Economic update for week ending February 4, 2017

Economic update for week ending February 4, 2017

U.S. Employers add 227,000 jobs in January – The Labor Department reported that 227,000 new jobs were added in January. It was the most workers added in four months. Experts had expected a gain of 180,000, so this was welcome news to investors and stocks rose making up losses earlier in the week. The unemployment rate was almost unchanged at 4.8%,  as more workers entered the workplace. The labor participation rate, which shows the share of working-age people in the workplace increased to a 4 month high of 62.9% from 62.7%.  Historically the participation rate has hovered for several years near a 30 year low showing that many people have given up looking for a job. The labor force is growing and people are re entering the workforce. That doesn’t mean that 227,000 new jobs is not a strong number, it is, but it does explain why the unemployment rate is so low and we keep adding jobs. It also may explain why wage growth has been so stubborn. Usually when the unemployment rate drops to full employment levels we see strong wage growth. Not in this recovery. Wages in January grew just 2.7% from last January, according to the report. 

Stock markets gain nearly 1% on Friday to end the week unchanged – Stocks had a rocky week. They opened down as last Friday’s low fourth quarter GDP number sunk in, some investors were spooked by the travel executive order, and some corporate profits came in lower than expected. Friday’s release of January’s strong job growth and another executive order rolling back some financial regulation in The Dodd Frank Bill sparked a rally and markets increased almost a full percentage point which made up for all their losses throughout the week.

The  DOW Jones Industrial Average closed the week at 20,071.46, down just slightly from last week’s close of 20,093.78.  The S&P 500 ended the week at 2,297.42, up slightly from its close of 2,294.69 last week.  The NASDAQ closed the week at 5,666.77,  almost unchanged from last week’s close of 5,660.78.

U.S. Treasury Bond yields    – The 10-year U.S. Treasury Bond closed the week yielding 2.49%, unchanged from 2.49% last Friday. The 30-year Treasury Bond yield closed the week at 3.11%, up from 3.06% last weekMortgage rates follow bond yields, so we watch treasury  bonds closely.

Mortgage rates – The Freddie Mac Primary Mortgage Survey released on February 2, 2017 revealed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.19%. The 15-year fixed average rate was 3.41%  The 5/1 ARM average rate was 3.23%.

Pending home sales show increase – The California Association of Realtors reported that contracts signed to purchase existing (re-sale) homes in California in December rose 1.9% statewide from the number of contracts signed last December. Southern California saw the largest increase, rising 7.8% from last December. Pending sales are an indication of what future closed sales will total. If pending sales pull through to closing we see strong numbers 30 to 60 days later.

Economic update

 

Economic update December 23, 2016

Economic update

Federal Reserve raises its key rate 1/4% – The Fed announced Wednesday that it was raising its Discount and Federal Funds rate by 1/4%.  This was just the second increase in 10 years. The first was done last December with an announcement to expect two more increases in 2016.  The first increase did not happen as growth slowed during the first half of the year.  GDP growth was just 1.1% for the first 6 months of 2016. The third quarter showed far more growth as the GDP rebounded to 3% growth and hiring picked back up.  The Fed mentioned these as part of their decision for Wednesday’s increase.  They also stated that they expected to make three more increases in 2017.  Experts had expected that number to be two increases. The market was expecting the increase, and an announcement of two rate hikes expected next year, not three. That moved the markets down slightly. When The Fed increases rates those increases tend to affect short term rates more than long term rates. That was the case this week as short term treasury rates increased while the 30 year barely moved up. Equity lines tied to prime moved up 1/4% following the announcement. ARM mortgages will also move up. Shorter term hybrids like 3, and 5 year fixed moved up while the 30 year fixed barely moved.

Stocks end week just slightly below record highs – All indexes hit record highs on Tuesday before being dragged down a bit after The Fed announced a 1/4% rate hike on Wednesday. The rate hike was largely expected so stocks didn’t lose much following the announcement. The  DOW Jones Industrial Average closed the week at 19,843.41, up from last week’s close of 19,756.85.  The S&P 500 ended the week at 2,258.07, unchanged from its close of 2,259.53 last week.  The NASDAQ closed the week at 5,437.16, slightly off from last week’s close of 5,444.50.

U.S. Treasury Bond yields higher  – The 10-year U.S. Treasury Bond closed the week yielding 2.60%, up from 2.47% last Friday. The 30-year Treasury Bond yield closed the week at 3.19%, up from 3.16% last weekMortgage rates follow bond yields, so we watch treasury  bonds closely.

