Mortgage Rates Tick Down as Markets Digest Incoming Data

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Following June’s jobs report, which showed a cooling labor market, the 10-year Treasury yield decreased this week and mortgage rates followed suit. There is also more inventory on the market, including a fair number of listings with price cuts, which is an encouraging sign for prospective buyers.

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Home Value Update: June 2024

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U.S. existing-home sales declined for the third consecutive month, as higher mortgage rates and rising sales prices hindered market activity during what has traditionally been one of the busiest months of the year. According to the National Association of REALTORS® (NAR), sales of previously owned homes dipped 0.7% month-over-month and 2.8% year-over-year, to a seasonally adjusted annual rate of 4.11 million units.

Nationally, total housing inventory grew 6.7% month-over-month to 1.28 million units heading into June, for a 3.7 months’ supply at the current sales pace, according to NAR. However, the increase in supply has yet to temper home prices, which have continued to rise nationwide. At last measure, the median existing-home price climbed to $419,300, a 5.8% increase from the same period last year and a record high for the month.

North San Diego County Home Stats:

  • Closed Sales decreased 7.8 percent for Detached homes and 13.6 percent for Attached homes.
  • Pending Sales decreased 0.3 percent for Detached homes and 4.4 percent for Attached homes.
  • The Median Sales Price was up 13.9 percent to $1,249,000 for Detached homes and 7.7 percent to $765,000 for Attached homes.
  • Days on Market increased 22.2 percent for Detached homes and 43.8 percent for Attached homes.
  • Supply increased 8.7 percent for Detached homes and 35.3 percent for Attached homes.

The numbers by city:
These #’s are for Single Family Detached homes and do not include Attached Homes, aka condos and townhomes.
DOM = Days on Market
% List Price = Percentage of the original list price that the home sold for.

Carlsbad

MonthAvg
Sold $		ChgDOMChgSold HomesChgActive ListingsChg% List PriceYoY Chg
06/24$1,999,000-1%18-5%179-5%11717%100.0%4.1%
05/24$2,024,000-1%19-5%18911%10018%100.4%6.5%
04/24$2,039,0004%20-17%17120%858%100.5%13.7%
03/24$1,960,000-3%24-4%14221%795%100.1%18.3%
02/24$2,024,0001%25-14%11717%75-12%99.4%27.0%
01/24$2,005,000-0%2912%100-2%85-6%97.7%25.5%
12/23$2,013,00012%26-4%102-20%90-10%96.9%24.0%
11/23$1,795,0001%2723%128-15%1004%97.2%13.1%
10/23$1,778,0001%2216%151-19%96-5%98.3%10.2%
09/23$1,759,000-3%1927%186-3%101-3%98.5%3.3%
08/23$1,815,000-2%157%1917%1041%99.6%0.7%
07/23$1,861,000-3%140%17915%1036%100.0%2.2%
06/23$1,920,0001%14-26%156-3%9723%100.3%3.0%
05/23$1,900,0006%19-17%16115%7922%100.0%2.4%
04/23$1,793,0008%23-26%1409%655%98.4%-0.8%
03/23$1,657,0004%310%12835%62-2%96.9%0.8%
02/23$1,594,000-0%3111%95-17%63-19%95.5%5.1%
01/23$1,598,000-2%280%114-10%78-21%95.9%4.1%
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Title Insurance: 2 Types

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Your closing costs might include two types of title insurance policies, but do you know how these policies differ?

Loan Policy

Your lender requires title insurance when you secure a mortgage. A loan or lender’s policy protects the bank or lending institution for as long as they maintain an interest in your property—typically until your mortgage is paid off. If you refinance your loan, you’ll need to purchase a new policy to cover the new loan.

Owner’s Policy

An owner’s policy of title insurance helps protect your rights as the homeowner for as long as you or your heirs own the property. In some areas, it’s standard for the seller to purchase the owner’s policy for the buyer, whereas in other areas the owner’s policy is a recommended buyer purchase.

So what exactly is “Title Insurance?”

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So what exactly is “title insurance?” Well, when a property is financed, bought or sold, a record of that transaction is generally filed in public archives. Likewise, records of other events that may affect the ownership of a property, like liens or levies, are also archived.

