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On August 18, 2011, FREDDIE MAC announced that the 30 year fixed mortgage interest rate averaged 4.15%(with 0 .7 points), down from 4.32% the previous week and breaking the previous low of 4.17% set on November 11, 2010. The 15 year fixed mortgage interest rate averaged 3.36%( with 0.6 points), as compared to 3.50% the previous week.
With mortgage interest rates at historic lows, not only is home ownership becoming even more affordable for home 
buyers, but now there is even more opportunity for current home owners to make the decision to refinance their current mortgage loan. Take a look at the benefit of just a .25% drop in the mortgage interest rate.
|
$200.000 Mortgage Loan Monthly Principal and Interest Payment |
||
|
4.25% |
|
4.5% |
|
$983.88 |
30 Year Loan |
$1,013.37 |
|
$1,504.56 |
15 Year Loan |
$1,1529.99 |
Want to calculate mortgage payments on your own? Here is a Mortgage Calculator for you to work with.
In selling real estate for 40 years now, I have not sold a home where interest rates are as low as they are now. I did just close on a sale Thursday where the buyers original mortgage application was for 4.75% and the loan closed with a mortgage interest rate of 4.375%.
Not only are there monthly mortgage payment savings for home buyers due to the low mortgage interest rates, but there are also huge savings in the purchase price of a home today compared to 2006. There is no denying that real estate values have dropped in the past few years, some towns and areas more than others. A lower purchase price equals a lower mortgage and a lower monthly mortgage payment.
Take a look at the year to year comparison of average sale prices for one family homes in Middlesex County, New Jersey.
Yes, there are substantial savings for home buyers with interest rates being at historic lows and real estate values reaching 2003 levels!
Real estate closing costs are an important financial consideration when purchasing a home and in the home buying process. A home buyer needs to be 
financially prepared for expenses during the real estate transaction and at closing. In addition to the down payment and closing costs a home buyer can also expect to pay for property inspections, such as a home inspection, termite inspection and radon test, a mortgage application fee and an appraisal fee. While not necessarily considered closing costs, these are direct expenses related to purchasing a home.
When purchasing a home and qualifying for a mortgage loan, a home buyer needs to verify that they have sufficient funds for the down payment and the buyer closing costs during the mortgage application process.
These are the types of fees and costs related to the purchase of a home, and are commonly referred to as closing costs.
Is it possible for home buyers to save money in transaction expenses, bank and lender fees and closing costs in the purchase of a home?
Yes, there is the potential to save money!
First and foremost, a home buyer needs to rely on various professionals during a real estate transaction and title closing. These professionals, REALTOR, Mortgage Lender and Attorney, can provide guidance, advice and recommendations from contract signing and through closing. Home buyers need to have confidence in the professionals they are working with!
Regarding transaction expenses and the inspection aspect of a home purchase, these fees are paid when services are rendered. A home buyer should obtain the names of a few service professionals, compare inspection fees and check for scheduling availability. Other considerations would be whether the inspection company is insured, is a licensed home inspection company, is a member of the American Society of Home Inspectors(ASHI), whether they offer early evening and or weekend appointments and whether the inspection fee is based on the size or age of the home.
Bank lending fees have increased recently due to regulations in underwriting guidelines, but there is the potential for home buyers to save money in obtaining a mortgage loan. Mortgage interest rates, interest rate lock ins and lender fees vary from one lender to another and vary from one mortgage loan type to another. It is recommended that a home buyer speak with more than one mortgage lender and make comparisons of interest rates, origination fees, lender fees and application fees. Savings are possible, and without much effort.
According to Marianne Tamburello, a Colonia, New Jersey Attorney:
“Even though closing costs in New Jersey are the seventh highest in the country according to a recent Star Ledger article, there are ways for the potential home buyer to keep the total amount of closing costs within budget.
Two of the most significant expenses in purchasing a home are the cost of title insurance and the survey. All lenders require title insurance. In New Jersey, the cost of title insurance is fixed by state statute. Title insurance, therefore, costs the same no matter what company your attorney deals with. But a portion of the title insurance cost will be reduced if the attorney provides “back title” information to the title company.
What is “back title” information? Back title information means the current deed, survey and title policy which the seller may have in their possession. Your realtor or attorney can request these documents from the seller shortly after the contract is signed.
When an existing policy is provided on a new title search order, the title company will use “re-issue rates” for the amount of the present coverage. For example, the seller purchased the house for $200,000, has a title policy for that amount and is now selling the home for $250,000. By providing a copy of that policy to the new title company, $200,000 of the title insurance costs will be billed at the “re-issue” rate with the balance billed at the basis rate…resulting in a savings of over $200.
