Fed Announces Interest Rate Increase, Now What?

You may have heard the Federal Reserve raised its key interest rate on Wednesday, December 16, 2015 by .25% (from a range of 0% to 0.25% to a range of 0.25% to 0.5%). This is the first increase in nearly a decade. So how does this affect mortgage rates?

This increase doesn’t mean that the average rate on a 30-year fixed mortgage will increase by a quarter of a point. That’s not how fixed mortgage rates work.

An article on CNBC explained it perfectly:

“The Fed has little influence over long-term, fixed-mortgage rates, which are pegged to yields on U.S. Treasury notes, so don't expect higher mortgage rates to weigh on your ability to buy a home or refinance in the near future.” (One thing to keep in mind, however, is the fact that this hike could affect adjustable rate mortgages. Contact us today to see if it is the right time for you to refinance to a fixed lower rate).

CNBC had another great article “Why the Fed Move Doesn’t Matter to Mortgage Rates” if you have time check it out: http://www.cnbc.com/2015/12/16/why-the-fed-move-doesnt-matter-to-mortgage-rates.html

One important thing you must know is that mortgage rates ARE anticipated to rise to 5.5% by the year-end 2016. This can really affect your buying power. Higher rates = less purchasing power. A 1% increase in rates can equal 12% less buying power.

You may be wondering if this projected increase will affect home prices. In a Forbes article published last year, they outlined whether mortgage rate increases affected home prices, here is what they said:

“Mortgage rates only rise when people feel good about buying houses: inflation is pushing up home prices, and more people have jobs. The higher demand for housing pushes home prices up despite the higher mortgage rates.” (See more at: http://www.forbes.com/sites/billconerly/2012/12/18/when-mortgage-rates-rise-will-home-prices-fall/). 

This is good news if your focus is equity in your home (whether it be to sell or refinance). If your focus is buying a home, consider the fact that rates are expected to go up by the end of 2016. Use us as a resource for any of your questions, we are here for you.

Enjoy your weekend,

Chris

St. Louis Will Be the Nation's Second Hottest Real Estate Market in 2016

According to Realtor.com via the **River Front Times, the St. Louis metro area will be the nation's second hottest real estate market in 2016. "Next year looks to be the best year St. Louis has had in quite some time," says Jonathan Smoke, chief economist for Realtor.com. "We've been seeing strong demand in St. Louis, and if anything, it's starting to heat up even more."

Wow, this has a lot of implications! The good news is this could potentially mean that your current home value could go up, making it a perfect time to sell or perhaps refinance. And if you are in the market for a new home in the St. Louis metro area, start the process early. 

 
"If you're planning to buy next year, start early," Jonathan Smoke, chief economist for Realtor.com, cautions. "There's more inventory on the market relative to the people who want to buy in January and February compared to May, June and July. That tilts the demand in your favor."

What an exciting time for our community, but it could be costly if you wait too late in the year to purchase and prices have increased.

http://Good goo.gl/kg53Gc or goo.gl/dxbsoV VIP Code: 314-223-9824

Get up-to-date listings and notifications through our complimentary home search tool.  (Find the Home Scouting app on iTunes: goo.gl/dxbsoV  or Google Play: http://Good goo.gl/kg53Gc .  Just enter VIP code: 314-223-9824) and be sure to tell anyone you know to sign up.  

As always, keep in constant contact with your realtor and feel free to ask me any questions.

Have a great weekend,

Chris 

**See the full article at: http://www.riverfronttimes.com/newsblog/2015/12/02/st-louis-will-be-the-nations-second-hottest-real-estate-market-in-2016

TRID-Top 9 Things Real Estate Agents Should Know

Uniform State Test Adopted by Missouri

Fourteen months ago the MBA of St. Louis asked the MBA of Greater Kansas City and the MBA of Missouri to join us in affecting change in Missouri. (At that time, Missouri was one of only 14 states still requiring a second state-specific test for licensed mortgage loan originators).

On January 1, 2016, independent mortgage bankers will no longer be required to take a Missouri state-specific test.  This will allow loan officers to save money and time in getting their license.  Great news! 

Importantly, the list of all states/regulators that have yet to adopt includes: Arkansas, Colorado, Florida, Illinois, Minnesota, South Carolina (BFI and DCA), Utah DRE and West Virginia.

TRID-We Are Ready!

