Housing Prices UP? What's With That
Yes you read the title correctly, housing prices are up. Well, not exactly overall prices, but in some housing markets, homes are not only retaining their value, but they're gaining! Let's face it, challenging real estate markets can be found nationwide as home prices fall, sales decline, and high foreclosure rates continue.
In the fourth quarter of 2007, 73 out of 150 metropolitan areas showed an increase in the median existing single-family home price compared with the same quarter in 2006, according to statistics from the National Realtors Group. In metropolitan areas, including San Francisco, Washington and New York, homes are typically retaining more of their value the closer they are to the city's core.
The places where homes seem to be holding the most value are those where prices didn't surge during the boom years and where economies are staying strong. Single-digit appreciation may have looked meager in the years of the boom, when red-hot markets experienced bidding wars and high investor interest. Now, as some markets experience steep price drops, those rates aren't looking so bad after all.
So what's so important about your home's value if you are only refinancing and not selling? A whole lot!
For example, if you need to refinance $170,000 and your home appraises for $200,000, your Loan-to-Value (LTV) ratio is 85%. When LTV is over 80%, three things result if you are financing with a conventional prime mortgage. 1) Your interest rate goes up 2) You are required to escrow your taxes and insurance (escrow deposits can be quite substantial) 3) You will be required to pay monthly mortgage insurance (typically averages .7% of your total loan amount per year on a monthly basis, or $99.17 in this example).
With the same example, if your home appraises for $212,500 (just 6.25% more), you would have an 80% LTV. This results in a significantly lower interest rate, no escrow requirement, and eliminates an additional $99.17 a month in mortgage insrance.
Now I didn't even mention those that need to refinance and can't because they are upside-down with their current mortgage (home value has decreased to the point where it is less than the principal balance of the mortgage).
So yes, those looking to refinance can be strongly affected by the home sales in the region and even neighborhood in which they reside. You can get a general idea of the value of your home by visiting Zillow.com. May the home sales be with you!
Refinance Tool Box
In the fourth quarter of 2007, 73 out of 150 metropolitan areas showed an increase in the median existing single-family home price compared with the same quarter in 2006, according to statistics from the National Realtors Group. In metropolitan areas, including San Francisco, Washington and New York, homes are typically retaining more of their value the closer they are to the city's core.
The places where homes seem to be holding the most value are those where prices didn't surge during the boom years and where economies are staying strong. Single-digit appreciation may have looked meager in the years of the boom, when red-hot markets experienced bidding wars and high investor interest. Now, as some markets experience steep price drops, those rates aren't looking so bad after all.
So what's so important about your home's value if you are only refinancing and not selling? A whole lot!
For example, if you need to refinance $170,000 and your home appraises for $200,000, your Loan-to-Value (LTV) ratio is 85%. When LTV is over 80%, three things result if you are financing with a conventional prime mortgage. 1) Your interest rate goes up 2) You are required to escrow your taxes and insurance (escrow deposits can be quite substantial) 3) You will be required to pay monthly mortgage insurance (typically averages .7% of your total loan amount per year on a monthly basis, or $99.17 in this example).
With the same example, if your home appraises for $212,500 (just 6.25% more), you would have an 80% LTV. This results in a significantly lower interest rate, no escrow requirement, and eliminates an additional $99.17 a month in mortgage insrance.
Now I didn't even mention those that need to refinance and can't because they are upside-down with their current mortgage (home value has decreased to the point where it is less than the principal balance of the mortgage).
So yes, those looking to refinance can be strongly affected by the home sales in the region and even neighborhood in which they reside. You can get a general idea of the value of your home by visiting Zillow.com. May the home sales be with you!
Refinance Tool Box
posted by Jim Bisnett at
12:47 PM
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