When you buy title insurance for your property, a title company searches these records to find – and remedy, if possible – several types of ownership issues. First, the title company searches public records to determine the property’s ownership status. After this search, the underwriter will determine the insurability of the title.

Even the most skilled title professionals may not find all problems associated with a property, though. Some risks, such as title issues due to filing errors, forgeries, or undisclosed heirs, are difficult to identify. So after the title company finishes its searching, it also provides a title insurance policy that will help protect you from a variety of issues that might be uncovered later.

What is mortgage insurance?

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A: Private mortgage insurance (PMI) policy held by your lender which indemnifies them is an insurance against losses on their investment in your mortgage when you default.

PMI is not property insurance covering hazards to its improvements, a policy also required by the mortgage lender.

Typically, mortgages insured by PMI are covered for losses on amounts exceeding 67% of the property’s value at the time the mortgage is originated.

PMI is required as a condition for funding a mortgage when your down payment is less than 20% of the purchase price. Before your mortgage is funded, you will undergo an in-depth risk analysis based on the PMI insurer’s eligibility requirements.

The PMI investigation and documentation takes place after you submit a mortgage application. It is generally limited to verification of your representations on the application.

Your PMI premiums are typically paid through your monthly mortgage payments. However, some lenders and PMI insurers offer a lender-paid mortgage insurance (LPMI) program.

When offered by the PMI insurer, your lender pays the mortgage insurance premium and passes the cost on to you as a higher interest rate on your mortgage. However, LPMI cannot be cancelled, while borrower-paid PMI may be cancelled or automatically terminated.

LPMI only terminates upon a refinance or other total payoff of your mortgage.

Premium rates are set as a percentage of your mortgage balance and are calculated in the same manner as interest.

PMI coverage may be terminated when the equity in your property reaches 20% of its value at the time the mortgage was originated. Once the equity in your property reaches 22% of its value, PMI is automatically cancelled.

Federal Housing Administration (FHA)-insured mortgages are also available for homebuyers with little cash available for a down payment.

To qualify for an FHA-insured mortgage, you are required to make a minimum down payment of 3.5%.

When you obtain an FHA-insured mortgage, you pay a mortgage insurance premium (MIP) to the FHA. An upfront MIP is added to the principal amount financed in addition to the charge at the annual MIP rate, which is added to your monthly principal and interest payments, similar to PMI.

However, the MIP remains in place, paid monthly for the life of the FHA insured mortgage.

If you default on an FHA-insured mortgage, the FHA covers your lender against any loss on the balance of your mortgage. However, you remain personally liable to the FHA for any loss the FHA suffers as a result of your default.

Home Value Update: May 2024

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U.S. existing-home sales fell for the second month in a row, sliding 1.9% month-over-month and 1.9% year-over-year, according to the National Association of REALTORS® (NAR), with sales down in all four regions of the country.

Higher borrowing costs and accelerating home prices continue to weigh on demand, pushing some prospective buyers to the sidelines and causing market activity to slump ahead of summer.

  • Closed Sales increased 2.2 percent for Detached homes but decreased 0.7 percent for Attached homes.
  • Pending Sales increased 8.0 percent for Detached homes and 2.4 percent for Attached homes.
  • The Median Sales Price was up 14.3 percent to $1,200,000 for Detached homes and 20.4 percent to $825,000 for Attached homes.
  • Days on Market decreased 8.0 percent for Detached homes but increased 5.0 percent for Attached homes.
  • Supply increased 4.8 percent for Detached homes and 20.0 percent for Attached homes.

Home prices have continued to climb nationwide, despite an uptick in inventory this year. Nationally, the median existing-home price reached $407,600 as of last measure, a 5.7% increase from the same period last year and a record high for the month, according to NAR. Meanwhile, total inventory heading into May stood at 1.21 million units, a 9% increase month-over month and a 16.3% increase year-over-year, for a 3.5 month’s supply at the current sales pace.

The numbers by city:
These #’s are for Single Family Detached homes and do not include Attached Homes, aka condos and townhomes.
DOM = Days on Market
% List Price = Percentage of the original list price that the home sold for.