Mortgage rates  continue to inch up – The Freddie Mac Primary Mortgage Survey released on December 15, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.16% The 15-year fixed average rate was 3.37%. The 5/1 ARM average rate was 3.19%. Rates rose Thursday and Friday so next week’s rates will be slightly higher. 

 

 

 

 

Economic Update November 30- December 3, 2016

Economic update for the month ending November 30, 2016 and the week ending December 3, 2016

DOW, S&P, and NASDAQ all ended November at record highs – Markets are up 4-6% since the election.  Investors have been bullish on prospects of higher corporate profits in the future based on hopes that The Trump Administration will deliver on promises of tax cuts, loosening of regulation, and higher infrastructure spending. The highest gains have been financials which are up 10% on hopes of changes to regulations put in place after the financial system collapse. Coal mining and energy stocks have faired well, also on hopes of less regulation.  Defense stocks have risen on hopes of more spending.  Construction and construction related companies that would be involved in infrastructure also saw gains.  Clean energy stocks have not done as well, perhaps on fears of more competition from oil, gas and coal. Unrelated to the election, oil prices also rose to $49 a barrel from about $46 at the end of the month as OPEC reached an agreement to cut back production. The DOW Jones Industrial Average closed the month at 19,128.58, up over 1,000 points from 18,142.42 on October 31.    The S&P 500 closed the month of October at 2,198.31, up from October’s close of 2,126.15.  The NASDAQ ended the month at 5,323.68, up from 5,189.13 at the end of  October.  On December 2, 2016 markets closed the week as follows: DOW 19,170.42, S&P 2,191.95, NASDAQ 5,255.65. 

U.S. Treasury Bond yields jump in November  – Bond yields shot up after the election on expectations that tax cuts, higher defense spending, and an infrastructure program would increase  U.S. deficit spending and debt, which is already out of control.  The 10-year U.S. Treasury Bond closed the month yielding 2.37%, up from 1.84% at the end of October.   The 30-year Treasury Bond yield was 3.02% on November 30,  up from 2.58% at the end of October.  Mortgage rates follow bond yields, so we watch treasury  bonds closely.  Treasury yields closed the week on December 2 with the 10-year yielding  2.40%, and the 30-year yielding 3.08%.

Mortgage rates rise about 1/2% in November   –  Rates soared following the election, rising almost 1/2 point in 10 days.  The Freddie Mac Primary Mortgage Survey released on December 1, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.08%, up from 3.47% on the October 27, 2016 survey.  The 15-year fixed average rate was 3.34%, up from 2.78% on October 27The 5/1 ARM average rate was 3.15%, up from 2.84% on October 27

U.S. employers’ add 178,000 new jobs in November – Unemployment rate drops to 4.6% – The Bureau of Labor Statistics reported that the U.S. economy added 178,000 net new jobs in October and the unemployment rate dropped from  4.9 percent in October to 4.6% in November, its lowest level since August 2007.   Wages in November were 2.5% percent higher than last November,  according to the report.

California employers add 31,200 new jobs in October  – The Employment Development Department reported that California added 31,200 net new jobs in October. The state’s unemployment rate held steady at 5.5%, as more workers entered the workforce. While this is higher than the national rate which was 4.9% in October it’s well below California’s 12.2% unemployment rate at its peak in 2010.  Employers in Los Angeles County increased their payrolls by 19,400 employees. The unemployment rate in Los Angeles County actually increased slightly to 5.1% in October from 5% in September as more workers began the job search. Year over year the unemployment rate is  down a full percent from 6.1% from October 2015. California runs a few weeks behind. We won’t have November’s figures until around the 20th of December

U.S. Economy grows at fastest pace in 2 years in the third quarter of 2016 -The Commerce Department reported that the Total economic output of the economy, also known as Gross Domestic Product  grew 3.2% in the third quarter.  That was faster in the third quarter than previously estimated, and at its fasted pace in two years.  This rebound was welcome news after a disappointing first half of the year.

California existing home sales and prices increase in October – The California Association of Realtors released its October  home sales report.  The number of existing homes sold in October totaled 442,970 on a seasonally adjusted annualized rate. That represented an increase of 4.1% from September and a year over year increase of 8% from last October’s figures. The statewide median price was $513,520, up 1.2% from September and up 7.3% from last October when the median price was $478,780.  Inventorycontinues to be near record lows as the unsold inventory index slipped to a 3.4 month supply of homes listed in October from a 3.5 month supply in September.

