Real Estate Information Archive

Good Monday Morning!

National Real Estate economists are now changing their thoughts about the 2019 national housing market.  The following is an article that was recently published in "Realtor.com", that gives an updated prediction for the 2019 U.S. housing market.

Despite a real estate slowdown gripping the nation, this year's housing market is expected to be busier than realtor.com® economists originally predicted late last year. That means more home sales—and higher prices—are on the way.

The anticipated uptick in activity is due to lower mortgage rates, which make homes more affordable for buyers. The economic team expected rates to climb to 5.5% in 2019, but instead they have hovered around 4%. (They were 4.17% on 30-year, fixed-rate mortgages as of April 18, according to Freddie Mac data.) Economists say rates are now likely to rise a little to 4.5%, still well below what buyers were dreading.

However, it'll be nothing like the feeding frenzy of recent years.

"It's still going to be a lukewarm year for the housing market," says Chief Economist Danielle Hale of realtor.com. "We're going to see higher prices and slightly higher home sales than we expected. But home sales are still going to decline slightly as a result of the housing slowdown. There's a gap between what sellers are looking for and buyers are hoping to pay."

While a single percentage point difference may not seem that significant, it can add more than $100 to the monthly loan payment on a median-priced home of $300,000. (This assumes buyers put 20% down.) That can translate into tens of thousands of dollars over the life of a 30-year loan.

The downside for buyers—and upside for sellers—is that prices are expected to rise more than Hale's team originally forecast, going up 2.9% in 2019 instead of 2.2%. That's because the swelling ranks of buyers motivated by those lower mortgage rates will increase demand—and therefore prices.

Meanwhile, realtor.com's economists predict the number of home sales will almost hold steady, dipping just 0.3%. They originally believed the number of sales would fall by 2%.

The market has slowed down from previous years because sellers, seeing an end to the good days of high prices, rushed to put their homes on the market. But this happened at the same time that many buyers backed off because of those same high prices. The glut in supply led to lower price growth and fewer home sales.

But as always, local conditions will be the main factor for real estate in your market, Hale says.

"In some markets there’s still not enough housing available, so buyers are likely to find a competitive market," she says. "But in some markets prices are so high that buyers are choosing to be patient and sit on the sidelines."

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

3913 Royal Ave  

Price: $350,000    Beds: 3    Baths: 2.0    Sq Ft: 1572

New Construction that backs up to an expansive Park. Open Living, Dining, & Kitchen. Master bedroom with walk-in closet. Carpet in all bedrooms. Home has vaulted ceilings, granite counters, high end cabinets and wood floors. This home includes an in...View this property >> 

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Good Monday Morning!

If you have a home to sell this year, there is no doubt that right now is the perfect time to put it on the market for sale. Home sale conditions are extremely good in the Eugene and Springfield area and your chances of selling quickly and at top dollar are excellent.  The following is an article from US News that talks about why now is the perfect time to sell your home.

Spring is in the air and homebuyers are coming out of hibernation. With the holidays over and the weather warming up, it’s the time of year that's typically considered a hot period for the housing market.

If you’ve considered selling your home, here's why spring is a great time to move forward with those plans:

• Warmer weather makes buyers active.
• The market is in the right place.
• There are plenty of buyers.
• You can get a head start.

Spring is the undisputed champion of seasons for selling a home. Not only are flowers in bloom and the sky blue for some great marketing photos, but also people are chomping at the bit to start the closing process so they can move in and get settled before fall.

Homebuyers have a tendency to taper off in the winter, and not just in parts of the country that typically have frigid weather. A mixture of holiday obligations and kids in school lead to more homes coming off the market temporarily and buyers pressing pause on checking out new listings.

By the time spring hits, cabin fever has people anxious to start touring homes. Dina Gorrell, a real estate agent for Redfin focused on the northern Virginia area, says the first two weeks of April have been the busiest so far in 2019. "When the blossoms come out, everyone goes nuts for it," she says.

With work, school or family obligations at the end of summer, spring is the optimal time to take on house hunting and get moving on the purchase process. "We can see a clear indication that the market its turning back up," says Dario Cardile, vice president of growth at real estate brokerage Owners.com.

The Market Is in the Right Place

A combination of low interest rates and low single-family housing inventory means there are a lot of eager homebuyers forced to compete for what’s on the market.

After increasing interest rates to 2.5% in December 2018, the Federal Reserve has expressed plans to keep interest rates at the same level through 2021. While rising interest rates previously scared off unsure buyers, Cardile points out that the steady outlook for interest rates since December has encouraged more buyers to resume shopping for homes.

Mortgage News Daily reports the average interest rate for a 30-year, fixed-rate mortgage is 4.34% as of April 16, 2019. The rate is a decrease of 0.16% compared to the year prior, and Mortgage News Daily shows the average mortgage rate has steadily declined since November 2018.

While housing has largely been in a seller's market over the last few years – meaning the seller has an upper hand since there are more buyers than homes available – the natural real estate cycle of indicates that's easing. Depending on where you live, there may be more new houses under construction to help ease demand or fewer active buyers.