A survey can cost over $600 depending on the size of the property. Unlike title insurance, a new survey may not be required by the lender. Although the cost of a new survey will be disclosed on the lender’s Good Faith Estimate of closing Costs, the home buyer or attorney should ask whether the lender will accept the seller’s survey with the raised seal of the surveyor or if one is even required at all! Generally, the lender may accept an existing survey if no major changes(i.e. an addition to the dwelling, addition of a strip of land to the property) have been made and the survey was done within ten years of the closing date. Occasionally, a lender will not require a survey at all as long as the title company will insure the property without one.
Nobody disputes that buying a home can be expensive but just asking a couple of very simple questions can save a home buyer almost $1,000!”
In addition to the potential savings listed above, the actual closing date has an impact on real estate closing costs. At closing, there will be an interest per diem expense calculated from the day of closing to the last day of the month. This is something where most home buyers can truly save money by planning in advance, and what few home buyers are even aware of. And that is scheduling the real estate closing near the end of the month.
A home buyer can save money on interest per diem charges, which are interest charges from the day of the closing to the last day of the month. A $200,000 mortage at 5% interest would equal a per diem interest expense of $27.40. A closing date on the 10th of the month would add $575.40 to the closing costs as compared to $109.60 for a closing on the 27th of the month. That is a cost savings of approximately $466 just for planning the closing date on the 27th of the month versus the 10th of the month!
Yes, there are ways a home buyer can help themselves save money on real estate clsoing costs in a home purchase!______________________________________________________
The above article,“How Buyers Can Save Money on Real Estate Closing Costs”, was written by David Fialk, REALTOR, Broker Owner, Choice Realty Co., Iselin, New Jersey and regularly posts real estate articles of interest for home buyers, home sellers and home owners.
David can be reached via email or by phone at 732-283-3400 or at www.DavidFialk.com.
Licensed since 1971, David has helped over 1800 families move across town, across the state and across the country and specializes in the towns of Iselin, Colonia, Edison, Woodbridge, Avenel, Fords, Sewaren, Port Reading, Keasbey, Carteret and Metuchen in Middlesex County, New Jersey.
Planning on purchasing real estate? Thinking of selling your home? For real estate information ”You Can Rely On, Contact the REALTOR You Can Rely On”.
Want to find out more about David Fialk?
Click to View RealtyMatters: Great Information for Homeowners
Articles of Interest Include;
Whether you are interested in buying a home, planning on selling a home or are just curious about real estate sale statistics in Middlesex County, and want reliable information, the following statistical information was obtained through published information by the Middlesex County MLS for closed sales though June 30, 2011.
Statistical information is important, but there is more to knowing the real estate market and market values than just looking at statistics. Not only do real estate values vary in Iselin, Colonia and Edison and from county to county, they also vary from neighborhood to neighborhood in the same town.
Real estate sale statistics can be important, but does the statistical data always paint the entire picture? Remember Econonomics 101: What is true of the whole may not be true of the parts. Just because there is a large drop in average sale price, such as Sayreville (-23.3%), does not mean that all homes in all price ranges and in all sections of Sayreville lost the same amount in value. No it does not!
In order to make informed decisions, home buyers and home sellers need to obtain a better understanding of real estate sale statistics. Just as doctors interpret xrays, lawyers interpret published legal opinions and insurance companies interpret life expectancy charts, REALTORS know how to interpret real sale statistics. A home buyer’s and home seller’s REALTOR can provide more specific information, more detailed information and provide a more thorough analysis in helping their client make more informed home buying and home selling decisons.
Summary: Middlesex County sales transactions were down 17.1% and average sale prices dropped 6.4% as compared to the time period of January 1, 2010 through June 30, 2010. There are 34 towns/market areas in Middlesex County in the Middlesex MLS. Only 7 towns showed sale transaction increases and only 9 towns showed an increase in average sale price.
Interested in viewing more real estate reports and real estate sale statistics from 2004, visit www.RealEstateSalesData.DavidFialk.com.
Are you aware that there is a move in Washington which could require a minimum down payment of 20% on the purchase of a home? It’s called the Qualified Residential Mortgage, commonly referred to as the QRM Rule.
