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“I firmly believe…”


SANTA ROSA, CA. ~ Streets lined with trees in vibrant col- orful blossoms is the first signs of Spring. Spring also tradi- tionally marks the beginning of home buying season. With the devastating fires wiping out 5% of the housing stock and displacing thousands, inven- tory is low. Tis current housing market has come a long way from the aſtermath of the financial crisis. At that time, we were facing a sur- plus of distressed properties, tarnished with deferred main- tenance and mortgages under- water. Tis challenged lenders to either foreclose or “short sale” homes. Too much inven- tory, and lending guidelines that were evolving daily, leſt the hous- ing market seeking


a bottom. Now we have the lowest in-


ventory ever. Te booming building industry is struggling to keep up with the demand. Te laws of supply and demand are the pillars supporting the current home prices. With the stricter lending rules, bor- rowers must demonstrate their


ability to repay. Tis isn’t a bubble, this is a thriving econ- omy. More people are qualifying


for loans.


Enough time has passed for those that experienced credit hiccups from a “short sale”, foreclosure, or bankruptcy.


Tis


now has little or no impact on a credit profile. We are experiencing an economy at full employment. Te low interest


rate train may be leaving the station. Many factors play into the interest rates; world events, job reports and anticipated in- flation. Te tools the Federal Reserve uses to fight inflation or stim-


ulate the economy are


set- ting the bench mark of the Fed-


eral Funds Rate. Tis is the rate that banks borrow to meet their required reserves when they fall short. For almost ten years the key bench mark has been held at near zero. With all the good economic news; low unemployment and now rising wages, fear of inflation is taking center stage.


In anticipation of the Federal Reserve’s next We have Positive Solutions to Intro to Beekeeping class schedule & sign-up: See Page 22


Unforeseen Interruptions! From time to time mini fender benders and accidents occur when you least expect them. And they do happen. We are a positive solution to these annoying interruptions. We hope you don’t have to call us. But if you do... We’ll be ready!


move, interest rates have been moving up. Investors are mov- ing away from the safety of the bond market. Even with these recent moves, we are still seeing historic low interest rates. Af- ter experiencing extremely low interest rates, any move up seems like it’s time to panic. Tere is no


need to pan- ic. We need to adjust our sights and calculate what each increment in rate does for buying power.


For every


1/4 % change in interest rate on a $400,000 loan amount, your monthly payment could go up almost $60. Depending on qualifying ratios, this could hamper buying power. As fixed interest rates go up, the Adjust- able Rate Mortgage (ARM)


SPRING GUIDE #1


UPBEAT TIMES, INC. • March 2018 • 15 by Barry O'Meara • barryo@stearns.com


will become more appealing. ARMs are usually fixed for 3, 5, 7 or 10 years. Mortgages these days do not have prepayment penalties. Using an ARM is a suitable bridge to get into the home now. With no prepay- ment penal- ties, there would


still


have an op- portunity to refinance into a fixed rate when interest rates drop.


Another option to consider would be a 1.5/0.5 lender paid buy down. Tis is a tempo- rary buy down that can help a buyer during their first two years in their new home. Te way it works is a buyer would get a higher note rate but for the first 12 months would pay an amortized rate that is 1.5% lower than the note rate. On


the second 12 months, the buyer would pay the amortized payment 0.50% below the note rate. Not until the third year does the buyer pay the note rate. Tere is no pre-payment penalty, so if an opportunity came to refinance at a lower rate, the buyer could still take advantage of that. As an exam- ple, if the note rate is 5% and a loan amount was $400,000 the first year’s monthly principal and interest payment would be $1796. In year two, the amount would be $2026. From year three on, the payment would be $2147. Your monthly sav- ings could be used for home improvements or helping make a new home, your home. Enjoy Spring in Sonoma


County. As Luther Burbank has said “I firmly believe, from what I have seen, that this is the chosen spot of all this earth as far as Nature is concerned.”


5800 Guerneville Rd Sebastopol • 829-2477


“Time is the longest distance between two places.” ~ Tennessee Williams UPBEAT TIMES, INC. • March 2018 • 15


THE MORTGAGE COACH


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