Over the past few years the number of people who have decided to rent our their condos in Boston rather than sell them has certainly increased, and in some cases dramatically so. The side of effect of all this renting is just beginning to show it’s face. We’ve already talked about how rentals are now priced sky high, (see here) but there is now a second side that is starting to show it’s face.

Owner Occupancy Rates

Most people have never really focused on this little used metric when buying a home, but it’s incredibly important. The most important use of this statistic is when it comes to getting a mortgage. Most mortgage companies want to see minimally 50% owner occupancy and most would like to see more than 60%. For many condo buildings in Boston this has never been a problem but with the increase in de-facto landlords many buildings are now flirting with this number. The result, it’s become another obstacle for many buyers to overcome, not just from a mental standpoint but from a closing standpoint.

The mental aspect is that buildings with high owner occupancy rates are generally better maintained, since the people living there have a vested interest in how the property looks. Since so many owners have now become de-facto landlords however, this type of thinking might need to shift. It needs to be recognized that some of these people will not be landlords much longer as the market improves.

If you have questions about Owner Occupancy Rates or other questions related to buying a home, contact our office at 617-449-3642.

This past week mortgage rates tied their all time lows with the national average on a 30 year fixed rate reaching 3.94%. Low rates have pushed up first time buyer sales in Back Bay, where the number of properties sold under $500,000 is up 20% from last year. This should come as no surprise given the dramatic rise in rental prices in the neighborhood over the past year. More and more people are starting to realize that owning in the city can be cheaper than renting especially during a housing market like this. The numbers are also helped by parents of young professionals, who are in some cases, providing the down payment for the children to purchase that first home.

If you are interested in buying a home for the first time or have questions about buying your first home contact us and we’ll be happy to walk you through the process and answer all of your questions.

Recently, I encountered a buyer who let their mortgage broker dictate who was going to be the attorney representing them in the purchase of their new home. I was blown away when the buyer told me that they had agreed to this. As a first time home buyer, it can be confusing process and many are likely to turn to friends and family to look for advice. This situation however, was where a trusted professional was giving bad advice. I’m here to tell you no matter what anyone says don’t let your mortgage broker dictate what attorney you decide to work with!

Mortgage brokers like attorney’s (relatively speaking) are a dime a dozen. There are more than enough of both to go around. This is why you want to pick them separately, you want the best of both! You want the mortgage broker who’s going to get you the best rate and be able to get the loan done when the time comes. For an attorney you want the best of the best because one small mistake can have huge implications later on down the road. If the job isn’t done right the first time it can be very costly to fix it later on. So please no matter what the mortgage broker says never let them dictate your attorney.

The Federal Housing Administration has announced that on April 18th they will be raising the Mortgage Insurance Premiums on the their loans. If you are thinking about purchasing a home and getting FHA financing you will need to be under contract on the property you are interested in with an active loan application by April 18th. The time frame gives buyers the next month to find the home they are interested in and make an offer. Buyers who wait until after the 18th are likely to see higher monthly payments due to the rate increase. For more questions on FHA financing in Boston you can call our office at 617-449-3642.

The end of an era is coming, the death of the 4% interest rate is not far off. If you’ve been watching mortgage rates for the past few months you’re well aware rates are on the rise, but it looks like they are about leave the 4% arena for good. In the past few weeks here in Massachusetts we’ve seen mortgage rates dance above 5% for a little bit but come back down. It is unlikely though we will see them go back down to the 50 year lows they were at earlier in the year. As mortgage rates begin to rise you can expect to see a small surge in the market with people looking to make a purchase before rates get too high.

Check out our major new announcement for those looking to purchase a new home!

Click Here to prequalify for a mortgage right now!

Last night on CNBC’s Mad Money with Jim Cramer, the show had some interesting news for those watching the real estate market. Jim Cramer was sadly pointing out that despite the facts, the housing sector continues to be the whipping boy for the media. His primary example, the venerable Wall Street Journal.

On July 28th the WSJ ran a headline that said “Home Prices Rise but Outlook for Sector Dims.” Then again yesterday they ran a similar story, “Home Prices Edge Up but Outlook Darkens.” So despite continued good news in the actual market, we’ve gone from a dimming of the market to a darkening. If this “look at the facts don’t listen to the headlines” story sounds familiar it’s because I said this a month ago. (See Here) So what has all this fear mongering cost us? Well according to Cramer it’s cost us a 10% dip in the market. On the upside it’s probably done wonders to boost attendance Stephen Colbert’s Keep Fear Alive March. Remember, always look at the actual numbers not the headlines.

Today the FHA is set to announce that it’s raising its standards for the loans it’s willing to guarantee. The new guidelines have a few big changes, but the one that will impact everyone, is the rise in initial insurance premium paid. In the new guidelines, the amount of MIP (Mortgage Insurance Premium) paid will rise from 1.75% to 2.25% of the value of the loan. Additional restrictions now include: the seller’s ability to help pay closing costs and minimum credit score for down payments. The new loan guidelines say the maximum amount of closing costs that can be paid by the seller is now 3% reduced from 6%. There will also be a credit score requirement in order to get the attractive 3.5% down payment. Borrowers will need a credit score of at least 580 if they want to put only 3.5% down. So what does this all ad up to?

If you’re thinking about buying in the next year it would be best to do it sooner rather than later. The tougher standards for FHA loans won’t impact most people’s ability to get an FHA loan, but it will cost you more to get one. It’s best to try and get any potential purchase done before these new regulations kick in rather than waiting till later. The other reason to buy now rather than later, is rising interest rates. Below, I’ve included a graph of interest rates in Massachusetts for the past month. In this graph, you’ll notice that mortgage rates are on the rise. As of today the average for a 30-year fixed is higher than it was a month ago and if you think back to November rates were right around 5% or for some, below 5% you can see we’ve had quite an increase.

Don’t get caught paying more later than you would if you bought today!

Just wanted to give a quick update to those savvy buyers looking to buy this fall. Mortgage rates are currently around or below 5%. The current 30-year fixed rate is 5.12% and there are some rates as low as 4.875% paying some origination/points. I will update this post with more info as it becomes available.

It’s crunch time for those looking to take advantage of the First Time Home-buyer Tax Credit. The clock is certainly ticking on them to get started and to illustrate that point I’ve added a count down above. The current plan is for the credit to run out on November 30th which gives potential buyers just over 90 days from today to close on a new place. The typical time it takes to close on a place is around 60 days this gives people not a lot of time to find a new place. Granted, some can close faster than others and some people find what they are looking for faster than others but if you want to take advantage of this feature you have to start now. Call 617-449-3642 for help starting the search for your new home.