Real Estate Forum
Adjustable-Rate Mortgages, Just The Facts!
May 30th, 2008 categories: BUYERS only, Real Estate Forum
Adjustable-rate mortgages (ARMs) differ from fixed-rate mortgages in that the interest rate and monthly payment can change over the life of the loan. ARMs also generally have lower introductory interest rates vs. fixed-rate mortgages. Before deciding on an ARM, key factors to consider include how long you plan to own the property, and how frequently your monthly payment may change.
Why choose an adjustable-rate mortgage?
The low initial interest rates offered by ARMs make them attractive during periods when interest rates are high, or when homeowners only plan to stay in their home for a relatively short period. Similarly, homebuyers may find it easier to qualify for an ARM than a traditional loan. However, ARMs are not for everyone. If you plan to stay in your home long-term or are hesitant about having loan payments that shift from year-to-year, then you may prefer the stability of a fixed-rate mortgage.
Compone
nts of adjustable-rate mortgages
Adjustable-rate mortgages have three primary components: an index, margin, and calculated interest rate.
The interest rate for an ARM is based on an index that measures the lender’s ability to borrow money. While the specific index used may vary depending on the lender, some common indexes include U.S. Treasury Bills and the Federal Housing Finance Board’s Contract Mortgage Rate. One thing all indexes have in common, however, is that they cannot be controlled by the lender.
The margin (also called the “spread”) is a percentage added to the index in order to cover the lender’s administrative costs and profit. Though the index may rise and fall over time, the margin usually remains constant over the life of the loan.
Calculated interest rate
By adding the index and margin together, you arrive at the calculated interest rate, which is the rate the homeowner pays. It is also the rate to which any future rate adjustments will apply (rather than the “teaser rate,” explained below).
Adjustment periods and teaser rates
Because the interest rate for an ARM may change due to economic conditions, a key feature to ask your lender about is the adjustment period–or how often your interest rate may change. Many ARMS have one-year adjustment periods, which means the interest rate and monthly payment is recalculated (based on the index) every year. Depending on the lender, longer adjustment periods are also available.
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An ARM can also have an initial adjustment period based on a “teaser rate,” which is an artificially low introductory interest rate offered by a lender to attract homebuyers. Usually, teaser rates are good for 6 months or a year, at which point the loan reverts back to the calculated interest rate. Remember, too, that most lenders will not use the teaser rate to qualify you for the loan, but instead use a 7.5% interest rate (or calculated interest rate if it is lower).
Rate caps
To protect homebuyers from dramatic rises in the interest rate, most ARMs have “caps” that govern how much the interest rate may rise between adjustment periods, as well as how much the rate may rise (or fall) over the life of the loan. For example, an ARM may be said to have a 2% periodic cap, and a 6% lifetime cap. This means that the rate can raise no more than 2% during an adjustment period, and no more than 6% over the life of the loan. The lifetime cap almost always applies to the calculated interest rate and not the introductory teaser rate.
Payment caps and negative amortization
Some ARMs also have payment caps. These differ from rate caps by placing a ceiling on how much your payment may rise during an adjustment period. While this may sound like a good thing, it can sometimes lead to real trouble.For example, if the interest rate rises during an adjustment period, the additional interest due on the loan payment may exceed the amount allowed by the payment cap–leading to negative amortization. This means the balance due on the loan is actually growing, even though the homeowner is still making the minimum monthly payment. Many lenders limit the amount of negative amortization that may occur before the loan must be restructured, but it’s always wise to speak with your lender about payment caps and how negative amortization will be handled.
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Atlanta Area Housing Market “Vibrant”
May 6th, 2008 categories: Alpharetta, Ball Ground, Buford, Canton, Cherokee County, Forsyth County, Fulton County, Gwinnett County, Holly Springs, Johns Creek, Milton, Real Estate Forum, Roswell, Sandy Springs
Former federal Housing Secretary Henry Cisneros says metro Atlanta’s housing
market is being spared the worst of the national slump due to the region’s
comparatively vibrant economy.
“Metro Atlanta arguably has the most dynamic economic market in the country,” Cisneros said last week while in the Atlanta area.