The rule as proposed could have the effect of requiring borrowers to have a 20% down payment on the purchase of a home in order to qualify for the best mortgage interest rate. The QRM is just one part of the Dodd–Frank financial regulation bill that was supposed to require lenders to do a better job of underwriting mortgages. Want to obtain more information about the Qualified Residential Mortgage, read this information provided by the National Association of REALTORS and or see what Google has found.
Many year ago when I entered the real estate business, 1971 to be exact, the first thing I educated myself on was qualifying a buyer. There were mortgage payment qualifying guidelines then and there are mortgage qualifying guidelines now. Whether the mortgage was Conventional, VA or FHA, there were down payment and income guidelines for each type mortgage loan, such as the 28%/36% Rule. Simply stated, a borrower’s monthly mortgage payment(PITI) should not exceed 28% of their montly gross income(front ratio) and the monthly payment plus monthly recurring debt should not exceed 36% of monthly gross income(back ratio).
A very simple guideline, but one that truly stood the test of time for mortgage qualifying.
And then, the real estate frenzy started in 2002 and carried through early 2006. Buyer demand exceeded available listings. Buyers were moving up into larger homes, they were purchasing second homes, they were purchasing rental homes and condos and they were looking to purchase fixer uppers and flip them. There was a buyer for every listing that came on the market. And more ofter than not, buyers were stepping over each and outbidding others just to purchase a home.
And yes, there were many buyers who were purchasing homes that were beyond their financial income limits. But, what about the mortgage qualifying guidelines that have stood the test of time for so long?
Well, the banks wanted in on this real estate and mortgage borrowing frenzy too! They loosened qualifying guidelines and increased income qualifying ratios. What was once a 28%/36% qualifying guideline became 41%/46%. To help even more buyers, many lenders also allowed the buyer to borrow the down payment for the home purchase in the form of a second mortgage. And on top of that, a home buyer was also able to negotiate the contract offer where the home seller would be paying for buyer closing costs as a seller concession. That was done by negotiating the sales price with buyer closing costs lumped in.
Great mortgage rates, great lender qualifying, a dream come true for home buyers!
Fast track forward to the period between mid 2006 and the present, in no special order. The financial mess on Wall St. The government bailout. Potential home buyers stopped looking. Real estate values weakened, then dropped and have continued dropping in most all areas of the country. Lenders started qualifying buyers again using appropriate qualifying standards. The economy weakened and, from a public perspective, is still weakening. What double dip, we never got through the first dip! Job layoffs started, and are continuing with no end in sight. Unemployment rampant, with no end in sight. New employment opportunities? Where? Late mortgage payments? In more families than could ever be imagined! Mortgage delinquencies? Foreclosure notices? Short sales? Foreclosures, becoming impossible to track due to the shear number of families affected. The list could go on!
Talk about the “perfect storm”!
I am a REALTOR. I am not an Economist, Banker or Government Regulator. I do believe that any consideration to a change in mortgage financing which would require a buyer to have a 20% down payment in order to obtain the best mortgage interest rate will not fix what is all wrong right now in the banking industry or in the US economy. I do believe that any mortgage regulation which forces home buyers with less than 20% down to obtain a mortgage loan with higher fees and higher interest rates would hinder the ability of many potential buyers from obtaining affordable housing.
Is it Possible That Real Estate News Articles
Tell Only Half the Story?
On Thursday, July 21, 2011 on the front page of the Business Section of the Star Ledger, the following real estate news related 
article was labeled:
“Of Interest: Closing costs increase as housing slump continues”
Here is the link to this article on NJ.com.
The first sentence of the article quoted a Bankrate survey released this week stating that “closing costs in New Jersey were the 7th highest in the country this year” and the 2nd paragraph stated that “this year, average loan origination and title fees on a $200,000 mortgage averaged $4,589 in New Jersey”.
Question: If you were thinking of purchasing a home, would that article title prompt you to take the time to read it?
Question: If you were planning your finances to purchase a home, would you assume that real estate closing costs average $4,589 for a home purchase with a $200,000 mortgage in New Jersey.
Is the article about real estate closing costs increasing in New Jersey or is it about the increase in mortgage fees related to purchasing a home?
Here’s the problem with the way the article was titled. The headline leads a reader to believe they will be obtaining information about real estate closing costs in New Jersey. However, the content of the article only refers to the increase in mortgage lending fees, loan origination fees and title fees, and does not include information related to actual real estate closing costs on a home purchase. Wouldn’t it make more sense to have a title such as “Closing Costs rise in New Jersey as mortgage fees increase”?
