October 25, 2022

Real Estate prices have dropped about 10% since the market’s peak early this year, caused mainly by interest rate increases. Most people feel interest rates will eventually fall in the next 6-24 months. So let’s look at what we are paying for now differently.

A house selling for $900,000.00 at the market’s peak has likely dropped to about $810,000.00. Interest rates were at 4.00% ish at that time, and today we are at 7% ish!
At $900K PP with 10% down and a 4% interest rate, we would have a payment of about $5060.00 per month, including Taxes and Insurance.
At $810K PP with 10% down and a 7% interest rate, we would have a payment of about $5820.00 per month, including Taxes and Insurance.

So the cost is about $760.00 more per month, which seems like a lot, but you spent $90,000.00 less on the property. If you divide $90,000 by the $760.00 you are paying, it will take about 118 months to break even. So imagine in 24 months when rates drop to 5%, and you refinance and drop your payment.
Your refinance payment will be about $4925.00 per month, which is lower than the $5060.00 you would have paid earlier this year with the higher prices. If we get back down to 4%, the payment will be about $4500.00.

Yes, everything is on sale today except for the interest rates, and when rates do drop, property values won’t lag too far behind, so get on it!

Rates had their best day in a long time today! The last time we had a day like this, we followed it up with three awful days to make up for our gains! Let's hope this is a new trend, and we are heading back to 2.5% tomorrow! Baby steps! LOL!

• 30-year Government Loans (FHA / VA) is in the 6’s.
• Conventional Loans up to $715,000.00 - 6’s and 7’s
• High Balance Loans $715,001.00-$ 1,072,500.00 are in the 6’s and 7's
• Jumbo loans above $1,072,500 are in the 6’s and 7’s
• 5/1, 7/1, 10/1 Arms are in the 5’s and 6’s
• Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score.
• Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the high 7’s - low 8’s.
• 0 down loans are in the high 7’s to low 8’s- 620 credit score min right now! Mid 6’s, for the most part, up to $735,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 7.49% with limited fees – But they get you where you need to go!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I will be around all week if you have any questions or if someone interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!