California pending home sales increase in October – The number of new home contracts on re-sale homes in California increased 1.5% in October from last October’s numbers according to data released by The California Association of Realtors. On a monthly basis pending contracts were down 6.7% from September.  The Southern California region fared even better with October sales up 6.8% from last October and up 2.4% from September. The association uses year over year rather then month over comparisons to account for seasonal changes in sales numbers. Typically sales begin to slow heading into the holidays which makes comparing same month figures more accurate. Pending home sales figures are useful because they give an indication of what closed sales figures will be in 30 to 60 days when those sales close escrow.

U.S. existing home sales hit the highest level since February 2007 – The National Association of Realtors reported that sales of existing homes increased 2% in October to an annual rate of 5.6 million homes, the highest level since February 2007.  Existing home sales are closed re-sales of single family detached homes, town homes, condominiums, and co-ops. Year over year the number of sales are up 5.9% from last October’s levels. Prices were also up nationwide as the median price this October was 6% higher than October 2015. Pending home sales were also higher nationally increasing 2% year over year. 

What does the recent election mean for the Housing Market?


The Presidential Election has a big impact on the housing market!

Please note, this article is to bring information to those interested in the housing market and not intended by any means to pick sides politically.

With the outcome of the recent election, there has been a lot of stir around where the housing market will go. In history, we have seen, time and time again, that the housing market soars shortly after election. But with housing already reaching unsustainable levels, how will we offset t
his? Will Trump need to boost jobs and the economy? America has barely staggered out of recession, so Trump could come out on top just because of timing.

Could Trump be the champion of affordable housing? During his acceptance speech early in the morning on Nov. 9 in New York, Trump promised dramatic new investments in infrastructure, which could boost the available supply of housing.

Trump housingDuring this election, one part of the main struggles of the middle class was the inability to find good, affordable housing. The housing market plays hand in hand with the economy and jobs.  Right now, first time home buyers are struggling to find any home that is in their price range. In Los Angeles alone, the market went from average $404,200 in 2009 (bottom of the market) to a median price of $570,500 by 2016 (laalmanac.com). These prices mean that a household needs to earn $96,513 a year, according to HSH.com, to afford a median-priced home.

If you did not tune into the last crash in 2008, it was largely caused by a lack of check and balances in the lending industry. Lenders were selling subprime loans to unqualified buyers. With everyone and then some being able to obtain a home loan, demand skyrocketed, driving prices up. This was depicted in the Big Short (a must-see great explanation of the 2008 housing crash). Since the crash, the lending industry is tightly regulated now, if anything, it is hard to get a loan with anything less than a 720 credit score! I’ve seen numerous well-qualified buyers with large sums in their bank, excellent credit scores, but a high debt-to-income ratio holding them back. These buyers had to go through a number of different banks to close on their homes. So what would drive the next crash if the lending institutions are so regulated?

housing-marketA housing crash is caused when housing prices reach unsustainable levels, leading to a decline. These unsustainable levels have been occurring in major cities throughout the country. Some areas have surpassed their peaks, —places like the San Gabriel Valley, flooded with foreign cash investors primarily from China, or the Westside, which has welcomed a surge of high-paid tech workers in the past couple years, getting the name “Silicone Beach.” Other rich areas have seen nice, healthy gains too, while poor areas have actually lost housing value. Middle-class areas have been stagnant or fallen just a bit. That all tracks with how the rebound from the recession has gone in general: the rich have come back as strong as ever, while the rest of the US still struggles.

In the last few years we have seen China leading the Los Angeles foreign all-cash investors, beating out the most well-qualified buyers using home loans. Chinese investors pumped $59 billion into the U.S. from 2000 through December, buying or creating more than 1,900 companies that employ 90,000 workers. Employment tripled in 2015 from 2012. In 2015, China invested $1.1. billion into California real estate, and $3 billion in New York real estate (Rhodium Group’s China Investment Monitor). It makes sense that foreign investors started buying out more real estate. In 2011, home values were at all time lows, and there was room for exponential growth! U.S. real estate was one of China’s top investments, just below Telecom and Technology. dollar

Early this year 2016, China devalued the Yuan Renminbi and the government tightened restrictions on moving money over to the U.S. This could be the reason for the slower growth this year, adding to the fact that there is just not as much room for growth in these high demand city areas now. During his campaign, Trump criticized the U.S. as being on the losing end of its dealings with China, particularly on trade, the flow of money has significant benefits, the study found. 

So with global economy changing, and the new president, what will our future real estate look like?

