Rising House Prices

. June 30, 2018.
money

Currently the housing market has a problem: There are too few homes for sale. Persistently low inventory means that there are a lot of frustrated would-be buyers out there spending weekends at Open Houses. It also has led to home prices continuing to rise at a more than 6 percent clip from a year ago.

Adding to the pressure for homebuyers is the fact that mortgage rates increased to a seven-year high of 4.8 percent in April, pushing the National Association of Realtor’s mortgage affordability index to its lowest level since the end of 2008. Even with prices and mortgage rates up, many still want in on the housing market because they are worried that increases will persist or because renting has become less affordable.

Ideas for savings

As interest rates rise, refinancing becomes less compelling. Refinancing activity has slowed down to 10-year lows, but there may be other ways for current homeowners to save a few bucks. For those who bought property with less than 20 percent down, now is a great time to see if you can eliminate your private mortgage insurance (PMI).

PMI acts as an extra layer of protection for the lender if you stop making payments on your loan. Many don’t focus on PMI after the closing because premiums are usually added to the mortgage payment.

To remove PMI, you need to demonstrate that you have at least 20 percent equity, that your mortgage balance is less than 80 percent of the original value of your home. “Original value” generally means either the contract sales price or the appraised value of your home at the time you bought it, whichever is lower. (If you have refinanced, the appraised value will be calculated as of the time you refinanced.) The equity in your home could have increased due to rising prices or due to additional payments you have made to reduce the principal balance of your mortgage to 80 percent, or a combination of both of those scenarios.

When the mortgage balance drops to 78 percent, the mortgage servicer is supposed to automatically eliminate PMI, but that does not happen as quickly as you might expect.

For my math-challenged pals, to calculate whether your loan balance has fallen below 80 percent of the original value, divide the current loan balance – the amount you still owe – by the original appraised value (most likely, that’s the same as the purchase price).

Jill Schlesinger, CFP, is an Emmy-nominated
CBS News Business Analyst covering the economy,
markets and investing.
See her blog, “Jill on Money” or check her website at
www.jillonmoney.com

(C) 2018 Tribune Content Agency, llc

Trending

He Never Saw It Coming: Looking Back at a Baseball Legend

Tony Conigliaro, known throughout baseball as Tony “C”, was an instant fan favorite and a legend in Boston. Tony “C” held a major league baseball record for hitting more home runs than any other teenager in the history of major league baseball, the second youngest and second quickest to reach 100 home runs.

Readers Choice 2018

There is perhaps no higher honor attainable in a community than to be considered and found exemplary by your peers and neighbors. Here are the businesses and leaders that you, our readers, found to be worthy of such a designation.

Parklike Perrysburg Retreat: Spacious With Classic Charm

Home feature of the month! Learn how you can feature your home and call 4199-244-9859.

Big City Taste: Manhattan’s Revitalizes Uptown Adams Street

Manhattan’s Pub and Cheer on Adams Street in Uptown opened in December, 2002 and recently celebrated its 15th anniversary. Toledo native, Zach Lahey, the restaurant’s owner and general manager explains, “For almost ten years, it was a major struggle to keep the doors open, to really find our place in the micro-neighborhood (Uptown) that we’re in.”