After years of near-moribund status fueled by a prolonged recession and problems in federal assistance programs, America’s housing market trend appears to be up, at least in the Beehive state.
Alan Blood of Capital Financial Group, based in Bountiful, Utah, says that figures for the population-heavy Wasatch Front area of Utah show that there is reason to hope the market is stabilizing. Although there has been a 30% decrease in the number of homes on the market however there has been a 5 percent increase in loan applications in recent months. Good prices and quicker sales are evidence of a reviving market.
“At least in Utah, where $200,000 is the median price for a home, that’s good news for everybody,” said Blood. He talks about housing market realities every Friday from 9 to 10 a.m. on local K-TALK Radio, AM 630. (Visit K-TALK.com for details.)
A graduate in economics from BYU, Blood became a mortgage broker. He also received a degree in Law by attending Brigham Young University’s Law School. With the law degree under his belt, he re-examined his career goals. He found the study of law useful to continue his career in mortgage brokering which he really enjoys.
Based on long experience, Blood can offer some suggestions to those who are in the throes of buying a home or considering it in the near future:
Don’t Buy Too Small
It’s probably the most common mistake first-time buyers make, he says. Especially if the buyers are a new family with potential for growth, a small home can quickly become inadequate, calling for a new purchase in only a few years, before the initial costs of home-buying are recouped. There is little equity accrued, so too much of the new purchase goes into the front-end process, he says. If possible, it is wiser to look ahead at least ten years to allow for equity growth before taking the plunge again. The average time a family stays in a new home, according to Fannie Mae figures, is 4.2 years. And, also on average, the typical family makes six moves in a lifetime.
Don’t Focus Only On The Interest Rate
It’s understandable that with a long-term loan, the tendency would be to consider the interest rate to be the most pertinent consideration the buyer needs to look at.
In reality, the advantage of a very low interest rate can quickly be cancelled by higher closing costs. Spread over 30 years, for instance, the difference between an interest rate of 3.5 percent and 3.75 percent is just $3,250 —approximately $27 per month. “It takes your about 10 years to break even,” Blood says. Looking at every element of the purchase costs is essential to get the best deal overall.
Mortgage Brokers Can Help Get The Best Deals
“No bank will always have the best deal every day. Mortgage brokers work with as many as 18 banks in any given day,” Blood notes. Interest rates and other variables involved in a home purchase change frequently, often within a day’s time. In addition, federal law requires that mortgage brokers give the best rate a buyer can qualify for, a standard that banks and credit unions are not obliged to observe.
In general, Blood advises that home buyers go into the search armed with as many facts as possible. It’s one of the most complex and demanding purchases a family is likely to make and it deserves some study and research. Begin the process educated and enlist a good broker to make recommendations. As the market continues to improve over the next few years, these are the buyers who will benefit from the rebound, he says. Contact him for more information about mortgage loans.