How to Unpack Mortgage News

In June 2020, average mortgage interest rates fell below three percent for the 30-year-fixed-rate mortgage – the lowest level in modern recorded history, according to Mortgage News Daily. What caused such a dip?

A stock market sell-off sent investors to the relative safety of the bond market, wrote housing journalist Diana Olick. Mortgage rates loosely follow the yields on 10-year U.S. Treasury bonds. As more bonds were purchased, the yields went down, and mortgage rates followed. But that’s not all that happened.

Also in June, the Mortgage Bankers Association’s Mortgage Credit Availability Index hit its lowest number since June 2014. The simple reason is that lenders don’t like uncertainty, so to secure those lower interest rates, borrowers are subjected to higher credit score qualifications (700 or higher per JP Morgan Chase), the temporary shelving of some loan programs (no new jumbo loans per Wells Fargo) and higher down payments (at least 20 percent). Other criteria lenders use to limit risk includes lower loan-to-value ratios and higher income-to-debt ratios from borrowers.

Yet, despite a rocky economy, June mortgage applications were up a whopping 13 percent over the previous year. Freddie Mac forecasts that interest rates will remain at or near record lows and that housing prices will moderate throughout 2021.

So, what does this mean to you, the homebuyer or homeowner? If you have good credit, steady employment, and a sizable down-payment, you’re in great shape to get or refinance a mortgage loan. In other words, nothing’s changed except tighter qualifications for higher-risk borrowers.


How Long Should a Roof Last?

Angieslist.com suggests that a typical asphalt shingle roof will last about 20 to 25 years, depending on variables such as the quality of the shingles, the professionalism of the installation, homeowner maintenance over the years, and, of course, the weather.

Your roof should have several lines of defense or redundancies. If one part fails, such as when a shingle blows off, there should be other protective layers such as an underlying membrane, flashing around chimneys and sealants that prevent the roof from leaking.

Because 70 percent of U.S. homes have asphalt or composition shingle roofs, replacement roofs tend to be similar. According to Roofingcalc.com, the average roof size in the U.S. is 1,700 square feet. Professional roofers calculate area by 100 square feet, so it would take 17 “squares” to reroof the average home. Materials and labor can run anywhere between $350 and $550 per square, or approximately $6000 to $9350.

Leaks through the ceiling, missing shingles, frayed or curling shingle edges, or erosion of the mineral granules are all signs that it’s time to repair or replace your roof.  Have your roof inspected by a reputable roofing contractor, who can tell you if the roof was properly installed and maintained.

Check with your homeowner’s insurance company about coverage. Insurance.com warns that many companies will amortize coverage according to the age of the roof and refuse coverage if the roof has two or more previous layers of roofs or if the roof is 20 years or older.


Don’t Give Up Hope, Millennials!

It’s no secret that Millennials, ages 24 to 34, have been hit hard in 2020. The triple whammies of student loans, COVID-19 and record job losses are huge challenges to face. It would be easy to give up your dream of owning a home, but we say where there’s a will, there’s a way.

How you manage your expectations, resources and opportunities will make all the difference in achieving what you want out of life, including owning a home.

First, don’t give up. Your timeline may be busted for buying a home this summer, but you can still make it happen sooner than you think.

Look for ways to save money. Don’t buy stuff you don’t need. Make your own Starbucks coffee and take your Teva and a packed lunch to work. Take advantage of interest deferrals on your student loan. Open a high-yield savings account that pays compound interest.

Move to a less expensive apartment, get a roommate to share expenses or move back home temporarily. Pay your parents a reasonable rent for food and board and save the difference of what you’re paying now or use it to pay off debt.

Look for ways to make money. Do you have a hobby or skill that you could turn into a side hustle, like carpentry, quilting, baking or small business accounting?

Don’t worry about what others think. Instead, encourage each other. It will be worth it when you move into your own home.


The Importance of the House Filters

Air conditioning systems and clothes dryers come with some kind of filter or lint trap, and it’s important to clean or change these filters regularly.  You’ll save money, have cleaner air and clothes, protect your home from accidental fires and your AC and clothes dryer will last longer.

Air Conditioning – According to HowStuffWorks.com, a dirty air filter is one of the most common reasons that an AC unit will stop working. Air filters catch dust and keep it from circulating throughout your home. If the filter gets too clogged, the AC has to work harder to push the cold air through. The cold air has no place to go, so it circulates back into the evaporator coil, causing it to freeze and fail. Permanent filters are easily removed, washed outside with a hose, and reinstalled. Replace pleated paper AC filters every one to three months.

Clothes dryer –  According to JoeFilter.com, the lint trap in your clothes dryer is the first line of defense against lint buildup.  It’s typically located on the bottom gum line inside the dryer. Simply pull it out clean it out, and put the contents in the trash every time you use the dryer.

Some lint may escape the trap and go into the dryer vent, the flexible silver duct that vents to the outdoors. If the vent gets blocked, it takes longer to dry your clothes (wasting energy) and could spark a fire. Clean your dryer vent at least once a year.


The Dish on Fine China

Choosing a china pattern is a great way to express your taste and accent your new home. You’ll enjoy the presentation of meals and how your table looks every time you serve breakfast, lunch, dinner or snacks.

So what is fine china and how is it used? According to Scullyandscully.com, fine china is made from a white clay called kaolin. It’s made of “soft paste,” where as porcelain and bone china are “hard paste,” explains Madehow.com. Porcelain is fired at a higher temperature than either fine china or bone china. Bone china has bone ash added which gives the fired dish the illusion of light.

One way to tell the difference is that fine china is always opaque. Porcelain and bone china are translucent, which means you can almost see through the dish when light hits it. Where porcelain and bone china differ is that porcelain is white, while bone china is a softer cream color. Embellishments include everything from hand painting, decals, beading, to gold and silver leaf, but manufacturers may recommend that decorative china be hand-washed to avoid chipping. 