Summer is over and fall is here.  Along with the weather changing, the mortgage industry is going through a big change.  We want to make sure you know what is going on.  

Beginning October 3rd, TILA-RESPA (commonly referred to as "Know Before You Owe") changes took affect.  You may be wondering how this impacts you as the buyer?  

The whole goal of this rule is to help consumers understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table.  (These things have always been important to us).  

You may have also heard that these changes could possibly delay closings.   We want to assure you we have been preparing for these changes for the past 12 months and increased our staff.  We have always been committed to speed.  The main take away is to stay in constant communication with us early and often.  Last minute changes can, in fact, lead to your closing becoming delayed.

Watch this short video for more:

https://www.youtube.com/watch?v=BazmJYxZoGY&feature=youtu.be

If you have any questions, please give me a call.

Chris

The Two Largest MLS's in Missouri Agree To Share Listing Data

As of September 1, 2015 realtors in Kansas City and St. Louis will be able to share listings.  This will give someone almost the entire state to look at when they are looking for houses!

*MARIS  and **Heartland Multiple Listing Service (HMLS) of Kansas City excitedly announced an agreement to share real estate listing data beginning September 1, 2015. 

Accordin to the announcement: "The reciprocal share of data will be facilitated through Realtors Property Resource (RPR). As the two largest Multiple Listing Services in Missouri, this agreement to share listing data will significantly broaden exposure for active listings within the state and provide more than 16,000 real estate professionals with access to expanded real estate data."

*MidAmerica Regional Information Systems (MARIS) provides the regional multiple listing service for the St. Louis Association, St. Charles Association, and the Jefferson County, Franklin County, East Central, South Central, Pulaski County, Lebanon, and Mineral Area Boards of REALTORS®.

**Heartland Multiple Listing Service (HMLS) is the most complete and accurate source of real estate information in the Greater Kansas City Metropolitan area. HMLS provides services to more than 7,500 real estate professionals in Kansas and Missouri.

Tips That Could Make or Break Buying or Selling A Condo

There is more to successfully selling a condo than updates, perfect pricing & taking good pictures.
In fact, it starts long before you put it on the market.  If you didn't research your condominiums home owner association before you purchased, and/or weren't actively involved during your ownership, you could have a very difficult time selling.  I have seen it happen too many times; a seller has a willing & qualified buyer, they have agreed to a price, and are ready to move forward with the sale.  Then, to the dismay of both parties, they find out that the home owners' association doesn't "qualify" for the loan.  So what does that mean?  Most loan programs have strict standards to meet when it comes to the purchase of a condominium.  (Especially the popular loan programs through Fannie Mae, Freddie Mac & FHA loans).

Potential reasons why a loan might be denied due to the HOA:

• The home owners' association doesn't have enough reserves (money set aside from HOA dues to cover maintenance or repair costs) 
• Too many investors in the complex.  The lender must consider the fact that renters may not take care of the property properly because they have no ownership interest.  Also, there is the potential for low reserve funds.  While homeowners don't necessarily want to see HOA fees go up, investors especially don't.  To an investor, $50/month on 10 properties = an extra $500/month.  The problem?  If there are not enough fees collected, the reserves could be depleted pretty quickly.

To avoid potential problems when selling, there are 2 major things to consider:

1. Use a realtor to help you research the HOA before you buy.  Your real estate agent can get information from the condo association.  Red flags: 
• If fees are low or aren't going up with inflation.  This could mean there may not be enough in reserves.  (Even if you never intend to sell, if a maintenance project comes up that the reserves can't cover, you may be expected to pay a special assessment.  This could be thousands of dollars). 
• Too much debt, and a lot of delinquent home owners 
• Inadequate insurance
• Pending lawsuits
• Special assessments
2.  Become active in your association from day 1
• Become either a board member or an active member who attends meetings, and/or volunteer for a committee
• The HOA can set limits on those who invest, conduct reserve studies, decide on HOA fees, etc
• Be informed of upcoming projects and/or make suggestions
• Get to know your board members and other owners

Cornerstone Mortgage does offer loans for warrantable (eligible for Fannie Mae, Freddie Mac or FHA) & non-warrantable condos.  But remember, if you purchase a non-warrantable condo, it may be difficult to sell in the long run.

Your realtor and lender are valuable resources, so use us!  Feel free to contact me at any time with questions.

Sincerely,

Chris Scheer

Your Residential Lending Team