Yes, mortgage related expenses are part of real estate closing costs, whether you are buying a home in Iselin, Colonia or Edison in Middlesex County, New Jersey or in any other town, county or state in the country. However, they are just part of a home buyer’s closing costs and expenses when purchasing a home. Why would an article be titled “closings costs increase …” when the article concentrates only on mortgage related fees? Is the title misleading or is it telling only half the story?
The truth of the matter is that real estate closing costs do consist of charges related to title ownership and mortgage fees, but they also include many other costs and expenses directly related to ownership of the home being purchased.
Real estate closing costs are an important financial consideration when purchasing a home. A home buyer needs to be financially prepared for expenses during the real estate transaction and at closing. During the transaction, a home buyer can expect to pay for property inspections, such as a home inspection, termite inspection and radon test, a mortgage application fee and an appraisal fee. While not necessarily considered closing costs, these are direct expenses related to purchasing a home. Have these fees increased for a home purchase in New Jersey?
When purchasing a home and qualifying for a mortgage loan, a home buyer needs to verify that they have sufficient funds for the down payment and the closing costs. For a home purchase with a $200,000 mortgage loan, actual closing costs will be much more than $4,589.
These are the types of fees and costs related to the purchase of a home, and are commonly referred to as closing costs.
Other than increases related to loan origination and title fees, were there increases to the other charges and expenses in a real estate closing? That question was not answered in the article.
Considering a home purchase? Surprises are for Birthdays, Not Buying a Home!
Obtaining a reliable estimate of anticipated real estate closing costs is very important. They do represent a large expense. Here are the type of professionals you need to meet with
REALTOR, Mortgage Professional, Attorney
and rely on to obtain the information to make the Home Buying Experience a Pleasant One!
Yes, home sellers have options in setting the asking price!
It is quite simple! Sellers can either price the home to sell it or price the home to own it!
A home priced to sell is one that is priced at market value, will attract more buyers, will get the attention of real estate agents who will place the home on the top of their list of homes to show, will obtain more home showing appointments, will have more second comeback showings and will result in contract offers. A home priced correctly will sell in a shorter period of time, with less inconvenience to the owner and at a higher price than those homes priced above the market.
A home priced to own is one where the asking price is considerably above the market, and one where buyers and agents have no urgency to see! Home viewings are very sporadic, there are no comeback and second showings, no contract offers and the for sale sign keeps getting replaced with a new real estate broker sign. It is a home that buyers and agents feel is one where the seller does not want to sell!
Yet, many home sellers believe they have other options in setting the asking price, such as “we won’t give it away”, “we can always start high and then reduce the price if we need to”; “let’s start here so we have room to negotiate”, “we need X in order to buy the other home”, “we’re not in a hurry” etc.
Home sellers need to understand how home buyers search for a home in order to better understand the importance of setting the asking price for their home.
Home sellers need to understand the value of real estate agents in the MLS, how they search for homes and how they select the homes to present to their buyer clients.
Home sellers need to know that buyers want to view comparable sales before they make a contract offer and when a contract is accepted, the mortgage application and approval process requires a real estate appraisal.
Wondering what real estate values and real estate statistics look like in Iselin, Colonia, Edison or any other town in Middlesex County in May, 2011 compared to May, 2010? Wondering if real estate values have increased? Are they still declining? Are there more home sales in 2011 than 2010?
View year to date real estate values and real estate statistics through May, 2011 and a comparison to 2010 for all towns in Middlesex County.
http://fp.choicerealty.com/MLS/2011/Comparison%20Report%20YTD_2011.pdf
Wondering if more homes are being listed in one price range or another?
http://fp.choicerealty.com/MLS/2011/Residential%20Listing%20Profile%20YTD_2011.pdf
Curious as to whether sales are consistent in all price ranges or there are more sales in one price range ?
http://fp.choicerealty.com/MLS/2011/Residential%20Sold%20Profile%20YTD_2011.pdf
View more Middlesex County real estate statistics.
http://www.davidfialk.com/getagent/Pages.php?Page=0000602285&aid=022900001&chome=1
The home buying process involves some very important decisions which need to be made at the beginning of the home search and others that need to made to made during the home search and home purchase.
The home buying process is more involved than just looking at houses!
Being informed and knowledgeable early in the home search can make the home buying process and home purchase more rewarding. Here is some helpful information in selecting an agent, obtaining mortgage pre approval, deciding on the right home and preparing the contract offer.
Selecting an agent in the home buying process is the first step for a home buyer. A home buyer’s real estate agent will be very important throughout the home buying process.
