Randy Mack | Realtor | 707.696.6272

    Heidi Faulkner | Realtor | 707.480.4098

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Adjustable-rate Mortgage

An adjustable-rate mortgage (ARM) is a mortgage loan with the interest rate on the note periodically adjusted based on an index that reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender’s standard variable rate/base rate. There may be a direct and legally defined link to the underlying index, but where the lender offers no specific link to the underlying market or index, the rate can be changed at the lender’s discretion. The term “variable-rate mortgage” is most common outside the United States, whilst “adjustable-rate mortgage” is most common in the United States and implies a mortgage regulated by the Federal government, with caps on charges. In many countries, adjustable-rate mortgages are the norm, and in such places, may simply be referred to as mortgages. (“Adjustable-rate mortgage,” n.d.)

“A 5/1 adjustable-rate mortgage has an average rate of 5.03%, an uptick of 13 basis points from seven days ago. For the first five years, you’ll typically get a lower interest rate with a 5/1 ARM compared to a 30-year fixed mortgage. However, you may end up paying more after that time, depending on the terms of your loan and how the rate adjusts with the market rate. If you plan to sell or refinance your house before the rate changes, an ARM may make sense for you. If not, shifts in the market may significantly increase your interest rate.” Justin Jaffe, cnet.com

To know if an ARM is a right fit for you, here are its pros and cons:

Photo from Slide 7 © Rosalinda Parks | Slideplayer.com

Adjustable-rate mortgages are risky, but as interest rates rise, more homebuyers are starting to consider them. ARMs have lower initial interest rates than 30-year fixed-rate mortgages, but the rate will change after a set period. Borrowers must then pay the fixed rate when their lock period expires, which can be risky if interest rates are rising at the time.

If you would like to know whether the ARMs or Fixed Mortgage is for you, Heidi and I will be there for you to give you the knowledge to have an informed decision—with our experience, you can count on us. Call us!

Posted in: Real Estate Trends + Stats Tagged: #artisansothebys, #homeownership, #mack-faulknerrealestate, #mackandfaulkner, #mortgage, #realestate, #realestateagent, #realtor, #sonomacountyrealestate

Sebastopol Borrowers See Slight Fall in Mortgage Interest Rates

It was fairly clear that the table had been set for the last Federal Reserve meeting to result in a minimal rise in mortgage interest rates. Their Fed Funds rate directly influences the mortgage interest rates that banks observe. Since Sebastopol real estate activity can be spurred or dampened by the monthly payment amounts Sebastopol mortgage lenders offer applicants, this national story has meaningful local repercussions.

It wound up as a non-event that nonetheless spawned action—albeit in a minor way. In May, Chair Yellen had said that a rate increase would be “appropriate” over the summer months. In the lead-up to last month’s meeting, other Fed governors had strongly implied that it was now time for a slight Fed Funds bump.

Still, most commentators kept their prognostications vague; they had been vociferously anticipating a move for many cycles, only to hear serial postponements from the Fed. In addition to having been burnt before by Fed head fakes, there was also another reason why a no-go might happen this time around. Regardless of what the jawboning had been, economic and employment growth was still stuck in first gear—and a rate hike could retard improvement.

The commentators weren’t wrong to hold fire. Once again, the Fed did nothing (except make even more noise about an interest rate hike…later).

Yet, even so, the market forces that nudge mortgage interest rates one way or the other did seem to react. After the non-announcement, rates barely budged at first—but then continued steadily lower (the lowest in weeks, in fact). By week’s end, the Mortgage News Daily announced that the string of moves had brought mortgage interest rates into a “post-Brexit range”—similar to the conditions “that sent rates plunging toward all-time lows.”

The reasons last month were less than certain, although frustration with the Fed’s lack of coherence was fairly unanimous. CNBC interviewed big time investment manager Bill Gross, who said that investors were left “very confused” by the meeting’s outcome. He pointed to the likely rate raise that Yellen had emphasized at last month’s Jackson Hole speech, as well as to Fed Vice Chair Stan Fischer’s earlier assurance that there would be two hikes this year.

All this left Sebastopol mortgage interest rate watchers to make their own assessments about what to expect for future conditions—most importantly, whether current favorable low-interest rates could be counted on for long. There had been at least one indicator that optimists could welcome. Almost unnoticed was a footnote to the Fed’s announcement. Back in June, the Fed had predicted the lending rate to end 2016 at .9 percent. It now said the likely number would be .6%. That would result in Sebastopol mortgage interest rates still comfortably in the historically low range—hardly a flashing red light for would-be borrowers.

Wherever the Fed heads eventually, it’s indisputable that right now Sebastopol mortgage interest rates remain fetchingly low—creating rare opportunities for buyers and sellers both. Why not give us a call to explore how you can take advantage today?

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Posted in: Real Estate Trends + Stats Tagged: #interestrates, #mortgage, #realestatemarket, #Sebastopolrealestate

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Contact Information

Randy Mack and Heidi Faulkner
Artisan Sotheby's International Realty
6984 McKinley Street
Sebastopol CA 95472
(707) 696-6272
(707) 480-4098
Fax: (707) 824-0587
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About Us

We are proud to have aligned ourselves with Artisan Sotheby’s International Realty an inspirational brand based on heritage, tradition and expertise. We are setting new standards by refining the art of residential brokerage with a practiced eye of identifying the unique value of a property. We offer a deep commitment to excellent service and have a passion for unparalleled quality. Unique homes require skillful marketing through our local expertise and Sotheby’s International Realty interconnected global network of offices that are dedicated to the extraordinary.

Testimonials

I wish to express my satisfaction and confidence in your ability to find an ideal home for anyone that I would refer to you. My own experience in purchasing and selling a home with you allowed me to witness the fact that you are truly an expert in your field, handling all aspects of residential real estate transactions. From the beginning, your market analysis to the final stages of negotiations, your calm manner and clear explanation kept me knowing I was in the best of hands.

Mr. Mitchler
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Contact Us

Randy Mack - Realtor CA BRE#01252462
randy@mack-faulkner.com

(707) 696-6272
6984 McKinley Street
Sebastopol, CA 95472



Heidi Faulkner - Realtor CA BRE#01227446
Heidi@mack-faulkner.com

(707) 480-4098
6984 McKinley Street
Sebastopol, CA 95472



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© MMVI Sotheby’s International Realty Affiliates, Inc. All Rights Reserved. Sotheby’s International Realty® is a licensed trademark to Sotheby’s International Realty Affiliates, LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each office is independently owned and operated, except offices owned and operated by NRT Incorporated. All information herein is deemed reliable but not guaranteed.
 

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