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Richard C. Lee's Blog

By Rich Lee | Agent in Boston, MA
  • Should You Refinance Your Mortgage?

    Posted Under: Market Conditions in Medford, Home Buying in Medford, Financing in Medford  |  November 10, 2011 7:02 PM  |  2,365 views  |  1 comment

    Mortgage Rates DecreaseI put into dollars what your mortgage payment will be at different interest rates.

    Interest rates have generally been falling for years.  Take a look at a five year mortgage interest rate chart @ BankRate.com.  I did some calculations for you at different interest rates based on a 30 year term.  Let's assume that you are buying a house for about $350,000, the average price today for a single family house in Medford, and you have financed 80% of that.  If you borrowed $280,000 five years ago, you would have gotten an interest rate of about 6%.  That would put your monthly mortgage payment @ $1,679.  If you borrowed the same amount today, your monthly payment would be $1,337.  Refinancing that mortgage today would save you about $350 / month.

    RateMonthly Mortgage Payment

    Check out my mortgage calculator that provides you with your monthly payment and monthly estimates for home insurance and tax costs.

  • Low Mortgage Rates

    Posted Under: Home Buying in Massachusetts, Home Selling in Massachusetts, Financing in Massachusetts  |  September 23, 2011 4:26 PM  |  1,239 views  |  No comments

    Mortgage Rates DecreaseAll the uncertainty around the world has driven interest rates down and as a result, mortgage rates have fell recently.  A look atmy mortgage rate calculator, provided by Zillow, you'll see that rates for today were @ 3.9%.  It looks like interest rates will stay low for a while.

    The low interest rates will keep the real estate market for homeowners and investors from falling too much.  Things will be interesting once this period of low interest rates pass as it inevitably will.  Do you think higher interest rates will result in significant declines in real estate prices?

  • S&P Credit Rating Downgrades Affects Mortgage Interest Rates

    Posted Under: Home Buying in Massachusetts, Home Selling in Massachusetts, Financing in Massachusetts  |  August 18, 2011 6:03 PM  |  1,853 views  |  No comments

    Home Loan Interest RateThe S&P credit rating downgrades for the United States and the government agencies, Freddie Mac & Fannie Mae, will change mortgage interest rates.  The long term and short term impacts of the downgrades will likely be different.

    In the short term, mortgage rates are expected to remain low because there is high demand for United States Treasuries, which means low interest rates.  Mortgage rates have a strong correlation to Treasury interest rates.

    In the long term, mortgage rates will likely rise because Uncle Sam will have to eventually pay for his prolific borrowing.  A lower United States credit rating will mean a higher Treasury interest rate after the dust settles.  Higher interest rates mean higher mortgage rates.

    Is this all bad?  Not necessarily.  I live by the rule that home buyers and investors can only afford a certain amount.  Since equations have to balance, higher interest rates translate to lower prices.  Even though the credit rating changes will affect interest rates, I suspect the long term outlook for affordability will not be greatly impacted.

  • Will Commercial Multifamily Mortgage Rates Decrease?

    Posted Under: Market Conditions in Boston, Home Buying in Boston, Financing in Boston  |  June 22, 2011 7:25 PM  |  1,448 views  |  No comments

    Mortgage Rates Decrease

    The Small Business Lending Fund provides incentives to small banks to lend money to small businesses. I am wondering if this program will drive down mortgage interest rates for commercial real estate loans from small banks.

    Banks that can boost lending to meet requirements will only have to pay 1 percent interest to borrow from the Small Business Lending Fund. The point of this program is to boost small business lending in hopes of improving the economy through small business activity. One of the ways to boost lending is to make lending cheaper. Will this program work? Will it work for commercial real estate, which includes multifamily income properties above 4 units?

    Check out the article @ Boston.com: Banks tap fund to repay TARP.

