Monthly Archives September 2013
For two weeks now mortgage rates have been imitating Alicia Keys’ biggest hit. No, they’re not a Girl on Fire, They’re Fallin’. Although mortgage rates haven’t been falling in and out of love with you, they have reduced their numbers significantly in the past two weeks. This is due mostly to the Federal Reserve’s decision not to taper bond purchases, and if you’re looking to refinance or purchase a home, your opportunity hasn’t looked better in months. Nine weeks to be exact; the Primary Mortgage Market Survey showed the 30-year fixed rate fall to its lowest level since July 25 of this year. Let’s take a look at the raw numbers, shall we?
30-year fixed-rate mortgage (FRM) averaged 4.32% with an average 0.7 point for the week ending September 26, 2013, down from last week when it averaged 4.50%. A year ago at this time, the 30-year FRM averaged 3.40%.
15-year FRM this week averaged 3.37% with an average 0.7 point, down from last week when it averaged 3.54%. A year ago at this time, the 15-year FRM averaged 2.73%.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.07% this week with an average 0.5 point, down from last week when it averaged 3.11%. A year ago, the 5-year ARM averaged 2.71%.
1-year Treasury-indexed ARM averaged 2.63% this week with an average 0.4 point, down from last week when it averaged 2.65%. At this time last year, the 1-year ARM averaged 2.60%.
Some people want it all, but I don’t want nothing at all if I ain’t got low rates. Rumor has it that was the original lyrics in Ms. Keys’ “If I Ain’t Got You,” at least that’s what’s said around home loan circles. But if you’re looking for factual information, let’s take a look at this quote from Frank Nothaft, vice president and chief economist of Freddie Mac.
“Mortgage rates fell following the Federal Reserve announcement that it will maintain its bond buying stimulus. These low rates should somewhat offset the house price gains seen the last number of months and keep housing affordability elevated. For instance, the S&P/Case-Shiller® 20-city composite house price index rose 12.4% over the 12-months ending in July, which represented the largest annual increase since February 2006. In addition, more than half of the cities had annual growth exceeding 10% and four cities saw increases exceeding 20%.
“These increases in home values have also increased homeowner wealth. For example, homeowners experienced an aggregate $1.4 trillion increase in equity in their homes over the first half of this year which contributed to the overall $4.2 trillion gain in household net worth.”
This article was written by Kelly McMurtrie, contributor to the HomeInsurance.com blog. The HomeInsurance.com blog serves as a resource center for insurance consumers and home buyers across the country.
Some prospective home buyers love the idea of spending weekends on do-it-yourself projects and transforming older houses with some potential into their own dream homes. Plus, the tag price is often drastically lower on houses considered “fixer-uppers.” However, here are just a few reasons an older, cheaper home that may appear to just need a little elbow grease could actually end up costing you a fortune down the road.
Out-of-Date Systems and “Renovations”
Sure, some appliances in the kitchen are older than you are, but this retro house was a steal. However, while dated features such as shag carpeting and paneled walls may be harmless and easy to renovate, they could be an indication that other, more important features of the home have been neglected over the years.
So before you set your heart on a vintage fixer-upper, find out when the electrical systems and plumbing systems were last updated. If either or both are out of date, you’ll either need to find room in your budget to renovate them before you move in or walk away.
It can make a huge difference when it comes to getting home insurance for the residence. Your lender will require you have insurance in place before it gives you a mortgage. Your premiums for coverage could be much larger than if you buy a similarly sized house that isn’t so old.
Here’s why: In 2011, nearly 50,000 home structure fires reported to U.S. fire departments were ignited by malfunctions in home electrical systems. On average, repairing damage from home fires costs more than $33,000 per incidence. You home insurance provider doesn’t want to be stuck with that bill any more than you do.
Additionally, you should ask about the roof. If it hasn’t been inspected or updated in the last 10 years, add that to your to-do list as well. Older roofs are vulnerable to wind and hail damage – the average claim is $7,177. A new or updated roof could actually help you qualify for savings on home insurance.
You Can’t “Fix” a Bad Location
If you’re looking in a lower-priced or “up-and-coming” area with the hopes that your property value will appreciate over time, consider the risks involved and how they could actually start to show up in your budget now.
Take a look at safety factors such as crime rates and other statistics. In addition to increasing your chances of theft or crime-related claims (the average cost of which is more than $3,000), that higher risk also often translates into higher insurance rates.
Other location-related risks to consider include flood zones, natural disaster and distance to hospitals, police departments and even the closest fire hydrant. While higher risks could force you to spend even more on insurance premiums and claims, a safer location could actually help you qualify for savings.
Spending More for Safety Now Could Save You More in the Long Run
Rather than focusing on the current price tag, smart home buyers consider the long-term investment of a house. If it’s not built to last, it’s probably not worth throwing thousands of dollars into renovations anyway.
In order to minimize your risk of add these basic home features to your walk-through checklist:
- Safety features such as deadbolts, storm shutters and smoke detecting devices that could help prevent big losses due to theft, weather and other disasters.
- Security features such as a burglar alarm or privacy fence that could greatly reduce your risk of theft.
- Liability issues such as uneven landscaping or second-story decks that could lead to falls. Swimming pools are also a huge liability and could result in sky-high home insurance premiums.
It’s not impossible to find a great steal and fix up an old house without going over budget. Just remember to look at the whole picture rather than just the current price tag,
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