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Should I stay or Should I Go

If you’re like me, you maybe heard the song “Should I stay or Should I Go” from the Netflix series Stranger Things and felt cool reflecting 1980’s nostalgia.  It can feel like late 2000’s nostalgia with the housing market; home values and interest rates are on the rise with a looming recession in a year or so.  It begs the question, “Should I stay, or Should I Go?”.  Except, darling is your house, not your girlfriend.

It’s a normal market

My clients lately have expressed fear with buying now and have equated the sellers’ market we are in with the 2008 recession and all the elements that led up to the financial crisis.  What I have observed is most of these concerns have come from first-time buyers.  Their normal was the housing crisis and seeing homes sell for next to nothing.  They watched their friends and family either buy homes or get into the real estate or mortgage industries and make big gains.  Those days of slinging homes and doing it on closeout price and loan terms are behind us.

Enter the new housing market where the decision to buy a home is still a great one, but it will take both work and additional considerations for your future.  With interest rates on the rise, the decision to buy now includes discerning your future employment or business outlook.  Should you buy the $600,000 home or be prudent and stick with the $400,000 home.  My clients are wondering what to do and how far they should stretch their budgets for buying a home even more so now because higher rates mean higher payments and a normal market means sustainable home value appreciation, not the insane gains of the last 10 years (which have been awesome along the way).

I own my home

If you own a home now it’s difficult to part ways because of one thing; it was such a great deal!  You likely bought your home when the rates were averaging 3.875% – 4.625% and got in when the value was 12% – 18% below market value.  After a few years, you’ve realized great gains on the value and locked in low payment terms.  If you were to sell and buy now, you will likely pay more for the same size and style of home.  So why would anyone still sell their home in this market?

Many reasons come to mind for selling or staying in your home, but let’s take a look at a couple scenarios dealing with just finances.

You might consider selling if you have a lot of consumer debt and want out.  If that’s the case, I highly recommend speaking with one of our preferred Real Estate partners.  We recently helped a client rebuild their credit by selling their home and paying off all their debt.  It wasn’t just a $10,000 credit card balance but a good $35,000 in debt.  The had plenty of equity from the sale to pay off debt, make a down payment, and put some cash away for their rainy day or emergency fund.  In the end, they still saved on their monthly cash flow, even with a slightly higher mortgage payment because they eliminated those monthly minimum payments with high interest rates.

Owing the IRS is no joke.  Your home’s equity can pay that debt.  Be mindful and understand I am not advocating only selling your home.  Banks and Credit Unions are promoting Home Equity Line of Credit (HELOC) loans and Home Equity Loans because borrowing against your home is still better than borrowing unsecured debt with high rates.  Borrowing against your home could mean a lower interest rate and terms that make your overall payment affordable, all backed by your home.

I keep hearing recession – What happens to my Equity in a recession?

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Truthfully, I do not have a crystal ball on this question.  But, I can give you something to consider and keep in mind.  Our 2008 recession heavily affected home values because of aggressive mortgage terms people could not afford.  The result was a massive wave of foreclosures and short sales in the market which brought home values down significantly.  Think about it, if the demand and affordability for a product drops, what does a business do to sell their glut of inventory?  They lower prices, take their losses, and move on.  That’s essentially what the banks did.

It wasn’t always pretty, and many families were displaced and often lied to.  The past is behind us and we can learn from it.  That’s why it’s not expected that home values will have a catastrophic drop as they did in 2008.  Underwriting criteria for home loans tightened up and forced banks to look at income with scrutiny.  If you have variable income or are self-employed and bought a home, you know what I am talking about.    Learn more about Self-Employed Borrowers – Income Qualifying.

A recession will have some down turn in your home’s value, but remember, you’ve gained equity today.  You’ll either not gain equity during the recession for that year or drop down to the value at which you purchased your home.  Some values may dip slightly lower, but it’s not expected that the masses will experience the 40% – 75% drop they encountered in 2008 – 2011.  The regulations and guidelines we use to underwrite mortgage loans were implemented to hedge against housing repeating what happened in 2008.  Check out my post Housing Strong going into 2019.

