The Scottsdale mortgage refinancing market has enjoyed months of near-record low interest rates. The rates have stayed so low for so long that many borrowers assumed home mortgage interest rates will be low “forever.” And for good reason. At the first sign of rising interest rates – regardless of how slight the expected increase – the global money markets seemed to force them downward again. Even the rumblings of a Federal Reserve increase in fed funds rates did little to change the feelings of some borrowers who watched mortgage rates remain low throughout the peak home buying months.

The majority of borrowers refinanced in the past year or so while interest rates were low. Surprisingly, however, more than 10% of borrowers throughout the nation have yet to refinance. Of the ones who haven’t refinanced their mortgages, most have home loans with rates at 5% or higher. The average rate of those borrowers in the Scottsdale mortgage refinancing arena who have actually refinanced is roughly 3.5%.

Is now the best to consider Scottsdale mortgage refinancing?

For technicality’s sake, experts say almost 25% of borrowers have mortgages with rates higher than 5%, but many of those homeowners cannot refinance their loans. According to CoreLogic here are the reasons why they haven’t – or are unable to – refinance to save money. For one thing, roughly half of the existing mortgages with higher rates that haven’t been refinanced are delinquent or have experienced a delinquency during the loan period. Because of that, most lenders consider the risk of granting them a new mortgage – even at a lower interest rate – too high.

In addition, existing mortgages held as part of private-label securities portfolios are generally more difficult to refinance than government-backed loans. As a result of the changes made in the aftermath of the housing crash of nearly a decade ago, the U.S. government offered refinance programs designed to be more streamlined. Those programs included a large number of borrowers who were underwater at the time – borrowers who owed more on their homes than they were worth. Again, to be technical the resulting share of borrowers not taking advantage of the interest savings is roughly 13%. Why haven’t that 13% refinanced when they could have? Let’s take a quick look.

The reluctance of the rest of the 13% of borrowers that haven’t refinanced is likely due to the remaining balance on their higher-rate mortgages. A CoreLogic spokesperson speculated that “small balances may not be worth refinancing… the savings would be too low.” And the speculation is probably spot on. Consider this: CoreLogic found that borrowers eligible to refinance with old rates above 7% have an average remaining mortgage balance of only $53,000. Borrowers with rates between 5%-7% had roughly $100,000 remaining on their principal balance. With the closing costs involved in a refinance – even with an existing lender – the question those borrowers need to ask themselves is, “Would refinancing a relatively low balance save me any money?” Closing costs for a refinance can often run 2%-3% of the loan amount, depending on whether points are involved. Let’s take a look and see if the savings are worth the effort.

The quick answer is, it depends on the original mortgage amount. For example, a borrower with an original loan balance of $400,000 can reduce his monthly mortgage payment substantially since the original payment was much higher. If that borrower is refinancing a $100,000 remaining balance, the closing costs are going to be comparatively lower. Conversely, a borrower with an original loan amount of $150,000 who currently owes $75,000 won't enjoy a significant savings on the remaining amount of interest – especially after factoring in the closing costs. In addition, many borrowers simply don't like the idea of extending the term of their loan. A borrower who’s 12 years into an original 15-year mortgage may just want to pay it off as planned instead of recasting the loan term to another 15-year term by refinancing.

As usual, each case is different, so it’s a good idea to talk to a Scottsdale mortgage refinancing professional. Here’s why:

Your mortgage lender can provide you with the remaining balance on your existing mortgage at the original interest rate. In turn, using the original amortization schedule – updated to reflect any principal only payments – the lender can estimate the amount of interest you’ll pay over the remaining life of the loan. Naturally, the calculation is based on the assumption that you won’t pay off or otherwise alter the loan's principle balance. Then, using current interest rates, the lender will determine what a typical refinance will cost in terms of monthly payment versus your existing mortgage payment. The interest portion of the payment when amortized over the new term will give the lender the total amount of interest you’d pay if you refinanced – again, barring any future changes to the principal amount. By simply comparing those two amounts, the lender can determine the interest cost savings. However, that’s not the end of the analysis. As mentioned, the costs of closing the loan have to be figured into the equation to determine the net savings, if any.

