Many Mobile homeowners will be planning to list their properties this spring because it’s when future home sales would be expected to peak. Historically, at least, spring is when a sudden crush of prospects usually arrive on the scene. But this year, the upward drift in mortgage interest rates might have would-be sellers worried. After all, it’s common sense that any rise in home loan rates would put a damper on buyers’ enthusiasm.

Sometimes common sense and reality don’t go hand in hand. When we try to estimate the strength of Mobile’s future home sales, it could be a case in point.

That’s one way to look at the conclusions drawn by a pair of studies released last week. Both were focused on examining how rising interest rates are likely to affect future home sales. If you assume that higher mortgage rates automatically dampen home buying activity, that in itself could become a self-fulfilling prophecy. For Mobile homeowners currently deciding whether the prospects for future home sales are on the decline, that could be a factor in their decision about whether to list their own properties.

 John Burns Real Estate Consulting examined the “common sense” idea about the dampening effect of rising mortgage interest rates—and found historical evidence that put the kibosh on it. They looked at ten separate periods since 1975 during which rates rose by 1% or more, and found little or no impact on sales if the underlying economy was strong. Apparently, the public optimism that accompanies a roaring economy offsets the effect of higher monthly mortgage payments.

 Another study by market research journalist Greg McCarriston summarized a late-2017 Redfin-commissioned survey. More than 4,000 people were polled in late 2017 about their own homebuying plans. Surprisingly, only 6% of those quizzed said they would cancel their own homebuying plans if mortgage rates passed 5%. A surprising 46% said that would either have no effect on their plans—or that it would actually increase their urgency to buy since rates might rise further.

Common sense or not, if both studies prove out, the strength of recent economic news could energize this spring’s Mobile future home sales activity—despite a creeping rise in interest rates. That will be good news for homeowners who decide to sell, and for buyers who are planning on the traditional spring flood of new properties entering the market. If you are thinking about joining either group, I hope you’ll give me a call!  

The post When Loan Rates Rise, Do Future Mobile AL Home Sales Slump? first appeared on The Cummings Company.

Some buyers think that finding the right home is the critical part of the buying process and that is how they determine which agent to use. While it is important, there may be a broader skill set to consider when selecting your real estate professional.

The most recent NAR Profile of Home Buyers and Sellers indicate that 52% of buyers do want help in finding the right home to purchase. There was a time when the public did not have access to all the homes on the market, but the Internet has changed that.

Helping to negotiate the price and terms of sale were identified by almost 25% of the buyers. No one wants to pay more than is necessary and the terms of the sale can be as important as the price.

The next largest area of assistance that buyers value has to do with financing and the paperwork. Even if a buyer has been through the process before, it very likely could have been several years and things have probably changed.

Since the cost of housing is dependent on the price paid for the home and the financing, a real estate professional skilled in these specialized areas can be very valuable in finding the “right” home. An agent’s experience and connections to allied professionals and service providers is equally important.

Ask the agent representing you to specifically list the tools and talent they have available to address these areas.

The post The “Right” Agent and the “Right” Home first appeared on The Cummings Company.

The new tax law doubles the standard deduction and it is estimated that over 90% of taxpayers will elect to use it. However, even without considering tax benefits, homeownership has convincing advantages.

Besides the personal and social reasons for owning a home, one of the most compelling is that it is cheaper. Principal reduction and appreciation are powerful dynamics that reduce the effective cost of housing.

Amortized loans apply a specific amount of each payment to the principal amount owed to retire the loan over the term. Some people consider it a forced savings account; when the payment is made, the unpaid balance is reduced.

The price of homes going up over time is appreciation. While there are lots of variables and it is not guaranteed, it is easy to research the history of an area and make predictions based on supply and demand.

Interest rates are still low and can be locked-in for 30 years. Without considering the tax benefits at all, the appreciation and the amortization dramatically affect the “real” cost of owning a home.

Consider a $250,000 mortgage that appreciates at 2% a year for the next seven years instead of paying $2,000 a month in rent. In the example, the payment is less than the rent being paid even including the property tax and insurance.

When you factor in the monthly principal reduction and appreciation and consider additional owner expenses like maintenance and possible homeowners association, the net cost of housing is considerably lower than the rent. In this example, reduced cost in the first year alone is more than the down payment required on a FHA loan.

Based on the assumptions stated, the down payment of $8,750 could grow to $73,546 in equity in seven years. Can you name another investment with this kind of potential that also provides you a place to live, enjoy, raise your family and share with your friends?