Like clothing, china tableware can be casual, semi-formal or formal, which is why many households have more than one set of dishes on hand. For everyday use, you may prefer a simpler, unadorned china pattern that is dishwasher and microwave-safe and in some cases, oven-safe.

Whatever you choose, don’t save fine dishes for parties or holidays. Use them and enjoy them often and make your own special occasions.


Mortgage Guidance for the Self-Employed

Yes, you can get a mortgage if you’re self-employed, but it’s challenging in the age of Covid-19. Guidelines are changing monthly as the crisis continues, but the following requirements are generally true:

Work history: According to USnews.com, you’ll need a two-year employment history. Fluctuations in earnings are acceptable as long as you can show stable or increasing income. A shorter history may be okay if you’ve been employed in the same industry for a period of at least two years.

Down payments: You’ll likely need to put 20 percent down, which minimizes risk to both you and the lender, but you may be able to get away with as little as 10 percent down if you have a FICO score of 720 or above, says NJlenders.com

Cash reserves: If the worst happens and your business declines, you must show enough cash on hand to pay your mortgage regularly and on time.

Credit history: You’ll need a high credit score and an income to debt ratio of 43 percent or below, depending on guidelines. Lenders carefully check how you use revolving credit, other outstanding loans, and payment histories.   

Documentation: Supply your ID, your personal and business tax returns for two years, earnings and bank statements, business name verification plus evidence of business such as a web site, invoices, etc., license if applicable, list of debts and expenses, and payment verification for your home’s rent or mortgage.

Loan requirements are fluid, so contact your lender to learn the latest guidelines.


The Renewed Appeal of Suburbia

It’s typical for single-family home sales to surge in the spring and summer, but this year, there are some differences due to Covid-19. The pandemic is causing more urbanites to move out of the city say The New York TimesForbes.comNPR.org and other news services.

Many of the attractions that make city living attractive, such as theater, shopping and dining out, simply aren’t available, causing some homebuyers to feel pent-up in their small apartments. They’re questioning if there isn’t a better way to live.

The result is a notable increase in home searches and purchases for single-family homes in smaller towns, exurbs and suburbs as many city-dwellers, particularly millennials, decide to ditch living in close quarters, paying high rents and home prices, and settling for views of buildings instead of trees.

One factor that’s driving the decision to move out of the city is that many white-collar workers believe they will continue to work from home permanently. The Star Tribune reported that Ford Motor Company, for example, intends to make many telecommuting jobs permanent, partly due to worker polls in favor working from home.  

If you’re of like mind, what can you expect when you shop for a home in the ‘burbs? According to Realtor.com, on average, a suburban home costs $230,000 compared to $431,000 home in the city with 300 more square feet of living space. You may pay over list price or get into a bidding war, due to intensifying demand, but you’ll still save a bundle. 


Who Pays for Utility Disruptions?

As a consumer of electricity, gas, sewer and water services, you have certain protections under state law. If you submit required deposits, pay your bills on time, and protect your interior and exterior equipment from overload or breakage, you should not be denied service and should rarely, if ever, experience a disruption in your utilities.

Yet, utility interruptions occur frequently. A water, gas or electric company can slow down or shut off flow to your home if there’s an outage, to protect the public safety or, to protect reserves and to keep prices competitive.

Sometimes, utility delivery equipment simply fails. Pipes burst, animals chew through lines and extreme weather can cause outages. In most cases, if the equipment is on your property, including a damaged meter, you’re as responsible to pay for repair or replacement as the companies are to monitor equipment performance before it breaks.

Extreme weather can wipe out utilities in large areas for weeks at a time before service is restored — a major reason why clean energy supporters lobby for micro-grids to limit outage areas and to encourage more subsidies for wind and solar power. Unlike fossil fuels which are switched on and off, wind and solar power can be stored in batteries for future use, which can help restore power to homes quicker.

According to Audubon.org, every state has a public utility commission that regulates your utilities and the companies that provide them. Get involved and help reduce outages the cost of utilities in your area.


Staged Homes Sell Faster

In a survey released this year, the National Association of REALTORS found that 83% of buyers’ agents reported that staging helps homebuyers visualize themselves living in the home and influences them enough to make higher offers. Sellers’ agents agreed that staged homes sell faster and for more money.

These are just a few of the advantages to staging your home, but there are other benefits for home sellers. 

Staging gives you a deadline. Getting your home ready to is a lot of work, but online photos and agent showings should showcase your home at its best – decluttered, freshly painted and staged with fresh new furniture and accessories.

Staging gives you great ideas. You’ll learn a lot about making rooms flow, creating focal points, increase and improve lighting, and how to use color.

Staging helps you decide what to keep or discard. If your furnishings are hand-me-downs, out of date, or not your taste, why take it all to your next home? Staging can help you separate what you love so you’ll have far less to move.

Ask your Berkshire Hathaway HomeServices Select Agent more about staging, or even virtual staging options for your online photos.


Local VA Housing Market

Check out the local housing report prepared by the Fredericksburg Area Association of REALTORS®. 

Look at the graphic below (found at https://www.faarmembers.com/market/) showing the statistics for the month of July 2020. Data show that the number of units sold and home price for each local county are still increasing, while days on the market is decreasing, due to low inventory. Because of the lower inventory, homes are selling faster, and for a higher sales price. Many homes are getting multiple offers!

In our local area, the housing market is still going strong. While the number of listings is down from previous years, homes are still selling quickly and buyers are looking for properties. It is a seller’s market, which drives up the home sale prices. Now may be the perfect time to sell your home in Virginia!