option of buying a new home, buildinga custom home, or buying an already existing used home. Decide what area, criteria and price range best suite you.


I will do my best to assist my clients in these areas, but I cannot make decisions for them. Part of your recommended research is choosing a good agent and loan officer. Hopefully Mike Christensen and I are given the chance to earn your business and show you why our businesses receive so many referrals from past clients. 


3. Fluff up your cash cushion: Save up for both your down payment AND extra cash just in case. The more down, generally the better your loan, and the more you save up, the greater your peace of mind. Cash in your bank account makes big decision time less stressful. 


4. Shed some stuff: Start preparing for the big move by getting rid of stuff that is no longer needed or used. If you do it right, you might be able to 'fluff up the cash cushion' at the same time. Make the joy of owning a new home more enjoyable by making the move a less stressful task.


5. Sit very, very still (your credit): Don't make any major purchases or cause any hits to your credit until after you have closed on your home. This is probably not a good time to apply for a credit card, buy a new car on credit or to start racking up credit card debt. But once you close on your new home, well, have at it (not recommended).




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