by rtdosen | Sep 4, 2015 | Ryan Dosen Real Estate Articles
The Mortgage Industry’s Race Problem By Ryan Dosen Racial discrimination in mortgage lending is apparently still a problem. Strides have been made and much attention has been paid to the issue, especially since the release of the Boston Fed’s well-known study back in 1992. However, according to a recent study, black borrowers still pay higher rates on their mortgages than comparable white borrowers. The Study Ping Cheng, Ph.D., professor of finance at Florida Atlantic University, led this recent study on potential racial discrimination in mortgage lending. Cheng’s report, “Racial Discrepancy in Mortgage Interest Rates,” reveals that “black borrowers on average pay about 29 basis points more than comparable white borrowers.” This means that black borrowers’ interest rates are, on average, 0.29 percent higher than the rates paid by comparable white borrowers. Cheng’s study also found that “rate disparity mainly occurs to young borrowers with low education as well as those borrowers whose income and credit disqualify them from prime lending rates.” Subprime borrowers with lower credit qualifications certainly have to pay higher rates than buyers with excellent credit, but Cheng’s numbers show that lenders are being even harder on black subprime borrowers. The study concludes by stating that, “while the racial disparity in mortgage rates is widespread between black and white borrowers, it is the more financially vulnerable black women who suffer the most.” Black women, according to the study, are charged an average of 57.36 basis points more than comparable white borrowers. Based upon today’s current rates, this means that, on average, black women may be paying an $80 premium on monthly payments for a $250,000 mortgage. ...
by rtdosen | Aug 21, 2015 | Ryan Dosen Real Estate Articles
Confident Builders Constructing More, Smaller Homes By Ryan Dosen Homebuilders are feeling confident and they’re ready to ride the wave of first-time homebuyers that is starting to be unleashed onto the real estate market. Frozen out of the home buying game in the wake of the Great Recession, many would-be first-time home buyers had been forced to delay their plans while their jobs, credit, and finances were put back in order. As these overdue first-timers enter the market, builders are responding with more homes and smaller homes. Confident Builders The National Association of Home Builders (NAHB) reports that home builder confidence has reached its highest level in almost 10 years. The NAHB/Wells Fargo Housing Market Index measures builder perceptions about single-family home sales, sales expectations for the next 6 months, and buyer traffic. The index now sits at 61. Any reading above 50 means that more builders view conditions as “good” rather than “poor.” NAHB chief economist David Crowe said that this recent report is consistent with NAHB’s forecast “for a gradual strengthening of the single-family housing sector in 2015” and that “job and economic gains should keep the market moving forward at a modest pace throughout the rest of the year.” NAHB Chairman Tom Woods concurred with Crowe’s sentiments, while also taking note that builders are still facing difficulties accessing land and labor. New Home Starts Hit 8-Year High The Commerce Department reported earlier this week that these confident homebuilders broke ground on new homes at the fastest pace since 2007. The significant 12.8 percent month-over-month jump in housing starts in July put housing production at...
by rtdosen | Aug 14, 2015 | Ryan Dosen Real Estate Articles
Home Prices Up Almost Universally By Ryan Dosen The National Association of Realtors (NAR) just released its latest quarterly report for the housing market and the results show an almost universal climb in home sales and home prices throughout the country. This is great news for homeowners, but potentially discouraging news for renters and those unable to obtain financing to buy a home. With market activity and prices surging, and with interest rate hikes on the horizon, those choosing to or needing to sit on the sidelines may be finding themselves increasingly distanced from homeownership. 93 Percent of Markets See Price Increases 93 percent of the 176 metropolitan areas analyzed for NAR’s second quarter market report showed home price increases (compared to the second quarter of 2014). This year, only 13 areas endured lower median home prices. 19 percent of metro areas actually saw double-digit price increases in the second quarter of 2015. The average price of an American home in the second quarter of 2015 was $229,400. This number is 8.2 percent higher than 2014’s second quarter average home price of $212,000. After seeing first and second quarter price gains in 2015 of 7.1 percent and 8.2 percent, respectively, the housing market is humming. Regional numbers for the northeast were also solid in the second quarter. Total home sales rose 10.3 percent in the northeast and sales are now 8.6 percent ahead of where they were this time last year. Home prices in the northeast are also up 5.2 percent. Increased Household Wealth Lawrence Yun, chief economist for NAR, observed that “steady rent increases, the...
by rtdosen | Aug 13, 2015 | Ryan Dosen Real Estate Articles
Home Buyers Enjoying Lower Closing Costs By Ryan Dosen Today’s home buyers are not only enjoying historically low interest rates; they are also paying less in closing costs. Bankrate.com, a leading online aggregator of financial rate information, recently surveyed lenders from across the country to determine just how much the average borrower is paying to close a home loan. The good news for buyers is that costs are down a decent amount, making the ability to lock in such low interest rates all the more enticing. Bankrate.com’s Lender Survey Bankrate.com polled up to 10 lenders in a large city from each state and Washington D.C., requesting Good Faith Estimates for closing a $200,000 mortgage. The hypothetical loan applications were for well-qualified borrowers (with “excellent” credit and a 20 percent down payment) purchasing a single-family home. Closing costs were calculated by including loan origination fees charged by lenders, plus third-party costs (those not charged directly by the lender) such as credit reports, appraisals, flood certifications, and home inspections. “Highly variable costs,” such as homeowners insurance, loan discount points, title insurance, and taxes, were excluded because, according to Bankrate, “those costs vary so much from house-to-house.” Bankrate found that average closing costs have dropped 7.1 percent, from $1,989 in 2014 to $1,847 in 2015. Again, these costs do not reflect many “highly variable costs” that must also be paid at closing. According to Michael Becker of Sierra Pacific Mortgage, these variable costs could add up to another $2,500 or $3,000 for a $200,000 loan. Lender Fees Down, Third Party Fees Up Bankrate’s survey revealed that third-party fees rose 22...
by rtdosen | Aug 6, 2015 | Ryan Dosen Real Estate Articles
Retirees Living Large By Ryan Dosen Fewer retirees are downsizing, many are upsizing, and the vast majority are actually living in the nicest home of their lives. Contrary to the common belief that people will generally buy and live in smaller homes as they ease into retirement, a recent study conducted by Merrill Lynch and Age Wave reveals that today’s retiree thinks differently, and has many reasons for doing so. Freedom to Own Their Best Homes According to Merrill’s study, “retirees say they have unprecedented freedom to choose where they want to live, including freedom from many work and family obligations that can dictate home choices, as well as a greater freedom from home-related financial worries and mortgage payments. As a result of this newfound flexibility, the majority of retirees say they’re living in the best home of their lives.” In fact, Merrill’s study reveals that retirees are twice as likely as pre-retirees to say that they’re free to live where they want (as opposed to living in a place dictated by life’s responsibilities), and that two-thirds of retirees are now living in their best home. Merrill’s study found that 81 percent of people aged 65 and older are homeowners, and that 72 percent of these homeowners enjoy the luxury of having no mortgage at all. Home equity among homeowners also peaks in the 65+ age group. With an average of over $212,000 in home equity, fewer work and family obligations, and a solid majority not even facing monthly mortgage payments, many people aged 65+ are actually viewing this retirement age as a time of empowerment and greater...
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