The Buyer's Blog

If you've ever been involved with short sales, you've probably been frustrated by the arduous process involved.  A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner.  In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.  Each process is lender specific, meaning each holder of the loan usually has their own processes and procedures. 

The Home Affordable Foreclosure Alternative Program (HAFA) introduce by the federal government in November is an effort to streamline the process and allow investors and/or home buyers to buy some of these short sales with less effort.  The guidelines of the program require lender participates to use standard procedures, documents, and timelines.  The program is voluntary, however 78 mortgage servicers, representing 85% of eligible mortgage debt, are participating, including such major banks as Wells Fargo, Citimortgage, and Bank of America.

There are possible financial incentives for both the buyer and the seller.  Wether you're looking to purchase a home that is a short sale or are an investor, it's important to be represented by a real estate broker familiar with the process.  At Buyer's Choice, the Buyer's Best Friend, we keep up with new programs like this so that we can represent our clients to the highest degree.

Many potential home buyers are currently on the sidelines trying to decide when to buy.  As always, all real estate markets are local, so the right answer to that question varies from market to market. 

In many areas around the country, home prices rose significantly over several years and those markets are now experiencing a correction.  In eastern North Carolina, outside of the water influenced markets, most areas didn't experience significant increases in property values.  Consequently, most of these areas have not seen significant declines in values as many around the country have. 

Another thing to consider when making this decision is current interest rates.  According to the latest release from Freddie Mac, current 30 year fixed mortgage rates are now averaging less than 5%.  These are historically low interest rates.  Nobody knows exactly what will happen with rates, but many expect rates to rise significantly in the coming years as inflation fears worsen. 

Cosider that at a 5% 30-year fixed rate on a $100,000 mortgage, the monthly mortgage payment (principal and interest only) is $537, while at a 7% interest rate, the monthly mortgage payment on a $100,000 mortgage is $665.  Or to look at it another way, at a 7% interest rate on a 30- year fixed mortgage, a monthly mortgage payment (principal and interest only) of $665 will pay for a $100,000 mortgage, while at a 5% interest rate, that same $665 monthly payment will pay for a $123,934 mortgage. 

Also, keep in mind that during the last significant period of inflation, annual average mortgage rates were over 10% for 12 consecutive years between 1979 and 1990, and peaked at 16.63% in 1981, based on Freddie Mac's surveys.  So the risk under a significant inflation scenario is high.  Just for comparison sake, the monthly payment on that same $100,000 mortgage at a 10% interest rate is $878 and at a 16% interest rate it's $1,345. 

Interest rates play an extremely important role in home affordability and these rates are at historically low levels.  Given this fact, along with the fact that values in the Pitt County area appear to be stable and not showing significant declines, there may never be a better time to purchase a home in the Pitt County area. 

The $8,000 tax credit takes that home buying opportunity even one step further for those who haven't owned a home within the past 3 years.  You can receive cash back from the government in addition to getting a low payment as a result of historically low interest rates.  It's really an incredible buying opportunity for those who qualify.

Of course, all of this assumes you can afford to buy a home and are not planning to move soon.  It is never a good idea to buy a home you can't afford.  Throughout the country over the past several years, many did just that and are now losing their homes as a result.  In addition, there are circumstances under which it makes more sense to rent than to buy.  Read our discussion of renting versus buying here.  Also check out our rent versus buying calculator here. 

We are available to help you with these important decisions.  And as always, there is never a cost to you for our services.  After all, at Buyer's Choice Realty, we are "The Buyer's Best Friend". 

The paper recently said that home ales have been rising a little in Pitt County and for the last couple of months, that's true. Check out this nifty graph, which is based on home sales.

As the graph illustrates, home sales are increasing the last few months after a pretty drastic downward trend. Interestingly, though, average home prices continue to trend down as shown in this graph.

Sales prices are going down, which is probably driving the increase in the actual number of sales. As homes are on the market longer, homeowners are motivated to lower the price. This could be for a number a reasons such as having to move to another city for a job and needing to unload their home.

What does this mean if you’re thinking about buying a home now? It means it’s a perfect time because with inventory increasing, prices will probably continue to trend downward until the amount of homes on the market returns to a better equilibrium.

And if you’re going to purchase a home, I would recommend being represented by a Realtor who is looking out for your best interests. And you’ll certainly find one with us, Buyer’s Choice Realty, the Buyer’s Best Friend. We represent only homebuyers, so we’ll never pressure you to look at listings from our firm because we don’t have any listings. Call us today at 252-227-3289.

We're starting a blog to let our readers and web site browsers get our take on the current real estate market in Pitt County.  Please feel free to comment and check back for updates frequently.  We'll be posting information about the market trends in Pitt's real estate market and commenting about how prices, amount of home's for sale, and the average days on market affect how your strategy for buying a home. 

Of course, your first and most important strategic move would be to get a real estate broker that represents only you, the buyer, and not the interests of the seller or the real estate brokerage firm.  You can get the most knowledgable and friendly buyer's agents at Buyer's Choice, the Buyer's Best Friend, where we represent only you, the home buyer!