Use this Rent vs. Own to make projections using your own numbers and price range. We’re available to answer any questions you have and to find out what it will take to own your own home.

The post Convincing Advantages with Standard Deduction first appeared on The Cummings Company.

Punxsutawney Phil may have decided to head back underground for a while longer, but since a roaring economy almost has to bring about an increase in prices, most expect Mobile mortgage interest rates to start climbing up from their historically deep burrows.    

It may be that the specter of more expensive mortgage payments will launch this spring’s Mobile selling season sooner than we would usually expect. If so, homeowners who plan to put their properties on the market will be confronting their own pricing issues right away—what’s the right asking price?

Pegging that figure is part art, part science. The science is covered: I provide my clients with a detailed spread of the latest Mobile activity—so there’s no mystery about the current market. But there still remains the fine-tuning. It’s always a close call, but in many cases, I think the nod should go toward what you might call “peaceful pricing.” It’s one of two differing philosophies.

First, there’s battle-ready pricing. This is an asking price that’s set a bit above what the market has been showing. The Mobile owner is mindful that prices have been inching upward, assumes that his or her property is at least as valuable as those covered in the sales figures, so decides accordingly. Anticipating what the spring market will bring, the seller decides that the asking price should be notched at least a little higher than the recent comps.

It’s “battle-ready” because the buyer would normally be expected to negotiate down toward where Mobile comparables have performed—and those negotiations may be spirited.

Peaceful pricing, on the other hand, takes the opposite tack. The owner looks over the comparables and sets the asking price just a bit below what those would suggest. This owner expects to settle back (perhaps chanting a soothing “Ommmm” from the sidelines), knowing that any battles that may ensue are more likely to be between buyers. And in fact, today’s highly informed buyers may very well sense the stand-out value and hope to outbid one another. Let the battle begin!

In the best instances, particularly when (as now) inventories from coast to coast are notoriously low, the result can actually be a higher final selling figure than “battle-ready” pricing would produce. It’s always something of a guessing game, but when the news of the day produces multiple reasons for buyers to act sooner rather than later, Mobile homeowners have reason to feel confident. Calling me early is a good way to get a jump on the competition!

The post A More Peaceful Approach for Setting Mobile Asking Prices first appeared on The Cummings Company.

There’s no challenging that ancient fable about the boy who cried wolf—which boils down to a simple story about why false alarms turn into more than minor irritants when a real wolf shows up. I can’t think of a comparable fable for the opposite situation, which is when an opportune circumstance has been ballyhooed so often that a surefire opportunity is allowed to slip by.

Too bad there’s no fable that covers that situation—because I think we’re exactly there right now.

The opportunity in question is for Mobile residents—particularly those who aren’t currently homeowners, or who are mulling over a future move to a new Mobile home. Although there are always good reasons to start looking over the Mobile listings at any given time, right now there are five straightforward reasons why this is the peculiarly apt moment to be buying a home:

1. Prices are uniformly expected to rise.
2. Interest rates are all but certain to increase—most likely, soon.
3. The overall supply of homes has been shrinking—while demand is expected to continue to rise.
4. Rents are projected to continue to rise more quickly once spring arrives.

The fifth reason is a constant, no matter when you decide on buying a home:

5. Owning a home remains one of the most certain ways to build family wealth.

Of course, I’m forever inclined to promote the notion of buying a home at all times. That’s for sure—and since the long-term advantages to homeownership are so indisputable, it’s a notion I’m proud to endorse. Yet with all indicators lined up as they are right now, it’s evident that we stand at a particularly rare “sooner rather than later” moment.

For those who’ve been thinking along those lines, starting your Mobile house hunt now rather than waiting for the spring rush will put you ahead of the pack—exactly where you want to be. I hope you will call me for a chat about the most efficient way to get started! 251-602-1941

The post 5 Reasons for Buying Your Mobile Home Now first appeared on The Cummings Company.

Readers who check in here regularly know that every once in a while I’m moved to relate Mobile real estate matters to various hot issues that are claiming the popular imagination. Such topics used to be called “water cooler talk” (but that was before we all started carrying water bottles around all day). So despite the fact that we may not gather around water coolers anymore, this the odds are that the leading topic of conversation won’t be the State of the Union or Mobile high school basketball. I’m guessing that (especially as the weekend nears) that other topic will rule.

