Stay Healthy & Safe!!!
The Saga Continues……
Looking more and more apparent that the COVID-19 issue is not going away anytime soon… With a great number of people choosing not to use masks and proper social distancing, this insidious virus will just not go away on its own… Even on November 3rd as many people like to think!! We have all seen the data and numerous statements made from the professional medical community for everyone to “mask up”., but we can always lead the proverbial horse to water, but you can’t make them drink…Let’s all please do our share!!
On the mortgage front, RATES ARE AT HISTORIC LOWS!!!! Almost all rates will be with a 2% as the first digit for conventional home loans up to $510K—up to $765K slightly higher. Please contact us to review your current mortgage program and see if we can lower the rate or shorten the amortization period to take advantage of the interest rate environment. Even if one is super strong financially, this makes good economic sense to refinance.
The real estate market is surprisingly robust with sales occurring at all price points. Multifamily underwriting is more stringent, but still available for strong borrower’s and excellent properties. Financing is available for B and C apartment projects, but naturally the rate is higher. Please make sure to take advantage of the low mortgage rates for any 2-4 unit investment properties. 30 year fixed rates in the 3%’s are a gift!!
Commercial real estate is a different story. Credit is available for the “right” transaction, but at reduced loan to values and microscopic underwriting… Everyone is aware of the complex retail issues.
As always, we are available to discuss your personal or client financing needs. Have a happy and safe, healthy July and look forward to connecting soon!! We welcome your contact.
Gloria Shulman and Curtis Cohen and all of us at Centek
by: Jacob “Coby” Cohen
As more and more Millennials graduate from college and graduate school and embark on their life’s path, a common question arises should I rent, or should I purchase a house. There are many misconceptions about home ownership and qualifying for a mortgage. Perhaps the biggest and widely missed understood concept is having to save 20% for a down payment. This, however, is not the case as there are many loan products available in the market place that only requires a 3%, 5% or 10% down payment. In many metropolitan areas, the monthly mortgage payment can be less expensive than a monthly rent payment. This element doesn’t even take into account the tax benefits of mortgage interests and property tax deductibility “even with the new Tax Cuts and Jobs Act of 2017”. Furtherer more debt to income ratio for loan qualifying has relaxed, with this ratio going as high as 50% of one’s income and still being able to qualify for a mortgage. However, one must carefully analyze their particular situation in deciding between renting vs. owning. There are many important factors to consider including but not limited to job security, the location of the property to both job and family and school districts in the neighborhood for a future family. However, most importantly one has to understand the associated additional costs of homeownership. There is always going to be some kind of repair and general maintenance to be performed which adds additional costs to home ownership vs. picking up a phone and explaining to the landlord that something is broken and needs to be replaced or fixed. These are the type of questions that need serious discussion and consideration when weighing the benefits of homeownership. An additional positive of homeownership is that of capital appreciation over time even with a small annual percentage gain the appreciation of the home is a significant benefit of home ownership.
Even with all of the above reasons for home ownership, renting still may be better suited for many Millennials this could be a result of many factors. Perhaps number one on the list is that many millennials have student loan obligations and they are nervous about having to repay these loans while at the same time having to make mortgage payments. According to CNBC, the Millennials ages 25 to 34 have an average of $42,000 in student loan debt each. Another factor why renting appeals to more people of the Millennial age group is that of location with home prices at near record levels across the country especially in urban areas where most Millennials desire to live, the costs of homeownership merely are too expensive. This forces Millennials to look at secondary or tertiary locations or cities which are outside the circle of their work, family, and friends.
This, in turn, underscores the strength of the multifamily apartment marketplace. Investors and developers have had a keen understanding of what the millennial renter is seeking in their living situation. Amenities such as; swimming pools, gyms, shared common space and other on-site services have been a driving force in capturing the millennial market into renting in prime areas vs. the path of home ownership in outlying areas. The appeal of not having the additional financial stress of purchasing a property coupled with the ability for millennials to share apartments and split costs is a significant factor in the decision-making process. Having one or two roommates in an apartment is much easier than having to purchase a property with another party. The commitment level on renting vs. owning has a much lower threshold. The co-ownership route is a road lined with numerals deep sinkholes.
Ultimately, the factors that determine one’s perceptions about job stability and the health of the real estate market are the two most significant factors in contemplating the rent vs. own question. Each person has their own personal philosophy and level of financial stress they are willing to undertake to make a decision. It would be wise for millennials and any prospective buyer to have discussions with an advisor or trusted knowledgeable friend in discussing their housing decision