31 Dec Happy New Year!
“Rates will rise with absolute certainty, and it will happen soon. A small correction will not necessarily be a bad thing.”
-James Gorman, CEO Morgan Stanley
HAPPY NEW YEAR!!!! 2021 is in the rear view mirror and there are so many wonderful opportunities ahead for 2022. For starters I don’t say things like “our new normal” B/C normal is always shifting, pandemic or not, but I think we are more aware of the effect of change. 2020 brought a sense of loss; loss of jobs, relationships, political climate and lives all heightened and impacted by COVID19. 2021 brought a sense of urgency to be with loved ones again, mend relationships, create a more defined career path and attention to our personal finances. 2022 will be a year of thriving as many of us are more determined to see the things that are important to us come to reality. I open this newsletter with a quote by James Gorman because he is doing the public a huge favor by making us aware that rising interest rates should be expected but many do not know how to take advantage of the benefit of now.
WHAT DO RISING INTEREST RATES MEAN FOR HOMEOWNERS?
- If your current interest rate is above 3.5% you should consider a refinance NOW
- If you have HELOC with a balance of $200,000 or greater you should consider consolidating with a refinance NOW B/C a higher rate could mean a much higher payment in the future
- If you intend on using a cash out refinance for future home improvements or padding your savings do it NOW and be sure you are disciplined with reserving the funds for their future intended purpose.
- If you expect to acquire investment property do it NOW B/C rising rates will affect the property’s operating income and the cash in your pocket
- If you are thinking of selling DO NOT do so without having a full financial evaluation of the property to determine if selling or holding will benefit you best. ***Not the same as a Comparative Market Analysis or CMA***
WHAT DOES RISING INTEREST RATES MEAN FOR BUYERS?
- BUY NOW!
- Evaluate all loan options with a reputable lender. HINT Rocket Mortgage is great for a refinance but terrible for a purchase. I know many people choose to go this route B/C their marketing is phenomenal but when compared to my lender who actually is a loan officer and not a licensed customer service agent, his ability to access multiple products and explain the pros and cons to the borrower coupled with the cost of the actual loan being significantly less is highly beneficial.
- Work with ME and if you don’t work with me be sure your realtor has a proven strategy to help you buy your home and they aren’t just dragging you out to tour the latest listings that every buyer is looking at as well expecting you to pay X% above the asking price right out the gate. I have closed 3 sales in 2021 below the listed price & I have put 5 buyers in homes that weren’t even on the market. I do my best to save my buyers MONEY!
We are being given a gift of such public and advance notice thanks to 24 hour news reporting, social media, and the internet. Previously, only people who read the newspaper or watched nightly news were aware of big swings in the financial world. Today, you have to be hiding under a rock buried in the sand deep below the ocean floor to not know that mortgage interest rates are rising along with all types of personal lending. This is where the benefit of homeownership comes in. Homeownership is supposed to create stability and opportunity for financial growth but it really can do way more than that. Real Estate can build substantial wealth.
WHAT EXACTLY AM I TALKING ABOUT? My 30 year old married couple will net approx $15,000 per year renting out their condo and IF they put those proceeds into a traditional IRA they will have close to $2MIL at retirement. If they pay off the property in 15 years they will net approx $30,000 per year from the property which could be used for college tuition, stock market investments, additional real estate acquisitions etc. The possibilities are nearly endless and we haven’t even discussed how much the property could appreciate over time and the potential benefits of tax strategies that could help them keep more of their paycheck. DO NOT GET ME STARTED; THIS IS MY JAM! This is just one way to have your real estate decisions support your current and future financial goals. I counsel homeowners often on how to make money with their real estate. Wealth doesn’t just happen. It takes discipline, strategy and proper partnerships to grow your dollars and diversify your overall portfolio. True, I won’t earn as much in commission by encouraging homeowners to not sell their primary residence initially BUT I am helping people make wealth driven decisions which will mean more real estate purchases and referrals in the future for me. The long game strategy in real estate allows for lower risk and steady growth. The short game is far more risky and works well for those who have no issue with losing it all either because they have the financial portfolio to absorb loss or B/C they find joy in rebuilding. I once had a boss who told me she works better when she is severely in debt. WHAAAT…She likes the DRAMA!
SOOO….. 2022 is the year where smart real estate decisions should be made. Call me and let’s get started on your wealth building plan.