Closing costs, though not as high as on a new loan origination to purchase a home, can still be substantial. Though it may seem unnecessary, the lender is required to ensure the home's value is sufficient for the loan amount to be granted. Therefore, either a new appraisal (or, in some cases, an update to the existing appraisal) is required. In addition, you can expect to pay a loan origination fee and an updated title search fee. A new credit report and normal court recording costs will also be required. You may have to pay for an updated termite inspection and a home inspection. After all those costs are taken into consideration, then and only then can your Scottsdale mortgage refinancing lender give you an estimate on the cost savings to refinance and an opinion as to whether it makes financial sense. From there, only you can make the decision.

You can find more articles pertaining to Scottsdale mortgage refinancing and the overall mortgage market in the Scottsdale Mortgage Info section of our site below Scottsdale Real Estate Categories in the column to your right.

We also post daily tips, many of them related to Scottsdale mortgages, on Facebook and Twitter and would love for you to follow us there, too.

The latest Scottsdale real estate news recently included the U.S. Department of Housing and Urban Development (HUD) issuance of new regulatory guidelines to the Fair Housing Act. The new guidelines more closely quantify and qualify “those actions or policies by landlords, property managers, real estate agents or lenders that could be classified as discrimination” against people protected under the Fair Housing Act. Under the new regulations, HUD is able to charge those in violation of the act and have the U.S. Department of Justice (DOJ) represent the complaining party. Violations carry with them the possibility of damages paid to the complainant in addition to potential civil penalties and applicable punitive damages as determined by the court.

The latest Scottsdale real estate news concerning HUD and Fair Housing

This past April, HUD added a codicil to the Fair Housing Act regarding the assessment of criminal records in certain real estate transactions. HUD contends that refusing housing to people based on their criminal background or arrest record is discriminatory. Their reasoning? Because a disproportionate number of people with criminal pasts are comprised of racial minorities. In addition, this past September, HUD further opined that language-related housing restrictions or caveats violated the Fair Housing Act. Their reasoning? They contend the language barrier between the national origin of those seeking housing closely corresponds to their limited proficiency in speaking English.

So, what’s behind the new regulatory guidelines and why are they in the latest Scottsdale real estate news? Experts say clarification is an important addition to the Fair Housing Act because such measures help to better define discrimination in housing, and to close potential loopholes to provide equal housing opportunities to all U.S. residents. Furthermore, with home ownership at its lowest rate in over 50 years, more and more people are renting. HUD wants to make sure property managers are well-versed in the guidelines and their ramifications. With more people renting now than owning, HUD is aware that the ongoing relationship between the housing provider – the landlord – and the property manager extends longer than that of a real estate agent or mortgage lender. In comparison, while an agent’s or lender’s involvement with a person protected under Fair Housing ends upon completion of the transaction, the landlord and property manager interaction continues throughout the term of a lease. In addition, according to experts, many housing providers and landlords are not "up to speed" on the Fair Housing Act regulations and are not complying as a result. Enter HUD to start better policing the industry.

HUD’s ruling regarding limited proficiency of the English language was designed to clear up existing grey areas or implied loopholes. The new regulatory additions say the refusal on the part of property managers or landlords to rent to people who can’t speak fluent English is discriminatory, based on their national origin. In addition, the law encompasses all areas of housing – including lenders. What this means is that lenders must be able to translate forms and allow for interpreters to be present during the loan application process and the loan closing. HUD has identified this shortcoming as a hindrance that, until now, has prevented prospective borrowers who don't speak English from getting mortgage financing.

Experts say as trends in housing tend to grow and change, more regulatory guidelines will ultimately be added to eliminate the loopholes and grey areas which still exist – especially regarding the responsibilities and limitations on housing providers. Most property managers expect HUD as well as state legislatures to provide additional guidelines to further clarify what's expected from the rental housing industry. Better regulation within the industry, on both the federal and state level, would allow for educational opportunities for housing providers and landlords, therefore minimizing the number of occurrences of violations of the Fair Housing Act.