Rick Sharga (Ten-X, real estate auction site) said the key to the housing market fully recovering depends on more jobs and better wages driving household formation and homeownership, which Trump promises to improve. “If President Trump is half as successful as his plans call for, the housing market will soar,” he said.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” Trump told his supporters. “We’re going to rebuild our infrastructure and we will put millions of our people to work as we rebuild it,” Trump said.
All in all, if Trump can create more jobs for the middle class, there could be a huge surge in the housing market. Nearly every millennial since 2008, has struggled to find a good paying job straight out of college, this is no news, research shows that millennials are choosing not to have children, and if so, not until their mid-30’s. Most research shows the reason for not starting a family for millennials is because they can barely afford life on their own. This is in direct correlation with housing prices and jobs available. Pew Research Center came out with a report in May 2016 that said for the first time since 1880, adults aged 18-34 are more likely to live with a parent than any other arrangement. 19 percent of 25-34 year olds in metropolitan areas have been living at home. This is the largest rate since 1940.

Will the American dream of everyone owning their own home find it’s way back in 2017? With primary mortgage rates staying steady between 3-5%, the option is more than available. Only time will tell!


Subscribe to our email newsletter to get updates on Los Angeles, the holidays, and the housing market.

Don’t forget: Love your home. Love your life.

Halloween Events in Los Angeles

halloween
Looking for some fun this Halloween? Check out these 3 fun events in Los Angeles.

1. Dia de los Muertos @ Hollywood Forever Cemetery (pictured)
This fun family event on October 29th features yummy Mexican food and live performances.
2. Guillermo del Toro @ LACMA
Running until Nov. 27th, this exhibit is perfect to get you in the spooky mood for Halloween.
3.Halloween Carnaval @ WeHo
For a fun day of event, the WeHo Halloween Carnaval will not disappoint. With past appearances from Rihanna and Boy George.

 

Warming Up the Home this Autumn

One of the biggest perks of living of living in Los Angeles is the beauty that we live in a perpetual summer, never having to worry about “seasons” ruining our fun at the beach or a nice outdoor bar-be-que. However, at times we do want to relish in the warmth that can be cozy Autumn days and nights. There is a way that we can have the best of both worlds. Here are fun ways to start integrating fall into your LA home!

Pumpkin-Spice-White-Barn-Candle

Pumpkin Spice Candles

3-wick candle. Bath & Body Works $22.50

Pumpkin Spice has become the taste for Fall. Between cookies and muffins to the infamous pumpkin spice latte from Starbucks, pumpkin spice has become a “welcome to fall” staple for the upcoming holiday seasons. This pumpkin spice candle is sure to put you in the fall mood. If you are looking for a fun indoor activity this coming weekend, you can try a fun DIY pumpkin spice candle.

Gold Serving BowlGold Serving Bowls

Threshold Hammer Large Serving Bowl Target $19.99

Nothing screams Autumn more than wonderful golden undertones. Matched with a red tablecloth or beautiful red apples, this stunning display bowl is the perfect way to bring warmth to your living room and instantly put you in an Autumn mood.

Aida-Mollenkamp-Kale-Apple-Walnut-Pancetta-Salad

Kale Apple Salad

LA is known for being health conscious and loving kale. However, fall is known for having a bad reputation of overeating and gaining a bit of extra holiday weight. But, with this yummy healthy salad you don’t have to sacrifice taste, or your waistline, to get in the fall spirit. This quick 20 minute delicious recipe will have you feeling perfectly in the holiday spirit with it’s sweet apples and dijon mustard. Add in the mouth watering maple and walnut dressing and you will be feeling healthy and indulgent. Find the recipe here!

Cinnamon Toast Drink

Cinnamon Toast

It’s not fall without a little bit of cinnamon-y goodness. Here’s a fun yummy drink for adults that will keep you warm during the chilly LA nights, or crank up your AC so you can feel like it’s chilly. This tasty fall drink is perfect after a long day at work or after the kids have gone to bed. With amazing hot apple cider and a little bit of Captain Morgan spiced rum you’ll feel relaxed and ready for the holidays. Add sweet sugar and cinnamon to the rim of your cup to get the full autumn taste with each sip that you take. You can find the recipe here.

Subscribe to our email newsletter to get fun updates on Los Angeles, the holidays, and the housing market. Send us pictures of how you integrated fall into your home this season! Don’t forget: Love your home. Love your life.

Brentwood Open House this Sunday

Come join us for the first open house for this beautiful Brentwood condo! (7/17) 2-5 p.m.

