Alright, if you have been on the search to buy a home, it’s time to buckle down and pull the trigger. You will want to lock in your rate now. The interest rates have spiked in the past 10 days and there is a potential danger that it could get worse. The average interest rate on a 30-year fixed loan has soared to 6.02% from 5.82% in just a week. The cause of this is the rising inflation fears that have sparked a jump on the long-term government bonds.

That means on a $300,000 mortgage, your monthly payments will increase $38 and the total interest on the life of the loan will increase $4,000. You can still get some good deals as there are a few lenders out there offering rates below 6%, but not many.

No one knows what is in store next, but if you find a reasonable deal, don’t think twice about putting a deposit to lock the rate in for a month or two if you are able.

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Knowing when to get out is one of the hardest decisions one has to make in a lifetime. What’s even harder, is knowing when to get in. I would have been rich if I had invested in Google, or if I had sold my home when the market was hot, or had got out when I was up $1000 in Blackjack. These are all situations that we regret and would love to go back in time to correct them. Whether it was greed, listening to one of our friends/family, or just scared to take the risk, we wish we had made the right decision. This leads me to my discussion of the housing market.

Have we hit the bottom of the housing market? I can’t tell you for sure but there are many hints that have me believing that we have. In some areas of Arlington, VA and Washington D.C., housing prices have gone up. This is shocking news to buyers out there. However, this is the truth. Most of the buyer mentalities right now are very relaxed. They believe they can take their time. In reality, they’re going to miss out of the market and catch it on the way up. Interest rates are below 6% and that is phenomenal. One of the biggest things that I see right now is that buyers are holding out for the interest rates to drop. I understand that we all want the lowest rate possible but a rate below 6% is a great rate regardless. It’s like saying I wish I had bought stock when it was $20/share instead you bought it for $25/share. Now the stock is up to $500/share. In the long run you made a great buy and it doesn’t really make that big of a difference.

If you are searching for a home right now, you’re witnessing the bottom of the market. In a few years from now we’ll all look back and see that 2008 was the bottom of the market and those who purchased then will be the wise buyers.

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Everyone’s taste is different when it comes to what they want in a house.  You can’t force someone to like the sponge paint in the bathroom or the colorful wallpaper you have in the kitchen, but you can easily make that fix.  However, switching the position of the staircase or moving the laundry up three floors is a different story.  Here is a list that will turn buyers away immediately:

Small houses
People nowadays want a lot of space.  Expect to get what other people are willing to pay for the space when you’re trying to sell the home.  If you can’t afford to increase the size of the home then you need to do everything you possibly can to make it look bigger.

One bathroom
When people are buying a home, they are usually upgrading from what they are used to.  That means that they don’t want to wait in line anymore for the bathroom.  The only time one bathroom is okay is in a one bedroom condo.

No air conditioning
Probably one of the greatest luxuries when the heat is unbearable is air conditioning.  It’s going to cost you between $10K-$20K to install central air if you don’t have it but it’s a must these days.

Spiral staircases
Of course they look good but let’s be honest with ourselves.  Who wants to carry a bed up a spiral staircase?  A bed isn’t even the hardest piece of furniture. 

Basement laundry rooms
We finally discovered that it would be more convenient to have the washer and dryer on the level with all the rooms.  Who thought it was a good idea to make a hike to the basement to wash your clothes?  People have come to realize that it’s all about convenience nowadays.

Popcorn ceilings
I don’t need to say much more other than no one is a fan of them anymore.  Just make the change.

Small master baths
The majority of the world is materialistic and they expect to have a big bathroom to go along with their big bedroom.  Even though you don’t sleep in your bathroom, it’s a complex buyers have come up with and there’s no prescription.

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30 yr fixed mtg		5.78%		5.87%
15 yr fixed mtg		5.36%		5.48%
5/1 ARM		5.31%		5.57%
30 yr fixed jumbo mtg		7.08%		7.21%
5/1 jumbo ARM		6.23%		6.31%

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Owning a home in Northern Virginia or Washington DC has been part of the American Dream. However, nowadays it’s becoming harder to live that dream. With the mortgage crisis, higher minimum credit scores, larger down payments, and mortgage insurance premiums (PMI) are becoming more common. Fewer home buyers are qualifying for mortgages and the up front costs of home ownership has steadily increased.

There are still programs out there for first-time home buyers that offer discounted interest rates and are more lenient on underwriting standards. The Federal Housing Administration (FHA) has a good program and it’s backed on income-verification and debt thresholds. There are also first-time home buyer credits out there. For instance, one program in Washington DC states: Taxpayers who have not recently owned a home in the District may be eligible for a one-time tax credit of up to $5,000 of the amount of the purchase price against federal income tax. In Virginia, the Home Stride program helps out first-time home buyers. Home Stride is a loan program available to first-time home buyers using a Virginia Housing Development Authority (VHDA) loan product for their first trust mortgage. Home Stride allows eligible buyers to borrow up to the lesser of 10% of the sales price or $25,000 to pay down payment and closing costs. Payments and interest are deferred for the first 3 years of the loan. After this deferment period, the interest rate of the loan is 5% for the remaining 27 years of the loan. The loan has no pre-payment penalties and can be paid in full at any time.

If you are a first time home buyer, it is recommended that you consult with a real estate agent. Buyers are generally not aware of FHA and VHDA loan programs. Who knows, these programs may help you get into the home of your dreams.

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You can’t hide it from me, you love the fireplace in the bedroom, hardwoods throughout, and even the kitchen that isn’t totally decked out.  The only question left is how much are you willing to pay for them?One of the biggest obstacles when buying a home is determining what to offer.  This is because many factors come in the picture.  The interest rates, fallen prices, the foreclosure market, and the greedy sellers overpricing their homes all fall on the table.  Your agent can reassure you that you’re not going to overpay for the home.  However, you can step in and do some research of your own.  Search the market and look for recent sales.  You’re going to want to look at similar homes that have sold in the past two to four months.  If you want to get a great feel, I suggest you get in your car and drive around the neighborhood.  This will give you a more precise idea of why homes have sold for more or less than the asking price.

When looking at home data, one thing that doesn’t show up in the numbers is value.  A home’s value can increase significantly over time which makes the previous information irrelevant.  Sometimes looking at the tax records to see what the seller paid for the property can be ridiculous.  A better option would be to hire an appraiser to estimate the property’s value.  This will give you some firing power when you’re making an offer.  The appraisal may cost you $300-$400, but if the appraisal comes in at a lower value you good evidence to back up the offer.

The information on the internet is available to you but I would consult with a real estate agent who deals with these statistics on a daily basis.  Doing your research ahead of time will get you familiar with the market, but don’t count yourself as an expert just from a few web pages.  When submitting an offer, a low ball bid might insult the seller and ruin your chances on that home.  You will need substantial evidence to back up a low ball offer.  Instead of putting in a bid lower than the sales price, you may want to ask for closing cost assistance or an upgrade of hardwood flooring. 

After a home has been on the market and the price has been reduced, the seller is typically becoming more realistic.  A way to help your cause is making the offer contingent upon an appraisal.  If the home appraises for less than the asking price, the lender will refuse the loan.  The only sure way to protect yourself is having a good agent that knows that market and putting the contingencies in place.  No lender is going to give you a loan if it doesn’t appraise.

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