OC Realty Blog

Orange County Home Prices & Sales (source DataQuick):

For the 22 business days ending May 15, sales for all types of Orange County home sales decreased 35.1 percent. The median sales price increased 0.8 percent for all types of housing, however, Resale Homes were up 1.4%.  The median is where half the homes sold for more and half for less.  Types of homes selling, as well as home value changes, cause the median to change.

Although sales were down, prices still remain constant.  The featured city this week:

Laguna Hills Real Estate (Zip 92653)

• Median Sales Price = $720,000  (up 6.7%)
• Number of Homes Sold = 31  (down 38.0%)

For a complete city list of Orange County Real Estate , click on the below link.

http://www.ocregister.com/ocregister/money/housing/article_1715548.php

Mortgage rates increased for the fifth consecutive week, with the average
30-year fixed mortgage rate rising to the highest point since August,
according to Bankrate.com’s weekly national survey of large lenders.

The average 30-year fixed mortgage rate is now 6.47 percent and has an
average of 0.26 discount and origination points.

The average 15-year fixed rate mortgage, popular for refinancing, increased by a similar amount, to 6.21 percent. With larger loans, the average jumbo 30-year fixed rate climbed to 6.68 percent. On adjustable rate mortgages, the average one-year ARM nudged higher to 6.09 percent while the 5/1 ARM jumped up to 6.37 percent. 
(Click Image To See Full Graph)

“Mortgage rates often show short spurts of volatility and prolonged periods of little movement,” Bankrate notes in its survey report. “Mortgage rates had been confined to a narrow range of approximately one-third of a percentage point for nearly seven months - including weeks on end with virtually no movement. But they broke out of that range with this week’s move, as hopes for a Fed interest rate cut continue to wane.”

Fixed mortgage rates have increased nearly one-third percentage point since mid-March. At the time, the average 30-year fixed mortgage rate dipped to 6.16 percent, meaning that a $165,000 loan would have carried a monthly payment of $1,006.30. With the average 30-year fixed rate now 6.47 percent, the same loan originated today would carry a monthly payment of $1,039.66.

Fixed mortgage rates still remain a compelling refinancing alternative for
adjustable rate borrowers facing sharp payment adjustments.

Bankrate’s national weekly mortgage survey is conducted every Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

- REALTOR® Magazine Online

Rates obtained from our local lender, First Capital.

First, the good news: interest only loans increase house affordability by 20 percent. If you qualify for a $250,000 loan, you now can get $300,000; $300,000 becomes $360,000; and $400,000 becomes $480,000.  In other words, you can qualify for a more expensive home than you would with a traditional mortgage.  And the payments are dramatically different.  On a five-year interest-only loan at 3.875%, your payment is $1,615.  On a five-year hybrid at 3.750%, your payment jumps to $2,316. And on a 30-year fixed at 5.750%, your payment $2,918.  Quite a difference there.

How interest-only loans work: Interest only loans do not prohibit you from paying down the principal balance.  Most are available only with adjustable rate mortgages.  Most are five, seven or ten year interest-only periods, where the rate is fixed.  After the initial period, the rate can rise up to six percentage points.  For instance, a 5/1 ARM rate is fixed for five years and the i/o may only be for five years, and the next 25 would be traditional principal plus interest-greatly increasing your payment.  After the initial interest-only period, the loan becomes a fully amortized 30-year mortgage loan with no pre-payment penalty.

Now for the (potentially) bad news.  The payment differences break down as follows over the life of a five-year interest-only ARM:  Years one through five at 3.875%, your payment is $1,615.  Years six through eight at 6.875%, your payment is $2,864.  Years eight through ten at 9.875%, your payment is $4,114.  Years 10 through 30 at 9.875%, your payment is $4,783.  This last jump is due to the fact that during the last 20 years of the loan, the principal is spread out over 20 years as opposed to the traditional 30.

You may want an interest only loan if you:  Are disciplined with money;  Are a risk taker;  Aren’t taking on more than you can handle comfortably;  Expect your income to rise sharply in the next five years;  Have an irregular income (like commissioned sales) so that the lower payment is manageable during lean periods and when the money is coming in can pay down the principal;  Are content to let rising markets build your equity for you;  Are confident that home prices will continue to rise.

You don’t want an interest only loan if you:  Have a lot of consumer debt you can’t get a handle on;  Plan on being in your house longer than the interest-only period;  Are undisciplined with finances;  Are borrowing a small amount;  Plan on spending the extra cash on “discretionary” items;  Plan to sell or refinance before the interest-only period ends;  Want to lock in today’s low interest rates.

If you live in or are moving to Orange County California and want to find out which loan option is best for you, just call or email me or visit my mortgage broker’s website at http://www.ocloanteam.com/Home