Debra K. Cooper

When the rates go up……

September 26th, 2016 by Debra K. Cooper

It’s not “if” the rate goes up but “when” the rate goes up; it could make a big difference for some buyers. Freddie Mac predicts that mortgage rates will be at 4.5% a year from now.Mortgage Rate History0916.png

If buyers can afford a home with higher interest rates, it means higher payments. Higher payments might mean they won’t have the money to spend on other things like furniture or improvements to the home or an unrelated purchase like a new car.

When the rate moves 0.50% on a $250,000, the payment goes up by $70.66 a month. If it moves 1.00%, the payment goes up by $143.74 per month, each and every month for the entire term of the mortgage which means paying over $50,000 more for the house.

The question facing every borrower in this situation is “How will you feel about having to pay more to live in the same house because you were not ready to commit?”

Then, there’s the borrower who is absolutely maxed out as to what they can qualify for or sometimes, it is a borrower who just refuses to pay a higher payment. When that’s the case, the buyer has to make a larger down payment. In the same example, a 0.50% increase in rate would require $14,873 more in down payment. That could make the purchase impossible or require the buyer to buy a lesser price home that will not have the same amenities.

Mortgage rates have been low for so long that some people think that is what they should be. There are some economists who believe that the economy will not be strong again until mortgage rates are in the 7% range.

To see how this type of scenario might affect you, go to the If the Rate Goes Up calculator.

Fall if a great time of year…..and a great time to buyer home!

September 22nd, 2016 by Debra K. Cooper

September is here, and you know what that means: summer is drawing to a close, and it’s back-to-school season again. This summer was a record-breaking one, as the housing market showcased its exponential growth.

Existing-home sales and average median sale price increased, while properties were snatched off the market quicker than they’ve been in over a decade. Summertime proved to be a real estate boon, but what should home buyers and sellers expect for the upcoming fall season?

For starters, mortgage interest rates are still hovering at bottom-basement levels, signaling a prime opportunity for buyers to lock in historically low rates, and sellers to embark on their next property with financial confidence. Likewise, demand remains strong, so don’t expect any seasonal slump ahead.

Temperatures may be dropping, but the market’s scorching summer is sure to bring the heat all autumn long. As the new school year begins, now’s the time to get smart and stake your claim in the American Dream of homeownership!

Waiting to Buy?…..WHY?

September 21st, 2016 by Debra K. Cooper

Some people wait to buy a home until they have 20% down payment to avoid paying the mortgage insurance which is required by lenders when the loan-to-value ratio is greater than 80%, with the exception of VA loans.


To illustrate a typical situation, let’s assume that buyers have $10,000 for a down payment on a $200,000 home. They could purchase it today with a 95% loan or save another $30,000 in order to get an 80% loan without mortgage insurance.

If it took three years to save the additional down payment, the $200,000 home at 3% appreciation would cost $218,545. A 20% down payment on the increased sales price would be $43,709, less the $10,000 the buyers currently have leaves them $33,709 to save which would amount to $936.36 a month. They would secure a $174,836 mortgage at the then current mortgage rates, which in all likelihood, will be higher than today’s rates.

The alternative is for the buyer to purchase the home today with a 95% loan at today’s low interest rates plus approximately $85 a month for mortgage insurance depending on their credit score. At the end of three years, the unpaid balance would be $179,548.  Assuming the home will be worth the same $218,545, the buyer’s equity would be almost $39,000.  To reduce the mortgage to the same amount as the first example, the buyer would need to make an additional $125 a month principal contribution above the normal payment. Then, the mortgage would have an unpaid balance at the end of three years of $174,775.

When there is sufficient equity in the home, the mortgage insurance is no longer required. Some lenders may drop the mortgage insurance requirement with an appraisal to provide proof. In other situations, it may require refinancing to eliminate the insurance.  Call to discuss options that may be available to you.


Welcome to my new web site

July 29th, 2013 by Debra K. Cooper

Please have a look around, and don’t hesitate to get in touch if I can be of assistance.