Property management insiders say their hope is the states recognize there is an information breakdown, and awareness is needed to educate people working in what is a specialized niche within the real estate market. They cite training for landlords, housing providers and property managers as the most important factor to help them understand the regulations and their obligations under the Fair Housing Act guidelines.

One property manager summed up a critical issue affecting the rental industry and the impact some decisions make with respect to the regulations. Their expectation is that additional regulations will eliminate the subjectivity of opinions in the process of leasing rental units to minorities and others. The property manager went on to say that he usually suggests property managers distance or remove the landlord from the decision-making process when it comes to the rental properties. After all, he contends, that’s what property managers are for. They are the experts. “You take out any sort of human judgment… because even if it’s well-intended, there could be something that would have ramifications… counter to the HUD guidelines,” he said.

HUD normally tailors their new guidelines and clarifications based on previous Fair Housing Act violations of which they are made aware.

The prognosis seems to be clear. Fair Housing Act regulations will likely continue to be part of the latest Scottsdale real estate news. The government, it appears, will add more layers to the Fair Housing Act in an effort to ensure those protected under the Act will not be subject to discrimination. While it’s a noble, admirable end – nobody should be a party to discrimination – the means to that end remain bureaucratic, arbitrary and borderline overkill.

As long as the home ownership rates continue to be as high as they are, more people will be forced to rent – including a large number of people protected under the Fair Housing Act. Those people include substantial numbers of minorities as well as non-English speaking tenants who’ve migrated into the United States.

The latest Scottsdale real estate news is that we can expect Fair Housing Act regulations to get broader to encompass more aspects of rental real estate and housing.

See more articles pertaining to the latest Scottsdale real estate news in the section of articles on Scottsdale Real Estate News just below Scottsdale Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there as well.

Most real estate on the market is comprised of homes listed by real estate professionals. In addition, some properties may be available for sale directly by the owner. FSBO is the industry acronym for “For Sale By Owner.” One of the common misconceptions with Scottsdale FSBO properties – or FSBOs – is the myth that because the sale doesn’t involve a real estate agent it will somehow be simpler. This is rarely the case. Let’s examine a few key points to keep in mind if you’re in the market for Scottsdale  real estate and come across a home that is advertised as a Scottsdale FSBO.

Most Scottsdale FSBO sellers will still work with your agent.

Typically, savvy home sellers are aware that most buyers they encounter have a close relationship with a buyer’s agent. As such, they will usually make arrangements to ensure the buyer’s agent will be paid for their efforts. Dayton area real estate buyer’s agents are important participants in the home buying process. If you’re interested in taking a closer look at a Scottsdale FSBO, consider calling us to make the initial contact with the seller on your behalf.

A home is a home, regardless of whether it’s a FSBO or not.

Just because a Scottsdale FSBO is not listed with an agent doesn't mean that seller won't work with an agent.

Just because a home is listed for sale by the owner doesn’t mean it should be treated any differently than a home listed by a professional real estate firm. The biggest difference between the two is the greater likelihood that you’ll be meeting, talking and negotiating directly with the seller. So be prepared. Because a home sale is often an emotionally challenging experience for some sellers to go through, be ready for some hurdles – and try your best to take them in stride.

If you’re truly interested in a Scottsdale FSBO home, you’ll find a way to work around the drama. Remember, lean on your agent for assistance and expertise. In addition, if you find it necessary to view the home without the owner being there, just ask. While it’s always a little uncomfortable for owners to have prospective buyers “snoop around” by themselves or with their agent, if you’re selling your home as a FSBO it goes with the territory. Try to put yourself in their shoes and understand how you might feel if the roles were reversed. Then, use that to your advantage by assuring the seller that you simply want to take some extra time alone to envision your furniture and your belongings in what may end up being your home. Once the seller understands your insistence and reasoning, they will likely be more open to letting you have all the time you need – especially if it means the difference in making the sale.

The law is the law – and it applies to all homes equally.