  • Mortgage Insurance Buyout

    Posted Under: Home Buying in Massachusetts, Financing in Massachusetts  |  May 24, 2011 5:03 AM  |  856 views  |  No comments

    ERA MortgageBrian Hatleberg, an ERA Mortgage Advisor and colleague, provides us with information about alternatives to mortgage insurance.

    "Here are some of the details on the mortgage insurance buyout we were discussing -- this is a great option for anyone with less than 20% down in a conventional mortgage, and it will generally save them quite a bit of money.

    In a nutshell, it's typical for a client with a low downpayment to have what we call "post-paid mortgage insurance," which means that they pay it each month. But there are other options, and some of them just got cheap. The two best have us paying the mortgage insurance rather than the client, as we get better pricing. We pay for it in one of two ways -- increasing the interest rate or having them pay a lump sum up front. Right now, both options are substantially cheaper than what the client would pay on their own.

    To make this concrete...I just ran the numbers for a client with a $360K offer and 10% down. Traditional mortgage insurance was $170 a month. I could bump her rate up, which saved her about $75 a month. Or I could charge her $4,800 up front and have no monthly cost. We can finance that up front cost into the loan amount, so it doesn't take cash out of her pocket, and it pays for itself in less than two and a half years. She chose the up front finance option, as she plans on being in the home for some time.

    Bottom line, these options save people money. Even if they choose traditional mortgage insurance (which they might do it, for example, they thought the value would increase to the point where they could waive mortgage insurance quickly), I find that borrowers hate mortgage insurance and love having a choice in the matter. And it's a great little niche for me because many lenders don't have it as an option."

  • How 20% Down Mortgages Affect You

    Posted Under: Home Buying in Boston, Home Selling in Boston, Financing in Boston  |  April 13, 2011 4:22 PM  |  511 views  |  No comments

    MortgageThere has been news from Washington that there is a push to provide the best mortgage interest rates only to home buyers who put down at least 20%. Why does this matter to you?

    • If you are an investor in multifamily income property, then there will potentially be more renters in the coming years as less people will be able to buy their own homes.
    • If you are an aspirational homeowner, you need to buy a home soon if you don't think you can scrape together a 20% down payment.
    • If you are a seller, you will likely see some price drops as the demand for homes decrease since less people can afford to buy.

    With high prices in the Boston Area and the need for larger down payments, there is little doubt that proposed changes will have a big effect on the housing market.

  • Top 6 Reasons to Buy Your First Home Today

    Posted Under: Home Buying in Massachusetts, Financing in Massachusetts  |  April 4, 2011 4:09 PM  |  386 views  |  No comments

    The following is from the desk of Brian Hatleberg, an ERA Mortgage Advisor and colleague.

    "Top 6 Reasons to Buy Your First Home Today

    1. Affordability. Based on recent property declines and current interest rates, home affordability has not been higher since it was first tracked over 40 years ago. Your grandparents couldn't have received a better interest rate than you can today.

    2. Tax Breaks. The IRS still allows you to deduct the interest you pay on your mortgage, your property taxes, and in many cases for those who qualify, some of the costs to buy your home and mortgage insurance. Owning a home is a great way to lower your tax bill.

    3. Build Wealth. Unlike paying rent, with each mortgage payment you make, you build equity and you decrease your income tax liability. Owning a home is still the best long-term investment.

    4. Appreciation. As home prices have fallen precipitously in today's tough economy, the basis for realizing appreciation in future years is very strong. Historically, even with other periods of declining value, home prices have exceeded consumer inflation. From 1972 through 2005, home prices increased on average 6.5%, according to the National Association of Realtors®.

    5. Stability. Know you can establish roots and raise a family in one location, free of the desires or needs of your landlord to sell the property you are living in. This is something no other investment provides. You can't live in a stock, and you can't raise your kids in a bond.

    6. Independence. Enjoy the freedom to do what you want to your home. After all, it's yours to do what you wish. And, with any improvements you make, you have the ability to benefit from your investment. Try that with an apartment!"

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