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Will home values continue to rise?

Are you a first time homebuyer and have questions about the rising home values in the Dallas Fort Worth area?  You are not alone!  Questions keep pouring in from around the metroplex asking how long will this rise go on.  Here are 3 key areas to consider.

Interest Rates – Rates have been at an historic low for the past 8-10 years. Everything in the market is indicting that interest rates will go up.  While interest rates increase, they still remain below the average of the last 32 years.  Even with the slight increase over the last 12 months, rates are still in a great position.  Increasing rates will have a slight impact on home purchases but not have an impact on home values.

Home Values – Rising home values will increase the net worth of the home owner.  While contributing to 401K, and paying down debt, i.e. your mortgage, your home is still appreciating.  This is helping you achieve long term goals.  Even with the recent increases the market is indicating that in the next 12-18 months, homes values will increase another 5-6%.  In certain markets, DFW we are predicting a 30-31% increase in home values by 2020.

Mortgage Products impacting home values.  Mortgage products many years ago were 100% financing and little documentation needed.  That has changed!  Mortgage products are requiring people to put money down and actually qualify for the mortgage.  Products have been designed for first time homebuyers rather than people trying to get into rental markets.  All of this indicates that people purchasing homes today are much more sophisticated and qualified borrowers.

The market today of increasing values is much different than the previous market.  While we don’t anticipate home values increasing forever, we won’t see a significant decrease of value in the future either.

Feel free to contact me with any additional questions you might have.

Leading With Questions!

Friends,

A few days ago at lunch a good friend of mine, Bob Tiede, asked me three very interesting questions.   1) What are you doing really well? 2) What could you improve upon and 3) Why haven’t you taken the steps necessary to improve?  As we bantered back and forth, I realized the VALUE in the order the questions were asked.  #1 was asked to set us into a positive mindset.   #2, in light of our “positive mindset” resulted in a proactive focus instead of a defensive focus.  This lead to a solutions discussion instead of excuses!

After the lunch, I spent some time thinking about how I could introduce these questions into discussions with my clients, our borrowers, and our suppliers.    The possibilities actually are endless, and when we can approach any situation with an inquisitive attitude instead of a “know it all” attitude, we will always get to the BEST solution possible!!

After lunch, Bob offered a free download of his book, “Leading with Questions”.   You can access it athttp://leadingwithquestions.com/great-leaders-ask-questions/      I would strongly encourage you to download this free book!  I would love your feedback!

HUD Lowers Mortgage Insurance Premiums for Most FHA Loans

The Department of Housing and Urban Development announced on Monday that they plan to reduce the Mortgage Insurance Premium for FHA mortgage loans. Since 2012, the Federal Housing Administration’s(FHA) Mutual Mortgage Insurance(MMI) Fund has gained $44 billion, and is now 32 basis points above the 2 percent threshold level required by Congress. This is ~$13 billion more …

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Millionaire Tells Millennials To Buy A Home

CNN recently ran an article explaining why self-made millionaire David Bach has said, “The fact is, you aren’t really in the game of building wealth until you own some real estate.” In his book, “The Automatic Millionaire” Bach writes, “As a renter, you can easily spend half a million dollars or more on rent over …

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Conforming Loan Limits Set To Increase For 2017

The Federal Housing Finance Agency has announced that it is increasing the maximum conforming loan limits for mortgage loans beginning in 2017.  A mortgage loan is considered “conforming” when it is eligible to be acquired by Fannie Mae and/or Freddie Mac. (Mortgages are often sold to Fannie or Freddie so that a lender has the liquidity/money available …

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Celebrating Our Veterans

Benchmark is thankful for all United States veterans and the sacrifices they’ve made for our country. We asked some of our own veterans here at Benchmark to share what makes them proud to have served our great nation. I am proud to have served in the US Navy. Volunteering four years of my life seems …

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Interest Rates and the recent Election

Dear Friends,

How has the recent Election affected interest rates?  A lot of people have been asking what this election means in regards to interest rates, the economical outlook and the economy in general. Regardless of your political view, Most Americans were shocked at the outcome, anticipating that there was no way HRC would NOT win the election.  The Markets also anticipated an HRC win, and thus assumed it was going to be business as usual, ie. continued average growth, continued market movements and everything pretty much the same.

When it was announced that Donald Trump was winning the election on Tuesday night,  the DOW Jones Futures plummeted almost 1,000 points, as anxiety over what TRUMP “might” do versus what everyone believed HRC WOULD do.   This lead to money flowing out of the stock markets into the perceived stability of the bond market.

For those of us in the industry, we thought that was going to be a really big boom for the bond market and thus a corresponding decrease in interest rates.  However, when the markets opened the stock market started to climb and the bond market started to decline.  We assume that people’s anxiety over a trump presidency was replaced with the thought that his conservative economic policies might be a boom for  the economy!   The money started to flow back into the stock market and when that occurred, the Bond markets started getting hammered. From Wednesday after the election to Monday of this week, that trend has continued.  The Bond Markets have lost over $ 1 Trillion in value and has resulted in about 3/8 – 1/2 point increase in interest rates from about a week ago.

What does that look like moving forward? The trend is pretty unknown right now.  Every economist is giving their opinion an ideas on what that could mean. But the general consensus is that we will see rates in the 4%’s for most of next year.  We know that the FED’s are implying that they are raising rates this December.  The market has pretty much taken that into account. As that occurs, interest rates for 15 and 30 year mortgages will continue to increase and hopefully the economy will continue to grow.

Now, that being said, another term for growth is inflation.  When the market is growing, everyone is excited because jobs are increasing, incomes are increasing, home values are increasing.  Basically everything is going up but it also means interest rates will increase as well.  We can anticipate for the next several years interest rates will continue to steadily climb.

It is important to understand that while we all love low interest rates, low interest rates don’t necessary to everyone going out and buying or refinancing their home.  What we know is that buyers will not make an economic decision to buy or sell a house until rate hit 6-6 1/2%.  That means as long as rates are in the 4 – 5% range, while people might be unhappy to pay a higher interest rate, it will not significantly impact their decision to buy or not buy a home.  It will however, affect the size of home they can buy because every point higher on the interest rate will equate to a dollar amount that they may not be able to afford now.  But it won’t make their decision to buy or sell until rates get into the 6% range.

Please give me a call if you would like more information!