11820 Mayfield Ave #105, Brentwood, 90049

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Brentwood condo for sale
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Brentwood condo for sale!

 

 

 

 

 

 

 

Amazing 3 bedroom 2 bath Brentwood condo for sale! Spacious, bright, and open floor plan. This condo offers inside laundry, wood flooring, updated appliances, wine cooler, a bright Spanish-influenced kitchen and dining area, central HVAC throughout. The master bedroom is a dream, very large, open, and bright, with lots of closet space, and a soaking tub. Great building in the heart of Brentwood, with low HOA dues. 2 Car tandem parking in the garage with Extra storage!! Desirable area, North of Wilshire. This is a MUST SEE, jump-on-it opportunity for a buyer looking for a beautiful new home!

 

The Perks of Buying a Home in the Fall

 

As we close out the summer we will notice some change in the market. The summer included rising home prices and limited supply, so per usual, the end of the “hot season” should be marked by a slowdown in pace.

The slower pace should present some great opportunities for homebuyers.

Homebuyers in the fall can enjoy year-end tax breaks. Buying before the year’s out allows fall homebuyers to take advantage of tax breaks such as the mortgage interest and property tax deductions. “There are certain deductions that can be claimed by homeowners only,” explains John Gregory of 1040return.com. “If you have taken out a homeowner’s loan, consider these deductions as Uncle Sam’s gift to you.”

Homebuyers in the fall can sidestep the multiple-bid minefield. Bidding wars dominated low inventory markets this summer, but competition tends to wane as activity slows in the fall. With fewer folks searching for homes, fall homebuyers can spend less time chasing supply and more time finding and getting the perfect home.

Homebuyers in the fall have more bargaining power. Aside from less competition, fall homebuyers may have the opportunity to purchase their home of choice at a reduced price, especially when negotiation with Sellers who had hoped to sell their homes over the summer.

Homebuyers in the fall will literately be home for the holidays. Fall home buying is usually fueled by emotional motivation. According to ERA Real Estate CEO Charlie Young, “As summer vacations wind down after Labor Day and people become more focused, the desire to be in a new home for the holidays is a historically strong driver of fall home sales.”

If you are ready to find your new home, we are ready to help! The Leah Loves Homes Team helps clients make the right move.

Love your home. Love your Life.

Things to Take Care Once You Have an Accepted Offer

10 Things To Take Care of Once You Have An Accepted Real Estate Offer

 

Earnest MoneyEarnest Money

There needs to be some cash involved in the beginning of a transaction to protect the sellers interests while they take their house off the market. Earnest money is your proof as a buyer that you “earnestly” want to purchase their home.

Some REALTORS® will collect earnest money from you before they submit your offer. Others will coordinate the earnest money drop off after an offer is accepted. Whatever your scenario is, make sure that your earnest money is delivered on time and in the proper payment form. This information is usually documented in your sales contract.


Property InspectionsProperty Inspections

Once you have an executed sales contract in hand, the clock starts on your inspection period. Make sure you know how long your inspection period is, and complete your inspections in a timely manner. There are multiple types of inspectors that you may need to schedule. A standard home inspector is the most common, but radon, pest, septic, structural, HVAC, and mold inspections may also be relevant to your buying situation. Discuss your options with your REALTOR®. Make sure that you have resolved any inspection issues within the time allowed in your sales contract.

 


Lender DocumentsLender Documents

As soon as you have an executed sales contract, you will need to communicate with your mortgage lender so that they will start the mortgage process. Be prepared to provide lots of documentation throughout this transaction. Make sure that you get the requested documentation to them ASAP to limit any problems with their timeline. Some lenders are not as thorough with regards to checking in with you to keep you updated on their progress. Make sure that you are checking in with them to verify that they are on track. Your REALTOR® should help you with this as well. If a lender does not complete the loan process in a timely manner, it can cause you to be in breach of contract by not closing on time. If you stall on any requested lender docs, you can be sure that the finger will be pointed at you if they are not ready. Make sure that you are not put in this situation by promptly providing any documentation to your mortgage lender in a timely manner.

 

WHAT’S NEXT?


Title CommitmentTitle Commitment

This step is handled by the Title Company. They will issue a title commitment that reviews the title history of the property and discloses any liens against the property that need to be resolved before closing. Be sure to review your title commitment and ask an attorney for advice if you see anything in it that looks concerning. Most title commitments are straight forward and require no additional work on your part. Just be sure to review it thoroughly before moving on to the next step.