Carlsbad

MonthAvg
Sold $		ChgDOMChgSold HomesChgActive ListingsChg% List PriceYoY Chg
05/24$2,024,000-1%19-5%18911%10018%100.4%6.5%
04/24$2,039,0004%20-17%17120%858%100.5%13.7%
03/24$1,960,000-3%24-4%14221%795%100.1%18.3%
02/24$2,024,0001%25-14%11717%75-12%99.4%27.0%
01/24$2,005,000-0%2912%100-2%85-6%97.7%25.5%
12/23$2,013,00012%26-4%102-20%90-10%96.9%24.0%
11/23$1,795,0001%2723%128-15%1004%97.2%13.1%
10/23$1,778,0001%2216%151-19%96-5%98.3%10.2%
09/23$1,759,000-3%1927%186-3%101-3%98.5%3.3%
08/23$1,815,000-2%157%1917%1041%99.6%0.7%
07/23$1,861,000-3%140%17915%1036%100.0%2.2%
06/23$1,920,0001%14-26%156-3%9723%100.3%3.0%
05/23$1,900,0006%19-17%16115%7922%100.0%2.4%
04/23$1,793,0008%23-26%1409%655%98.4%-0.8%
03/23$1,657,0004%310%12835%62-2%96.9%0.8%
02/23$1,594,000-0%3111%95-17%63-19%95.5%5.1%
01/23$1,598,000-2%280%114-10%78-21%95.9%4.1%
12/22$1,623,0002%28-7%127-19%99-14%94.4%4.9%
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Your home sale could trigger capital gains taxes. Here’s how to calculate your bill

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  • More home sellers now owe capital gains taxes after selling their primary residence, but it is possible to reduce the bill.
  • There are no taxes on the first $250,000 of profit if you are single, or $500,000 for married couples filing jointly, assuming you meet IRS rules.
  • You can lower profits above those thresholds by adding to your home’s “basis,” or original purchase price, with closing costs and eligible improvements.

There are strict IRS rules to qualify for the $250,000 or $500,000 exemptions. Any profit above those limits is subject to capital gains taxes, levied at 0%, 15% or 20%, based on your earnings.

“It is important to track your cost basis of the home,” which is your original purchase price plus closing costs from the purchase, according to Thomas Scanlon, a certified financial planner at Raymond James in Manchester, Connecticut.

You can reduce your home sale profit by adding often-forgotten costs and fees to your basis, which minimizes your capital gains tax liability.

For example, you can start by tacking on fees and closing costs from the purchase and sale of the home, according to the IRS. These may include:

  • Title fees
  • Charges for utility installation
  • Legal and recording fees
  • Surveys
  • Transfer taxes
  • Title insurance
  • Balances owed by the seller

These could be small amounts individually but have a significant effect on the basis when tallied.

The average closing cost nationwide is $4,243, according to a report from Assurance, but fees vary widely. In the priciest state, New York, the average is $8,039, while California is a close second at $8,028.

“You also get credit for the expenses for the sale of the property,” added Scanlon, who is also a certified public accountant. That includes your real estate commissions and closing costs.

However, there are some fees and closing costs you cannot add to your basis, such as home insurance premiums or rent or utilities paid before your closing date, according to the IRS.

Similarly, loan charges such as points, mortgage insurance premiums, the cost to pull your credit report or appraisals required by your lender will not count.

Original Article

Why Be Pre-Approved For a Home Loan?

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Real estate experts tell first-time home buyers that it’s critical to apply for a loan before shopping for a home, and it’s true; this is an essential first step.

But do you know that it’s far better to be Pre-Approved for a loan than to be Pre-Qualified?

There are advantages to gaining Pre-Approved. When the lender hands a borrower a Pre-Approved letter, it means the borrower can:

Save Time by Looking at the Right Homes
When searching for homes you can set the parameters to more tightly encompass the selection of homes that you are qualified to buy. This way, you’ll save time by checking out homes you can actually afford to buy instead of falling in love with pie in the sky.

Spend More Time Examining the Right Homes
By decreasing the inventory of homes to those that fit your parameters, you can allot more time to thinking about all the little nuances each home has to offer. Lots of home buyers never move past the price point when sorting out their preferences, but now you can devote your energies to looking at the little things that matter to you most such as whether your SUV will pass through the overhead space in the garage or smash into the microbeam.

Gain Confidence & Avoid Disillusionment
Now when you find that perfect home, nobody can take it away from you by telling you that you do not qualify to buy it.