Consideration should be given to whether the agent is full time or part time, how available they are and how they communicate information. A buyer’s agent should be familiar with the locations the buyer is looking in, know the real estate values in those areas and has sold homes in those locations. More importantly, a buyer’s agent should be helpful and knowledgeable in explaining and guiding the buyer through the home buying process.
A home buyer needs to be comfortable in talking with their agent and, more importantly, be comfortable with providing information to the agent. The more information the agent has about a home buyer’s needs, wants, desires and price range affordability, the easier it will be for them to offer assistance and suggestions about the most appropriate homes to look at.
A home buyer can obtain a lot of information in their initial contact with an agent, whether it is on a phone call regarding a home they saw marketed or a for sale sign, an email communication on a home seen on the internet or at an open house they visited. Sometimes they just call their friend who is a real estate agent or are referred to an agent by one of their friends. Many times, this is just how a buyer finds their agent and everything works out well.
The first contact and first appointment can provide a buyer with a lot of information about whether this is the agent who can help them accomplish their goals in their home search in the areas they are looking to purchase a home in. Whether consciously or not, a buyer needs to think of this as an interview. The agent asking questions to obtain information to then set the most appropriate homes to look at and the buyer asking questions and finding out if this is the agent who can provide the information they need about the home buying process and the availability of homes for sale in the areas they are searching in.
Some helpful hints in selecting an agent:
There are noticeable differences in the level of services provided by real estate agents. A home buyer needs to select and work with the agent that can provide the level of service that best suits their home buying needs!
There is a difference in mortgage pre-qualification and mortgage pre-approval. Homes buyers need to know this. It can make the difference in getting a contract offer signed or make a difference in how smooth the mortgage approval process goes in the home purchase.
Why would a home buyer think they are qualified for a mortgage loan simply because they spoke with a mortgage rep who obtained their credit check , asked about their income and then provided a mortgage pre qualification letter? Home buyers need to know that the mortgage pre approval process is more involved than simply speaking with a mortgage rep and providing verbal information!
The mortgage application and mortgage approval process involves a very thorough review and analysis of a home buyer’s credit, employment longevity, income verification and asset verification. While there are differences in underwriting standards in each of the different type of mortgage loans(VA, FHA, Conventional) and from one lender to another, a home buyer needs to know what type of a mortgage and how much of a mortgage loan they qualify for as early as possible in the home buying process. What was acceptable in the mortgage industry relative to mortgage qualifying during 2003 to 2006 is not acceptable now!
Some helpful hints in being prepared for obtaining a mortgage loan:
For most all buyers, obtaining a mortgage is required in a home purchase! Why not be prepared for what needs to be provided?
When a buyer likes a home and is considering making a contract offer, it is important that they go back and take a second look before making an offer.
There are home buyers who view various homes during a week or two and make an offer and purchase one. There are other buyers who search for a home over the course of months before making the decision to purchase. Sometimes the decison to make an offer is made on the day they saw a number of homes, and the one they are interested in was the first one previewed.
Viewing the home a second time is very important. One look is not enough for a home buyer to get a comprehensive view of the entire home, a view that involves more than just room sizes and general condition. As important, many home buyers need to show the home to a parent or advisor for their inspection and approval. A second look and a viewing for parents is more appropriate before an offer is negotiated than afterwards, provided that this can be accomplished timely.
While taking a second look, it is also a perfect time to obtain a copy of the sellers disclosure form, if one is available. Having this disclosure will help when looking for the age of the essential systems and roof, and what recent repairs and improvements were made and when. The buyer’s agent should be of valuable assistance in helping to point out what needs to take a closer look at.
Home buyers need to know that price is only one factor in getting a contract offer signed by the home seller. Home buyers need to know that they may not be the only one submitting a contract offer to the home seller. It is important for home buyers to know that there are three separate parts of a contract offer which are important to home sellers: price, terms and conditions.
Making a contract offer to purchase a home can be emotional. Lots of different thoughts go through a buyer’s mind: is this the right home, what price to offer, is the contract offer binding, etc. A buyer should obtain a copy of the contract offer form early in their search for home and review it. It is so much easier being prepared to move forward with a contract offer when there is familiarity with the forms which need to be signed.
Some helpful hints in submitting a contract offer:
For more detailed information regarding preparing a contract, read Buyers: Be Prepared in Making Contract Offer.
Home buyers do need to be prepared and knowledgeable in order to make the home buying process and home purchase a happy time and a happy experience!
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