Regardless of whether a home is being sold as a FSBO or not, real estate sales laws still apply. Sellers have an obligation to disclose existing issues about the home to the buyers. In addition, the seller could also be bound to have the home inspected and perform certain repairs. Unfortunately, many Scottsdale FSBO sellers are rookies when it comes to selling homes, and they simply aren’t aware of the laws or common industry practices. Again, rely on your agent – and your own instincts – to determine if a seller is shirking his responsibility or making it more difficult to inspect the home than it should be. It could be a tell-tale sign that the seller knows something about his home that he doesn’t want you or your agent to find out about. If that’s even remotely the situation, keep looking. Life is too short to deal with difficult people, and money is too valuable to take a risk on a home that may be trouble in the future.

Anticipate inflated asking prices.

If there’s one factor that tends to remain consistent when owners try to sell their homes directly, it’s overpricing. Not having a knowledgeable professional real estate agent to consult often means sellers price their homes unrealistically. They tend to dismiss the market comparables and any other recent sales data and erroneously assume their home is worth more than the others in the same neighborhood. You'll often hear rationalizations or justifications expressed by owners that go something like this:  "Our home is the nicest one in the neighborhood." While it's normal for any homeowner to have pride in their home and want to get top dollar when they sell, the cold hard truth is more like, "Your home is pretty much like all the others in the neighborhood – some are more attractive, some less."  It’s not necessarily greed that motivates them to inflate their asking price, it’s more a case of just not knowing the market – and the Scottsdale home selling process. Again, they’re rookies, and just like in the big leagues, rookies make mistakes.

If you really like the home, once again rely on your own agent to assist. By providing comparable sales information of similar homes in the neighborhood maybe your agent can convince the seller to see his price is too high. In addition, if the home has been appraised already – or if you can perhaps negotiate having an appraisal done – you can use that as a closer representation of the home’s value. If either of those ideas fail, keep looking. A stubborn owner isn’t worth the headache, and there are likely other homes on the market that are priced where they should be.

Just keep this in mind: A Scottsdale FSBO home is just a home, it just happens to be listed for sale by the homeowner. Discuss the home with your agent and get his or her thoughts and input. While the negotiation process may be a little different since the sellers are going solo, remember there are still certain obligations incumbent upon the sellers. Don’t be intimidated by the fact that the seller is listing the home directly – as mentioned above, that doesn’t necessarily mean he knows more about Scottsdale real estate than you – and he certainly doesn’t know the process as well as your professional agent.

See more articles pertaining to real estate in the section of articles on Scottsdale Real Estate just below Scottsdale Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there, too.

Scottsdale insurance costs aren't cheap. The average U.S. homeowner pays $952 for insurance on their home. While it’s not a budget-breaker, we all would like to pay less. Here are a few helpful strategies and tips that not only better protect your home from loss, but can help save you money, too.

First, it’s important to make sure you have the proper amount of coverage on your home. It’s vital to determine whether you’re currently paying too much or not enough. Scottsdale insurance costs experts recommend working with your insurance agent to calculate the estimated cost of rebuilding your home should a disaster occur. Keep in mind the replacement value of your home will likely be a great deal higher than the market value. Why? Because if you have to completely rebuild your home, it will probably be more expensive than what you paid for it. In addition, if you have a mortgage, your lender will usually only require coverage in an amount equal to what you paid for the home. In actuality, the mortgage holder really only cares about sufficient coverage to pay off the loan amount in the event of a total loss resulting from a fire or natural disaster.

Your Scottsdale insurance costs can get away from you if you're not paying attention to details.

Your insurance agent can assist you with ideas about upgrades and loss prevention steps you can take to lower your Scottsdale insurance costs – without running the risk of being underinsured. We’ve identified ten items that could reduce your homeowners insurance premiums.

Choose a higher deductible.

If you’re comfortable with paying for smaller claims out of your pocket, you definitely need to increase your deductible. Since most homeowners plan to use their insurance coverage for major perils, your deductible should be at least $1,000. Insurance experts say the more you’re able to pay from your cash reserves or savings, the more you’re able to save. Homeowners with $5,000 or even $10,000 deductibles can save even more – if they are capable of covering the costs.

Consider bundling your policies.