I’m still reading – What if I’m a buyer?

For buyer’s, great news!  It’s still a good time to buy!  I feel like a broken record and sometimes too salesy, but I maintain and believe in it.  The trends point to a stable housing market and steady appreciation gains all while interest rates maintaining their historical lows.  Yes!  A rate at 5 -5.5% is still considered a low rate.  Even for investment properties, rates are below 6% making it attractive to buy and hold properties for rental income and equity appreciation.  Rental rates are increasing 3%-4% per year and the demand for housing (buying, selling or renting) has only gotten stronger.

If you are a first-time homebuyer or seasoned homebuyer, you have a lot to look forward too in buying a home in today’s market.  Read my latest post 6 Reasons to Buy a Home.

Finally, the end of this post!

If you’ve made it this far, I both applaud you and sincerely thank you.  I’ve wanted to write about this topic and honestly, I could go on even more.  It’s an exciting time for the mortgage industry because clients want information about their home’s equity and how to use it to make a better lifestyle for their families.  Should you stay, or should you go just depends on what you hope to accomplish with the results.

If you own your home and want ideas about selling, refinancing, or renting your home, read my post Homebot: Mortgage Reports Just for You and set up your monthly mortgage digest.  There, you will get real data and information about your home in our current market.

Follow this link for your FREE Homebot Report!

Chris Gonzalez

480-442-4494

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Homebot: Mortgage Reports Just for You

Tech meets Mortgages

It’s no secret that people are turning to their smartphones and technology to guide them with information and decisions.  The Real Estate industry is littered with technology to give you the most updated data feeds on the housing market and your home’s value.  But what about technology tailored for your actual mortgage and the ways to build cash flow or save on interest?

Meet Homebot, a new sophisticated service we are providing to all our clients at no cost who have completed a mortgage loan with us.  This service allows our clients to see their potential equity and show them what a possible refinance looks like in the future.  It also tells clients what their home might rent for on popular sites like Airbnb.com and VRBO.com.  It’s a handy update our clients will receive once a month.

Sound like something you would like?  Awesome!  You can subscribe to these updates on your home at no cost.  Even better is you share it with your family and friends.  Click Here!

Why would I use this?

The question most people ask is “why do I need this”?  Everyday I discuss the benefits of home ownership and how a home’s equity can improve monthly cash flow or open the opportunity to pay off debt or start a business.  A home is a vehicle in addition to a place to live, that has helped many of my clients realize a tremendous amount of savings on interest and building wealth.  One of my clients recently paid off their debt selling their home and had plenty of equity left over for a down payment on a new home.  There are many strategies to using your home’s equity.  Homebot can give you ideas and solutions.

Homebot is a tool that empowers clients with detailed information about their mortgage and not a guesstimate as to their home’s value but real data.  Data is pulled from recent sales and rental rates (in a given area) and presented in an interactive way.  You can also plan and estimate how consistent principle reduction payments will save you on interest and pay your mortgage off sooner.

What if I am Buying a Home?

Great news!  Homebot is a great tool for Buyers wanting to find homes meeting their budget.  The Buyer features let’s you locate homes and get a sense of price p/sq ft and homes that are available at your price point.  It’s a good tool if you are relocating and compliments the work your Realtor does on your behalf.  It does not replace your Real Estate agent, but gives Buyers an opportunity to see the data for the area from a Birdseye view.  Contact me directly for more on how to set this up.

All of this is FREE and doesn’t cost you a thing.  If you’re already a client, you will receive your free report once a month starting in the next couple weeks.  It’s my way of continuing to say Thank You for trusting me with your family’s home.  Enjoy!

Follow this link for your FREE Homebot Report!

Chris Gonzalez

480-442-4494

Contact

 



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