Cisneros predicted metro Atlanta’s home prices and its overall housing industry will rebound sooner than other regions in the country. The local market continues to be reinforced by the influx of talented people seeking opportunities, he said. Factors contributing to local economic strength include hospitals and health care facilities, universities and the many fortune 500 companies Visit Site For List Of Companys who make Atlanta their home address.
Henry Cisneros was secretary of the Housing and Urban Development department from 1993 to 1996. For more info on Henry Cisneros visit About Henry Cisneros.
For Homes For Sale In The North Atlanta Area & Surrounding cities visit www.NorthAtlantaHomes.org .
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Atlanta Area Housing Market Has Clearer Skies on Horizon!
April 15th, 2008 categories: Fulton County, Real Estate Forum
As we continue to read and hear about the dismal housing market, keep in mind that
real estate is local in nature and the media continues to
make a blanket statement about how the housing market in general is poor across the country. These statements are a great exaggeration to the Atlanta housing market and the Alpharetta, North Fulton area.
The much publicized bubble was never more than a small bump here in Atlanta. The states of Florida, California and Nevada saw housing prices double and triple between 2001 and 2006. During this same period, homes prices in Atlanta increased a modestly 4 percent to 5 percent per year. Price increases in other parts of the country were unsustainable, and what goes up eventually comes down. Naturally, whatever part of the country saw the biggest increase in home prices are now experience the painful reality of downward adjustment.
Does everyone remember the stock technology bubble of a few years past? How certain stocks kept going up and up and up. When those certain stocks came crashing back down, it sent ripples to other area’s of the stock market, but as a whole, the healthy companies maintained their due, steady course.
While fear and uncertainty have caused the number of overall home sales to fall in the Atlanta area, home prices have maintained a steady course. Homes are much more than commodities to us, it is where we make our lives. The majority of house moves are discretionary. If the housing market is unfavorable, discretionary buyers and sellers sit and wait. This will cause a decline in the number of homes sold without having much of an effect on prices.
Home prices in the Atlanta area are somewhat immune to large price drops as we have the benefit of a wonderful safety net. The Atlanta area adds about 150,000 people per year. In the last six years, we added about 800,000 people, a growth rate that was the highest in the nation. Almost 2 million people are expected to move here over the next 12 years. With so many people moving to the Atlanta, Fulton County area, the demand for housing will remain strong. Visit Video From President Dan Forsman Prudential Georgia Realty.
While there are approximately 100,000 homes on the market today in the Atlanta area, it will not take long to absorb them based on our current growth rate. This is particularly the case as homebuilders started cutting back on new construction 3 years ago and permits for new homes have fallen dramatically.
Home buyers are under the impression that getting a mortgage in today’s market could be difficult. Despite all the hoopla about the mortgage crunch, it is surprisingly easy to get a mortgage if you have decent credit. While the same cannot be said for buyers with bad credit, buyers with decent credit have every mortgage program option available to them, including stated income and no documentation. Buyers with poor credit represent less than 10 percent of the market.
Read Article From AJC Newspaper
Housing prices in the Atlanta and North Fulton area, not having fallen much, do not have far to go to predictably rebound. In a few years, due to the health of our local economy, housing prices should be higher than at the peak of the previous cycle. Housing is, and will continue to be, a tremendous builder of wealth for buyers. A strong buyer’s market and low interest rates are allowing buyers to get great deals on housing. As the spring market gains momentum, the best deals are being snapped up. The advice of “buy low, sell high” has never been more evident. Buyer’s should act accordingly! For homes in the North Atlanta area visit www.NorthAtlantaHomes.org .
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Atlanta Regional Parade Of Homes April 2008
April 10th, 2008 categories: Builders & Architects, Real Estate Forum
The 2008 Atlanta Regional Parade of Homes features Georgia’s finest builders and developers showcasing their innovative ideas, special design features, dynamic floor plans and master craftsmanship. To visit North Atlanta Builders Homes
This event is being held;
April 19-20, 2008
April 26-27
Saturdays: 11 a.m. - 5 p.m.