AppraisalAppraisal

Once you have cleared the Inspection process, let your lender know. They will then order a home appraisal to verify that the value of the home your purchasing is worth the loan amount that you are asking for. In Los Angeles, due to demand, it is important to make sure that your lender orders your appraisal as soon as possible. It’s likely that you will be paying for the appraisal, so it’s best to wait until after you have completed the inspection process.


Home Owners Insurance & WarrantiesHome Owners Insurance & Warranties

Your lender will require you to have a Home Owner’s Insurance Policy on the property that you are purchasing. You will want to shop around and choose the home owners insurance provider and policy that works best for you. Once you have the policy in place, let you lender, REALTOR®, and/or title company know.

Also, some seller’s will provide an allowance for you to purchase a home warranty. If you are purchasing a home warranty, you’ll want to shop around and find the home warranty company that best suites your needs. Once you have found the right home warranty provider, be sure that the title company knows who you plan to use.

 

FINAL STEPS:


Schedule UtilitiesTurn On Utilities

Now that you are past all of the major steps required to purchase your home, you will want to get your utilities turned on, or transferred into your name.


Schedule Closing Date & TimeSchedule Closing Date & Time

Your sales contract will have an agreed upon closing date. Make sure that you and/or your REALTOR® have contacted the title company in advance to make sure they have a time slot open that is convenient for your schedule. Some sellers like to close at the same time as the buyers, so your REALTOR® may need to coordinate this with the listing agent as well. This is usually an easy step – just make sure that it doesn’t get put off until the last minute so that the title company can accommodate your request.


Final WalkthroughFinal Walkthrough

It is wise to do a final walkthrough before the closing. The purpose is to verify that any repairs have been completed, that all of the seller’s personal belongings have been moved out, and/or to make sure that the home is ready to move into. This is not a time to renegotiate any items on the sales contract. It’s simply a safeguard to make sure that no major issues arise that could cause the closing to terminate; which would likely be followed by legal proceedings to mitigate the issues.

 


Close The TransactionClose The Transaction

On the day of closing, you will need to have your driver’s license (or other approved photo ID) and certified funds (cashier’s check or wire transfer) for any monetary amount required from you at closing. You will meet at the title company to sign all of the required documentation. A typical closing usually takes less than an hour. Once the documentation has been signed and your lender has funded the transaction, you will be given the keys and the house it yours!


Final Thoughts

Buyers Love Closings

Each of the 10 steps listed above has the potential to sabotage your home purchase. Make sure that you stay on top of your transaction to identify any potential issues before they arise. If you have a good mortgage lender and/or REALTOR®, they will catch these issues immediately. They will keep you in the loop through each step and protect your interests. A good REALTOR® is your best resource to make sure that every step above is met in a timely manner with no added drama.

Unfortunately, it is possible that your REALTOR® and/or mortgage lender may disappear once you have a signed contract. If you are confident in your REALTOR’s® ability to keep track of the transaction, take charge and communicate directly with your lender and title company to make sure that everything is moving along as planned.

Buying a home takes time and energy, but it’s extremely rewarding. After you sign the papers at closing and get your keys, all of your hard work will have paid off, and you will feel a wave of excitement as you move on to enjoy your new home!

Love your Home, Love your Life.

 

Fixed Rate or Adjustable?

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   Shopping for your loan is just as important as shopping for your new home. There are generally two different types of loans that buyers will go with, this is either a Fixed Rate Mortgage or an Adjustable Rate Mortgage. So what is the difference, and which one makes more sense for you?

   In a conventional fixed rate mortgage, your interest rate will stay the same throughout the entire loan period until your loan is paid off. An Adjustable Rate Mortgage will stay the same from the start until it is set to change in the future. An ARM may be set to change after 5 years (5/1 ARM) or 7 years (7/1 ARM), or whenever the chosen program is set to change. When the rate changes, it will change to the current going market rate. Because it can be slightly riskier, generally an ARM has a slightly lower rate for the buyer. Though an ARM can be riskier, there are margins that protect your future rate from drastically changing. 

   For buyers that wish to stay in their home for over 5-7 years, they typically will go with a fixed rate loan so that it will stay at the current rate for the entirety. Buyers that wish to only live in their new home for a short period of time will typically go with an ARM because the amount of time that they will be owning the home will be less than the set time their ARM will adjust rates.

If you have any questions regarding loans or purchasing homes in Los Angeles, please feel free to reach out to me as I am always here to help!

 

Love your Home, Love your Life.

 

Leah