You can minimize anxiety and remove last-minute loan surprises that could disqualify you.
You’ll sleep better at night knowing that the home you selected is yours.

Increase Bargaining & Negotiating Power
In today’s market, sellers are increasingly demanding Pre-Approval letters from buyers and by having yours done up front you can get your offer in quickly.

Enjoy a Faster Closing Period
Because there is no window period while your loan application is processed, the lender can speed up the entire processing procedure. Appraisals can be ordered immediately. It’s possible to shorten a 30-day closing to two or three weeks, which comes in handy if a seller needs to quickly move and can’t decide which offer to accept. Yours will move to the front if you can accomplish the seller’s need to quickly close.

Because mortgage approval is generally the longest contingency to satisfy in a purchase contract, it is to your advantage to obtain a Pre-Approval letter as soon as you’re ready to begin your search. Lenders will render a decision based on your complete loan application, employment verification and data from all three credit reports.

Being pre-Approved is a pretty easy process and only takes 60 minutes or so of your time. I work with a lender who can complete a variety of loans, depending on your qualifications. Please call me for more info.

Help Me Find a Home

Home Value Update April 2024

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U.S. existing-home sales recently fell from a one-year high, dropping 4.3% month-over-month to a seasonally adjusted annual rate of 4.19 million, according to the National Association of REALTORS® (NAR), as higher interest rates and rising sales prices continue to keep some prospective buyers on the sidelines. Average 30-year mortgage rates have topped 7% in recent weeks, while the median existing-home sales price hit $393,500 as of last measure, a 4.8% increase from the previous month, according to NAR.

  • Closed Sales increased 12.8 percent for Detached homes and 1.5 percent for Attached homes.
  • Pending Sales increased 2.4 percent for Detached homes and 1.2 percent for Attached homes.
  • The Median Sales Price was up 21.2 percent to $1,260,000 for Detached homes and 5.0 percent to $737,500 for Attached homes.
  • Days on Market decreased 25.0 percent for Detached homes and 19.2 percent for Attached homes.
  • Supply increased 11.1 percent for Detached homes and 28.6 percent for Attached homes.

Warmer temperatures appear to have helped bring some sellers back to the market, providing additional options to home shoppers during the spring buying season. Total inventory was up 4.7% month-over-month and 14.4% year-over-year, for a 3.2 months’ supply at the current sales pace, according to NAR. Nevertheless, demand continues to outpace supply and properties are selling quickly, with the typical home spending 33 days on market nationwide, down from 38 days the month before.

The numbers by city:
These #’s are for Single Family Detached homes and do not include Attached Homes, aka condos and townhomes.
DOM = Days on Market
% List Price = Percentage of the original list price that the home sold for.

Carlsbad

MonthAvg
Sold $		ChgDOMChgSold HomesChgActive ListingsChg% List PriceYoY Chg
04/24$2,039,0004%20-17%17120%858%100.5%13.7%
03/24$1,960,000-3%24-4%14221%795%100.1%18.3%
02/24$2,024,0001%25-14%11717%75-12%99.4%27.0%
01/24$2,005,000-0%2912%100-2%85-6%97.7%25.5%
12/23$2,013,00012%26-4%102-20%90-10%96.9%24.0%
11/23$1,795,0001%2723%128-15%1004%97.2%13.1%
10/23$1,778,0001%2216%151-19%96-5%98.3%10.2%
09/23$1,759,000-3%1927%186-3%101-3%98.5%3.3%
08/23$1,815,000-2%157%1917%1041%99.6%0.7%
07/23$1,861,000-3%140%17915%1036%100.0%2.2%
06/23$1,920,0001%14-26%156-3%9723%100.3%3.0%
05/23$1,900,0006%19-17%16115%7922%100.0%2.4%
04/23$1,793,0008%23-26%1409%655%98.4%-0.8%
03/23$1,657,0004%310%12835%62-2%96.9%0.8%
02/23$1,594,000-0%3111%95-17%63-19%95.5%5.1%
01/23$1,598,000-2%280%114-10%78-21%95.9%4.1%
12/22$1,623,0002%28-7%127-19%99-14%94.4%4.9%
11/22$1,587,000-2%300%156-4%115-9%94.0%3.1%
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