Sundays: 1 p.m. - 5 p.m.
Weekdays April 21-25*: 11 a.m. - 5 p.m.
*Weekday openings are optional. Please check with the home for Weekday opening times.
Four local Home Builders Associations have joined forces to present hundreds of new homes throughout the Atlanta region including the
Greater Atlanta Home Builders Association:
Cherokee, Clayton, Cobb, DeKalb, Forsyth, Fulton, Gwinnett, Henry and Rockdale counties.
To learn more about this event visit
Atlanta Regional Parade Of Homes Website
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Foreclosure Doesn’t Mean Bargain!!
March 29th, 2008 categories: Alpharetta, Real Estate Forum
As foreclosures become more prevalent in the Alpharetta, North Fulton region,
there is a widespread belief that foreclosure equals opportunity.
Unfortunately, this is where the misconception begins.
Today’s mortgage crisis can be traced back to lenders who, just a few short years ago, started loaning money to homeowners with marginal credit, small down payments and an adjustable interest rate that escalated each year. These types of loans became the majority of mortgages across the country. As people start losing their jobs, they are now faced with a house payment they can no longer afford, in a home that has no equity, in a market that takes to long to sell. At some point in the near future, foreclosure proceedings begin and the bank looks to reclaim the property. Tips for Avoiding Foreclosure.
When purchasing a foreclosure, the buyer needs to be aware of any outstanding liens or back tax, in addition to paying off the lender. The foreclosure process is a very tricky endeavor, and typically requires the guidance of an experienced Real Estate Agent. If you have an interest in seeing the current inventory of foreclosure properties, feel free to Contact Me.
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How Is The Housing Market In North Atlanta?
February 2nd, 2008 categories: Fulton County, Real Estate Forum
No matter where I go or who I meet, as a Prudential Realtor I am asked the question, How is the Real Estate market? With so much attention to the Real Estate Market being in the national spotlight, the question is asked very often.
Here in North Atlanta, the number of houses on the market inticate a buyers market, however prices are remaining stable. Unlike other parts of the country, especially Florida, we are doing quite well. Even within our market area of north Atlanta suburbs, the supply and demand is quite varied.
Recent leading property reports confirm improving buyer demand and sales generally throughout the property market, which should lead to better prices.
For a seller to take advantage of the increased buyer interest and the record low interest rates, remember that you risk the least if you buy and sell in the same market. In other words, don’t wait too long between buying and selling. For first-home buyers, it is possible to wait too long and miss the opportunity to buy when prices are the most favourable.
With a little research, common sense and good advice, astute sellers can optimise their chances of making the most on their sale and achieving the best price in an upswing for what is often their largest financial asset. It is a question of gaining advice from someone who has studied trends in the real estate market and identifying the right time to make a move.
Please do not hesitate to call or email me with any questions concerning Real Estate and our local housing market. Feel free to visit my web site www.NorthAtlantaHomes.org.
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3 Important Facts You Should Know To Sell FSBO in North Fulton
December 18th, 2007 categories: FSBO, Real Estate Forum
There are many choices when selling your home in the North Fulton area. Should you put a sign in the yard and sell it on your own? Should you pay a flat fee to get into the North Atlanta area MLS without true representation? Should you sign a listing agreement with an agent who promises to offer “full service” at a discounted commission?
Or, should you list with the best truly full service Prudential Georgia Realtor.
The truth is that the discount options can be ok for the right property, in the right market, with the right seller; but it is not always the best choice. Too often the discount companies exaggerate the savings ad grossly underestimate the time commitment and complexity of a real estate transaction.
I am a full service Prudential Georgia Real Estate agent. I always seek to truly save my clients money by preventing them from falling into some common pitfalls and selling their home for the most money in the least amount of time.
North Fulton FSBO Facts You Should Know:
- 1. Homes sell for an average of 16% higher price when the seller is represented by a truly full service agent.
- 2. There are currently over 90,000 active home listings in the North Atlanta area. What will need to be done have your home exposed to Agents and prospective buyers.
- 3. A high percentage of purchase agreements involving unrepresented sellers fail to ever close.
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