Insurance companies that offer policies covering home, auto or life often provide a discount for bundling them together under the same company. Experts suggest shopping each of the policies separately and comparing the costs to what bundling them would be. If the savings warrants, it makes sense to deal with one reputable, highly-rated insurance company.

Don’t sweat the small claims.

Avoid making small claims if possible. Should you incur damage to your home that you can handle out of pocket without filing a claim with your insurance company, do it. Like most insurance, the more claims you make (not just the size of each claim) the greater the likelihood your premiums will increase. In addition, before you think you’ll just change insurance carriers, experts point out many insurance companies are members of a larger database with information on customer claims. So, just changing carriers won’t necessarily mean you’ll start over with a new company – your premium may still be higher.

Opt for paperless billing.

Insurance companies – like many other business who receive monthly payments – always seek their own ways to cut costs. Encouraging customers to choose paperless billing has been one way insurers can do this. In turn, by passing on some of the cost savings to their customers, paperless billing can offer you a small discount on your Scottsdale insurance costs.

Pay premiums annually instead of monthly.

Most insurance companies include a small processing fee for premium payments paid monthly. However, some companies offer cost savings if you elect to pay your premium annually, or even semi-annually. Depending on how much the processing fees are, you could save up to $50 or more.

Install a central alarm system.

If you install a central alarm system – one that’s monitored by a home security company – you could qualify for a discount. Insurance companies reward their customers who perform proactive measures to limit or prevent damages that could potentially occur to their insured premises. An alarm system notifying first responders like the fire department or police department usually minimizes losses to both the homeowner and the insurance company.

If your home is older, update it.

Older homes, of course, likely have outdated electrical and plumbing systems. Such systems can often be responsible for damage – and resulting losses – for the homeowner and the insurance company. By replacing the electrical and plumbing systems you can save money on your Scottsdale insurance costs by minimizing the risk older systems pose.

Professionally install storm shutters and doors.

Notice we used the word, “professionally.” If your home is located in a hurricane-prone area, having professionally installed protective storm shutters and storm doors can save money on your insurance premium. Check with your carrier ahead of time and find out what they will require for a premium discount. Most companies will want receipts for the work performed or other certification that the work was completed by a professional installation company. Having specially designed storm shutters and doors may help save Scottsdale insurance costs.

Install an automatic generator.

During a power outage – especially in some parts of the country – water pipes can freeze quickly, creating considerable damage in the event of breakage. If you have an automatic generator wired directly to your home’s electrical system you can avert such a disaster. In return, most insurance providers will give you a money-saving discount for being prepared – and potentially eliminating damages or loss.

Exercise customer loyalty.

One of the hallmarks of good customer service is rewarding customers for their continued brand loyalty. Insurance companies do the same thing. For example, one nationally recognized insurance company will lower a customer’s deductible by $50 for every year the customer has had the policy – without increasing the premium. It’s a simple, but effective way of saying “thanks” for being a loyal customer. The net effect, of course, is the customer is saving money by not having to pay for the lower deductible. It's just another way you can save on Scottsdale insurance costs.

You can find more articles pertaining to Scottsdale insurance in the Scottsdale Insurance section of our site below Scottsdale Real Estate Categories in the column to your right.

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The Scottsdale economic market has been battling the notion for some time now that the U.S. is headed for another housing bubble. A repeat of the recession and housing crisis from less than a decade ago is unlikely at best. Yet, there are those that have warned of another housing meltdown like the one that occurred back in 2008. Before you buy into the double-talk, let’s examine a few important comparisons to then and now – and you can draw your own conclusions as to where housing is headed – especially if you’re a real estate investor.

First, it should be noted that individual, select real estate markets certainly aren’t immune to the bubble phenomenon. Each micro-market, as it were, stands somewhat on its own. However, there are few signs on a national level that are serious enough to adversely affect the entire housing industry.

Subprime Mortgages

One of the key ingredients in the housing meltdown recipe back in 2008 was the abundant availability of mortgage money – loaned to just about anybody that wanted some. Experts in the Scottsdale economic market say for another housing collapse to occur, the entire housing market would have to be comprised of these ill-advised – and ill-fated – mortgage loans. While that possibility could certainly arise at some future date “down the road,” today it doesn’t exist. Let’s look at a “then and now” comparison.

