Ask the Expert: Kelly Perkins interviews Mark Simon
When you look back at your life, marriage, having kids, or starting a new job, timing is not always on your side. Many of those decisions, always peppered with speed bumps, are often the best ones you have ever made. Local real estate agent Kelly Perkins talks with mortgage specialist Mark Simon about the simple question… Despite the rate changes, is it still a good time to buy?
Kelly: I see buyers are starting to become more discerning and approaching the local market with more caution. Caution is smart, but it is also wise to realize it’s unlikely you can time the market AND find that perfect house simultaneously. If you find that one house that checks all your boxes and pulls on your heartstrings, it may represent a premium in the interim, but can pay dividends in the long term as a rewarding lifestyle decision. How and where we spend our time is important, which has been magnified by the last few years of COVID-19. While the value of our homes has risen, the “value” of the home in our lives has risen more.
Mark, what are your thoughts on some who feel they may have “missed the market”?
Mark: Interest rates were expected to rise, yet the increase was higher than expected; payments average 30% higher than they were 3 months ago. That said, there are loan products available that will offer more favorable terms down the road. Over the past 2 years, the mortgage product of choice was a 30-year fixed loan considering historically low rates. However, now consumers are orientating their search toward intermediate Adjustable-Rate Mortgages. These ARM programs are fixed for 5, 7, and up 10 years, amortized over 30-40 years. The other program back in focus is interest-only ARM’s, which offer consumers more flexibility in their monthly payments and cash flows.
Kelly: I know some buyers have backed out of escrow due to the increase in rates. How do you guide those looking for a loan to best position themselves to avoid being caught in this stressful situation?
Mark: To qualify today for a loan, given market volatility, my focus is to carefully analyze all data provided by a client that wants to pursue a home purchase and ensure they are formally pre-approved not only using today’s rates but rates that may fluctuate during their home search. This allows for a stronger offer and peace of mind for the buyer while they shop for their dream home (a built-in safety net). I also provide my clients with program options such as intermediate ARM’s to best manage their payment goals.
Kelly: For the past few years, many buyers have approached the limited home inventory with an understanding they would have to bid over the asking price and remove appraisal and other contingencies just to be considered. However, going forward, they may not encounter as much competition and be able to secure the property while keeping these otherwise standard safety nets in place. Per Altos Research’s recent report for Laguna Beach, the market has changed from a “Strong Sellers Advantage” to a “Slight Sellers Advantage.” While the market may be showing signs of cooling, it is important to keep in mind, that deceleration is different than depreciation; Deceleration means the market is slowing down but may still appreciate albeit at a slower pace.
Mark, what do you see as the long-term impact of the recent interest rate changes?
Mark: Looking at the June 15 Federal Reserve rate hike of .75%, what was most interesting to see was mortgage rates declining slightly on the same day and following days. This supports the theory that once the markets have direction on what the Federal Reserve is going to do, their actions stabilize certain segments of the financial markets. As clients today choose to pursue a home purchase and take out a home mortgage to finance that purchase, it is important to recognize they cannot replace their “Dream Home,” however, they can always refinance their home loan as we believe interest rates will decline over time. The loan they secure today may not necessarily be the loan they have for the duration of owning their new home.
Kelly: One constant we can all count on is change, as change is the law of life. And those who look only to the past or present are certain to miss the future. In that spirit, consider your timing based on the idea that life is short, so “love where you live.”
Originally posted on coastalrealestateguide.com
Kelly Perkins: Realtor, Compass
Kelly Perkins, is a Realtor and Coastal Specialist with over 23 years of experience in the Real Estate Industry, starting out as one of the first certified Appraisers back in the 1980’s.
Mark A. Simon, Vice President, and Senior Loan Officer, United American Mortgage
Mark is a 34-year veteran in the mortgage banking industry and consistently ranked in the top 200 Mortgage Originators nationally.
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