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December 13th, 2010 3:27 PM by David W. Welch
I have always said that time is the enemy in a real estate transaction, and that is still true today. The problem is, nobody seems to care. I think having banks plodding processes involved in so many of our transactions has taken all the urgency out. Why do we need a sense of urgency, and why do I claim time is the enemy? In the last 90 days there were over 11,000 guideline changes in residential financing. Things change over time that we have no control over, and many times those changes can kill a transaction. One financing change earlier this year not only cancelled that sale, but kept that buyer from buying anything for the near future. She was perfectly qualified 30 days earlier. I am not saying that she did not have a sense of urgency, but just pointing out the need for action.
In the last few weeks, interest rates have begun to rise. They are now approaching 5%. A $100,000 mortgage at 4% would have a principle and interest payment of $477.42. That same mortgage at 5% would be $536.82 or $59.40 more each month. That could be the difference in qualifying and not qualifying for a mortgage for many people. FHA changed their mortgage insurance recently greatly increasing the monthly portion of the mortgage insurance premium. On that same $100,000 mortgage it could cost the buyer almost $30 more per month. If the economy is actually beginning to pick up, look for interest rates to continue to climb. If that begins to occur, I expect short sales will begin to look a lot less attractive with a three to six month wait for bank approval. The few thousand dollars saved on the short sale could be wiped out by an increase in the mortgage rates. Even bank owned properties may begin to look less attractive as some have had issues closing because of title delays.
Let's get back that sense of urgency it is not only good for business, but it's good for our customers.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone