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LA Digs - Northeast LA Real Estate Blog

Welcome to LA Digs, the real estate and Northeast Los Angeles community blog written by Realtors Tracy King and Keely Myres.

Here, we share tips, market updates, and local news bits to keep you informed on what's happening in Northeast Los Angeles and the surrounding neighborhoods. Read on to learn about the latest in your neighborhood!

How Changing Mortgage Rates Can Affect You

The 30-year fixed mortgage rate has been bouncing between 6% and 7% this year. If you’ve been on the fence about whether to buy a home or not, it’s helpful to know exactly how a 1%, or even a 0.5%, mortgage rate shift affects your purchasing power.

The chart below helps show the general relationship between mortgage rates and a typical monthly mortgage payment:

Screen Shot 2023 05 04 at 1.40.29 PM

Even a 0.5% change can have a big impact on your monthly payment. And since rates have been moving between 6% and 7% for a while now, you can see how it impacts your purchasing power as rates go down.

What This Means for You

You may be tempted to put your homebuying plans on hold in hopes that rates will fall. But that can be risky. No one knows for sure where rates will go from here, and trying to time them for your benefit is tough. Lisa Sturtevant, Housing Economist at Bright MLSexplains:

“It is typically a fool’s errand for a homebuyer to try to time rates in this market . . . But volatility in mortgage rates right now can have a real impact on buyers’ monthly payments.”

That’s why it’s critical to lean on your expert real estate advisors to explore your mortgage options, understand what impacts mortgage rates, and plan your homebuying budget around today’s volatility. They’ll also be able to offer advice tailored to your specific situation and goals, so you have what you need to make an informed decision.

Bottom Line

Your ability to buy a home could be impacted by changing mortgage rates. If you’re thinking about making a move, let’s connect so you have a strong plan in place.

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Why Should I Buy Now?

The real estate market has hit the Pause button in the last few days. Why? Who knows? Waiting for another shoe to drop (such as even worse economic news?) It doesn’t make a lot of sense, really. Mortgage interest rates have dropped to the lowest in over 50 years. Lots of people have rushed to refinance their homes, but many have discovered that the rules are too tough for them to qualify now. Appraisals are extremely conservative, which means that if you refinanced back in the boom times a few years ago, you might owe too much to qualify for the required 20 to 30% equity that lenders want you to have now.

People who ask me about the real estate market assume that no one is buying because no one can qualify for a loan these days. Surprisingly, this is not true. Lots of people can qualify and are walking around today with pre-approval letters hanging out of their pockets. They even have 20% down payments sitting in their bank accounts ready to go to purchase that new home. Why don’t they make a move?

We’ve talked before about fear and how that has been holding the market back for quite awhile now. Fears such as: what if the prices drop more? What if I lose my job? What if a better buy pops up next week? What if my friends/relatives think I’m stupid for buying now?

Another obstacle is information overload. Every day we hear more economic news about things we really don’t understand, like, say, the Case-Shiller index or Standard and Poor’s credit rating of companies or countries. We hear about Europe’s economic woes, we see the stock market rocket up and down. What does it all really mean? How can we make a good decision in the face of all this information (so much of it bad news)?

How about trying this: turn off your radio, throw the newspaper in the recycling bin, and think about what you really want. Do you want a home to live in for several years? One that you can make your own with your unique designer touches? One that your kids can grow up in with a sense that they are loved and provided for? Want to try your hand at urban gardening? Raising a litter of puppies? What does any of that have to do with the Euro?

For most of us, not much.

The percentage of people in the United States who own their homes has varied between 65% and 70% over the last several years. “Experts” are saying that we probably won’t see 70% home ownership again. So what? So what if it is 65% forever more? Isn’t that still a large majority of the people in this country? Can we agree on this: most of the people in this country live in homes that they own?

Let’s go back to the basics for ourselves. A home is a big investment and the decision to purchase should be taken seriously, but life goes on day by day by day. Things do change, such as interest rates and loan guidelines. If you qualify for a good mortgage today, do you want to risk that you don’t qualify under some new guideline tomorrow? Do you want to wake up one day and see that your opportunity has passed you by?

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Are you a home buyer starting your search? READ THIS!

In the past we posted our number one tip for home buyers -- always change your locks when you move into a new home.  But that tip is for buyers who actually find a house and make it to the close of escrow, not buyers who are just starting out on their journey to home ownership. 

So for all of you who are jumping in and not quite sure what to do besides pore over Redfin listings online, here you go:

The very first thing you should do, BEFORE you even start looking online for houses, is call a lender and get PRE-APPROVED!

If I got a dollar for each time I'd seen buyers start looking before they take this crucial step, end up finding their dream home and then learn that they can't afford it -- well, I'd be able to buy my own dream home!

Talking to a lender should really be foremost in your mind.  Learn what your options are.

Because let me tell you, if you're looking at homes in the $500,000 range and then learn that you can only afford $350,000... well let's just say that a house listed for $350,000 is a whole heck of a lot different than a house listed for $500,000.  Or even $450,000.  Nothing in your new $350,000 range is going to look good enough after you've seen those $500K homes.

And then there's the flip side - what if you learn that you can actually afford a bigger loan?  Or that there is a financing solution that allows you to get a re-hab loan?  Maybe you didn't even know you could afford a house!

Don't have a lender?  Try Edward Uriarte (310.463.2270).  Or Steve Kenilvort.  We've worked with both and they've done great things for our clients.
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