Then:  The original loan volume of all subprime loans in 2005 was estimated at nearly $625 billion. Subprime loans are called that because the borrowers have low credit scores or other qualification issues, but were granted the mortgage financing anyway – amplifying their credit risk to the lending institutions.

Now:  There was approximately $56 billion in new subprime loan originations in 2015 – just ten short years later. That’s a reduction of more than 90% in the volume of subprime lending. In 2005, subprime loans accounted for over 20% of the entire mortgage market. Today, they comprise roughly 5%.

New Home Craze

Looking at the Scottsdale economic market.

During the time preceding the housing crisis, the rate of homeownership rose dramatically, fueled in part by easy credit and subprime mortgage lending. Most people weren’t renting, as buying was easier, cheaper and made better long-term financial sense. As a result, housing production reached a peak as supply struggle to keep up with home demand. Here’s another “then and now.”

Then: Sales of new single-family homes reached nearly 1.28 million in 2005. According to the U.S. Census Bureau that’s the highest level in the more than 52-year history that particular statistic has been tracked. A great deal of the growth in sales was the result of investors and other real estate speculators taking advantage of, once again, readily available and easy-to-get credit.

Now:  The number of new single-family homes sold in 2015 was 500,000. That represented a 61% decrease from the highest level. In addition, it was 30% less than the previous 51-year average of Census Bureau data. To further put the number in perspective, there were only 490,000 new home sales way back in 1968! By the way, the American population increased during that 47-year period by more than 120 million people.

After the housing crash, the following occurred:  There was a market surplus of single-family properties, and once-plentiful mortgage availability changed drastically. The result was a severe drop in buyer demand. Naturally, real estate investors in the Scottsdale economic market exhibited the same lackluster interest.

Local Bubbles

Some real estate markets, including the Scottsdale economic market, rebounded well following the recession and housing crisis. Economists point to natural demand created by employment and population growth. Other real estate markets fared even better – at least until the bubble burst. One case in point is the phenomenon that occurred few years ago in the downtown Miami condominium market. Investor demand – primarily from Latin America – caused a spike in condo prices and growth in construction. Experts say the supply of condos in downtown Miami increased by 8,000 units. With a stronger U.S. dollar forcing less investor interest, the last year or so has seen a glut of condos available for sale – experts say roughly 3,500 units – representing nearly 2.5 years of inventory. Sluggish sales created by the oversupply has caused sale prices to fall 6% during the spring and summer of this year.

Higher Interest Rates

While interest rate increases are still part of the bubble talk double-talk in the Scottsdale economic market, so far the Federal Reserve has only slightly increased rates – by less than .25%. These economic facts remain:  The economy is relatively soft as a result of slower-than-expected GDP growth, low personal savings rates, low homeownership rates and only a slightly improved jobs market. And while raising interest rates could stifle or stagnate what growth the economy has enjoyed, it's pretty safe to assume, the Fed will raise rates at some point in the not-too-distant future.

How will rising rates affect you? As an investor, it can affect both your homeownership and your rental property portfolio. While an increase in the Fed funds rate doesn’t immediately equate to a comparable increase in mortgage rates, fewer people will buy or borrow. For landlords, an interest rate increase may actually be a good thing since it would likely drive more potential tenants to the rental market, keeping them on the home buying sidelines a little while longer.

Real estate investors should be aware of the downsides of a rising interest rate market. If your properties are mortgaged – especially with a short-term loan or adjustable rate mortgage – consider refinancing or paying off the loan. Investors should be cautious of what exit strategies they employ in a rising rate environment. Should you sell to another investor who may need financing, you may need to adjust your asking price. Simply put, the reason you’re selling is that you may not be able to make the numbers as attractive as they once were – and the new investor may feel the same way. If at all possible, investors selling properties during a rising rate market should find a cash buyer.

You can find more articles pertaining to the Scottsdale economic market in the "Economy" section of articles just below Scottsdale Real Estate Categories in the column to your right.

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