Today's Headlines - Realty Times

First week of August and we get the July jobs report on Friday. Not likely to be a great number, but the FED has dismissed all the jobs misses so it shouldn’t be a surprise, unless the FED sees something new. I do think the inflation report next week is also likely to be a terrible number, but once again, the FED will just dismiss it with its new favorite word, “transitory” and keep right on ignoring the inflation we all see.

Housing is another issue, prices continue to rise across the country and in many areas, it’s more than double digit increases year over year. While activity has slowed down a little in some areas, volume of both home sales and demand remains strong. Fueling much of that is the insane rise in rents. Last month we saw a 2% increase in rents, leading to more than a 10% increase year over year. With some markets seeing rental availability challenges at, or worse than listing inventory!

Yes, mortgage applications were down last week for both purchases and refinances, but levels are still strong, and opportunities are plentiful if you know where to look. While some companies are panicking to low origination volume, many I work with are well ahead of last year’s numbers and still managing 70% purchase to refinance balance for the year!

With many across the country beginning the trek back to school, we may see a brief lag in activity but be prepared for a spike in the action within two to three weeks of the kids going back to school and functional obsolescence of current homes forces a change! Staying committed to your plan and the focus of relational business practices will continue to help you out pace your competition!

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Ralph Waldo Emerson-“The desire of gold is not for gold. It is for the means of freedom and benefit.”

Samir and Sabba had finally found a home that would give them some rest from the busy city and the noise.  They had been visiting with a builder who called them to let them know that he had a ready-made house that had everything on their wish list.   The first buyer was supposed to close in the next two and a half weeks but had backed out due to a family emergency. So if Samir and Sabba wanted the house, they would need to buy it right away, or the builder would have to take the next offer. 

How could Samir and Sabba close in two and a half weeks on the new home if they could not sell the old one yet? They would need to use a large amount of equity from the sale of the old house to put down enough on the new home to afford the new payment.   The answer for the Sader’s was getting an equity line of credit on their old house to use for a down payment on the new home.  The Sader’s story is one example of interim financing to bridge the gap until the old house sells.

Low Inventory-High Demand Causes Interim Financing To Be More Popular  

We are experiencing a record low number of homes for sale.  At the same time, low mortgage rates and rising rental rates are driving people into the homebuying market. It is normal to walk into multiple home purchase offers on the same house. The bridge loan and other interim financing tools are wildly popular because they allow the buyer to make a home purchase offer without having to make the offer contingent on the sale of their current home. 

Advantages of Using Bridge Type Financing

1. Your peace of mind knowing you aren’t forced to sell your current home before buying your new one.
2. Your offer is more competitive if you are not making the home purchase offer contingent on the sale of your old home.
3. Your comfort level on the financing on the new home is better since you used interim loan secured on the old house, giving you  proceeds to put a substantial down payment on the new home.  The large down payment on purchasing the new home lowers the permanent mortgage and the permanent house payment. You have your loan terms where you want it.  When you sell the old house, you pay off any mortgages and the interim loan that was secured on the old house. 

Disadvantage of Using Bridge Type Financing

The borrower is required to qualify with the lenders for all of the loans on the current home and the new home. 

The borrower is required to make the payments on all mortgages secured on the two homes.  

As a real estate professional, connect with other realtors and lenders to get familiar with the various types of interim bridge loan types that can help get your home buyer and home seller closed quickly and smoothly.

Posted On Monday, 02 August 2021 00:00 Written by
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