So, it’s all but inevitable—here are the Top 7 Things that Mobile real estate and the Super Bowl have in common:

1. Both are Sunday-centric. Mobile real estate and the Super Bowl make Sunday a major activity day (at least when the weather is nice).
2. Both do better when their ads are top-notch. The best Super Bowl ads will be replayed on Monday night news shows, but although our best Mobile real estate ads won’t get that kind of attention, eye-catching ads are a plus for both.
3. Both rely on heads-up plays by Special Teams. Your Mobile Realtor^® is the captain of the specialists needed to make a sale happen.
4. Both rely on marketing to draw a crowd.
5. Both have a definite banking connection (Sunday’s venue is U.S. Bank Stadium).
6. Both are (mostly) free to enjoy. Open houses and showings are free to the public—only in Minneapolis will admission be charged (and what a charge!).
7. Both are judged to be first rate when fumbles don’t happen.

Now you may be thinking that my Top 7 Things list is offered for no other reason than to try to get Super Bowl fans thinking about Mobile real estate instead of the game itself. There may be an element of truth in that.

But by the time we’ve all been deluged by the onslaught of pregame hoopla, interviews, commentaries, predictions, mini-documentaries, player/coach profiles, etc., thinking about anything else may come as a welcome break. If that’s true for you, call me anytime to talk about your real estate plans! (Okay—maybe not during halftime).

The post The Super Bowl and Mobile Real Estate’s Top 7 Parallels first appeared on The Cummings Company.

You might think that when your house is in terrific shape, that’s all you need to guarantee a quick, successful sale. Just because it is located in a desirable Mobile neighborhood on a great street populated with conscientious neighbors—and just because it has most of the features and attributes that today’s buyers seem to want—that it’s a cinch to draw a raft of top-of-market bids from a clamoring flock of eager prospects.

It often turns out that the result was not inevitable. The reason is that “My Mobile house will sell itself” thinking was allowed to take over.

Now it is definitely true that all of the terrific qualities listed above should guarantee a short and successful offering. The problem arises when a homeowner logically concludes that, since their Mobile house will sell itself, all they have to do is plant a sign in the yard and wait for the sale to be finalized.

That can be a costly misstep if the “For Sale” sign they decide to plant is one that includes the fateful words, “by Owner.” The apparent logic is that, if the house will sell itself, what’s the advantage to hiring a professional Mobile agent to do the selling?

The needs are many, but I think the one that’s least debatable is this: when prospective buyers see that a homeowner is selling their house on their own, they correctly assume that the seller is hoping not to have to pay a commission. True or not, they also assume that the owner will have borne minimal expense—and that means that the owner can accept a lower offer. In other words, exactly the opposite of what the For Sale by Owner gambit was meant to achieve!

There are many other reasons why the vast majority of sellers do eventually rely on a professional Mobile agent. For one, there’s the fact that the aura of professionalism all by itself conveys added value. For another, buyers and their agents know that negotiations will be professionally conducted. To be accepted, any offer will obviously need to be respectfully assembled (in other words, lowball offers are less likely to succeed).

When you add in the relief from the raft of technical hassles that goes with representation by your own Mobile real estate professional, it’s a wonder that any of those “by Owner” signs ever show up. It’s probably because the self-contradiction in the “My house will sell itself” idea takes a while to evidence itself.

The irony is that it’s exactly those Mobile homes with terrific attributes that deserve to attract the highest offers. That’s the ultimate benefit of the professional service I offer. Call me! 251-602-1941

The post The “My Mobile House Will Sell Itself” Conundrum first appeared on The Cummings Company.

If you find yourself in a quandary over whether to jump into buying a home now or waiting for a clearer signal that the time is right, there is one method you can use to inject some hard numbers into your decision. It’s called the CTW.

CTW stands for “Cost to Wait.” It attempts to approximate the money saved or lost if buying a home today is postponed until a later date. The most reliable CTW calculations are based on what have proved to be the most accurate projections. For this example, we rely on quasi-governmental mortgage guarantor Freddie Mac for interest rates and CoreLogic for home pricing data projections.

Since projections are most accurate in the nearest term, the best example will be a simple one-year CTW. This one seeks to calculate the difference between buying a home in Mobile right now versus the same time next year.

Freddie Mac projects that from December’s annualized average PMMS (Primary Mortgage Market Survey) rate of 3.99%, a year later that rate is projected to rise to 4.5%. As for typical U.S. home prices, CoreLogic’s most recent projection is a 4.7% annual increase—similar to the past few years.

Let’s take for our Mobile example the Census Bureau’s U.S. new home sale price—December’s median was $335,400. At that price, assuming a 10% down payment, its 30-year mortgage at December’s rate resulted in a monthly payment of $1,439. If the assumptions prove true, by next January, the cash required for the 10% down payment will have increased by over $14,000—and the monthly mortgage payment would now equal $1,601(a monthly Cost To Wait of $162 per month).

Although that CTW may seem manageable, standing back to take the long view is a different story. For instance, by the time the mortgage has been fully paid, the entire CTW comes to more than $72,000—and that’s just for holding off for 12 months. Imagine what the CTW would be for waiting several years…or for a decade!

Although nobody can say for certain what the future will bring, it’s also true that over the long haul it’s likely that residential real estate will continue to do what it’s tended to do since time immemorial: grow more valuable. Especially given today’s still-historically low mortgage interest rates, the upshot is that buying the Mobile home of your dreams could very well be at its most economical right now.

I hope you’ll give me a call to see all the great buys currently available in Mobile. As the CTW measure illustrates so well—why wait until spring?

The post CTW in Mobile Proves the Prudence of Buying a Home Now first appeared on The Cummings Company.

Mortgage loans for more than 80% loan-to-value typically require private mortgage insurance. Mortgage insurance reimburses the lender if a borrower defaults on a loan. PMI is expensive, and homeowners should be aware of how to remove it when certain conditions have been met.

A borrower can request in writing for the lender to cancel the PMI when the mortgage balance has reached 80% of the home’s original appraised value. However, they are required to eliminate it when the balance reaches 78%. It is a good idea to monitor this, especially if additional principal contributions are being made to pay off the loan early.

Other methods to eliminate PMI sooner than through normal amortization include the following:

• If the value of the home has increased, the owner may consider refinancing with a loan that does not require PMI. There will be refinancing charges involved but you can determine how long it will take to recapture those costs from the monthly savings.
• Some lenders will consider using a new appraisal to verify that the home’s mortgage is below the 80% requirement. Find out in advance from your lender if they will accept this procedure and get the names of approved appraisers they will recognize. The cost of an appraisal could range between $450 to $600.
• Another strategy is to make additional principal contributions on a regular basis to reduce your mortgage balance to 78-80% level that would allow the lender to eliminate the PMI.

Mortgage insurance is not required on VA loans regardless of the loan-to-value. FHA mortgages made after June 3, 2013 are required to have Mortgage Insurance Premium for the life of the loan. For FHA loans made prior to that date, the MIP should automatically cancel when the loan-to-value ratio reaches 78% and has been in effect for a minimum of five years.

To obtain additional information specific to cancelling your mortgage insurance, contact info can usually be found on the annual statement provided by your mortgage servicer.

The post Lower Your Mortgage Payments without PMI first appeared on The Cummings Company.

The new tax law that was signed into effect at the end of 2017 will affect all taxpayers. Homeowners should familiarize themselves with the areas that could affect them which may require some planning to maximize the benefits.

Some of the things that will affect most homeowners are the following:

• Reduces the limit on deductible mortgage debt to $750,000 for loans made after 12/14/17. Existing loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap.
• Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the existing mortgage being refinanced.
• Repeals the deduction for interest on home equity debt through 12/31/25 unless the proceeds are used to substantially improve the residence.
• The standard deduction is now $12,000 for single individuals and $24,000 for joint returns. It is estimated that over 90% of taxpayers will elect to take the standard deduction.
• Property taxes and other state and local taxes are limited to $10,000 as itemized deductions.
• Moving expenses are repealed except for members of the Armed Forces.
• Casualty losses are only allowed provided the loss is attributable to a presidentially-declared disaster.

The capital gains exclusion applying to principal residences remains unchanged. Single taxpayers are entitled to $250,000 and married taxpayers filing jointly up to $500,000 of capital gain for homes that they owned and occupied as principal residences for two out of the previous five years.

Not addressed in the new tax law, the Mortgage Forgiveness Relief Act of 2007 expired on 12/31/16. This temporary law limited exclusion of income for discharged home mortgage debt for principal homeowners who went through foreclosure, short sale or other mortgage forgiveness. Debt forgiven is considered income and even though the taxpayer may not be obligated for the debt, they would have to recognize the forgiven debt as income.

These changes could affect a taxpayers’ position and should be discussed with their tax advisor.

The post The Affects of Homeowner Tax Changes first appeared on The Cummings Company.