Still, a softer market doesn't mean you won't be able to sell your house or that it's worth less. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which measures price increases in single-family homes across the U.S., found home prices increased by 4.26% from January 2018 to January 2019 – and they have been steadily climbing since February 2012.

There Are Plenty of Buyers

Just a few years ago, millennials were brand-new to homebuying, but they've since become a staple demographic of the real estate market. With them, the real estate industry has evolved to better utilize technology and data to help home shoppers search for available homes. Now when a real estate agent lists a house on the local multiple listing service, it also gets picked up by consumer-facing portals like Zillow, realtor.com and Redfin to reach homebuyers directly.

Of course, this doesn't exclusively benefit millennial buyers. The National Association of Realtors’ 2018 Profile of Home Buyers and Sellers reports that first-time homebuyers made up 33% of the total share of homebuyers last year, with a median age of 32. The median age for all homebuyers, however, was 47, indicating that new home purchases certainly aren't limited to first-time buyers or millennials.

Additionally, the move-in ready expectation that accompanied the rise of the millennial homebuyer is now widely embraced. To make your home as marketable as possible to all potential buyers, you should update key rooms like the kitchen and master bathroom, which are known to get a lot of attention from homebuyers. Consider replacing major appliances or systems that have reached the end of their life, such as the water heater or roof, since being able to say they're brand-new can add value to the house. Selling your home "as-is" promises quite a bit more work than a first-time buyer is willing to take on.

You Can Get a Head Start

There’s still time to get your home on the market this spring to take advantage of the growing number of interested buyers, but successfully reaching potential buyers requires a bit more work than just an online listing, and it’s best to get started sooner rather than later. Gorrell recommends reaching out to an agent at least a few weeks before you'd like to put the house on the market to know what you need to do early on, so you can avoid a time crunch.

“It's smart to have a Realtor come and look through the house room by room and make suggestions,” Gorrell says.

Selling your home also likely means you'll be buying a new one, and the earlier you start on one the sooner you can make moves on the other. Cardile encourages home sellers to be active in the homebuying process at the same time. Especially if you need to be moved in before the end of summer, it's best to tour houses and have a head start on house hunting, even if you don't want to make an offer until your own home is under contract.

Here are four tips for taking advantage of the springtime homebuying surge:

• Prep your home. It’s a year-round rule that you should be putting your home’s best face forward, from planting flowers along the walkway to updating appliances in the kitchen or bathroom. While an interested buyer may be competitive about bidding on a home, he or she will also be well-informed, and prepping your home is imperative to getting the highest possible return on your investment. Staging is also a key component, Cardile says: "If you stage correctly, you have the right light, the right environment ... you showcase the house at its best."
• Price it right the first time. If your home is priced too high, it’s much harder to bring back the homebuyers who moved on to other listings because the asking price was out of their range. Redfin reports that as of mid-February, more than 1 in 5 homes for sale on the site have undergone a price drop, an increase of about 3.5% of homes seeing price drops around the same time 2018.
• Aim for a Thursday. A separate Redfin study reveals homes listed on a Thursday are more likely to sell above list price and find a buyer faster than homes put on the market any other day of the week. "Thursdays are perfect because it gives people a chance to look at what's coming and make their plans for the weekend," Gorrell says.

Stay competitive. Even in a seller’s market, there’s no guarantee your home will be scooped up quickly – or even scooped up at all. It’s important to pay attention to homes going on the market in your area and to emphasize the particular strengths of your home. And while many markets are heating up or hot already, it’s important to keep in mind that a jump in home values in one area doesn’t promise high home values anywhere else.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

3913 Royal Ave  

Price: $350,000    Beds: 3    Baths: 2.0    Sq Ft: 1572

New Construction that backs up to an expansive Park. Open Living, Dining, & Kitchen. Master bedroom with walk-in closet. Carpet in all bedrooms. Home has vaulted ceilings, granite counters, high end cabinets and wood floors. This home includes an in...View this property >> 

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Good Monday Morning!

Talk of a potential slowdown in the U.S. economy is currenty having little effect on the national housing market.  Any current slowdown in housing right now is most likely going to be fueled more by inflation with home prices.  The unknow is, how much inflation will influence the potential for a recession.  Here is an article from "Realtor.com" that talks about recession risks and the national housing market.

While the U.S. economy has been chugging upward for the last seven years, the good times could be coming to an end. But that isn't deterring determined home shoppers from trying to close on a home.

Whether it's sooner or later, most home buyers, according to a recent realtor.com® survey, believe a recession is on the way (much like winter on "Game of Thrones"). About 70% of home shoppers believe the United States will enter a recession within the next three years.

More than 1,000 active home buyers participated in the survey.

"There may be concern among some consumers, but economists and analysts generally expect that the next recession will be more mild than the [Great Recession], particularly in the housing market," says Danielle Hale, realtor.com's chief economist.

However, these gray clouds on the horizon could have a silver lining. If a downturn hits, about 41% of shoppers expect the housing market will fare better than it did in the Great Recession of a decade ago. Another 36% of respondents believe it's going to be worse, while 23% think it'll be just as bad.

Yet other life factors are simply closer to home.

Another recession isn't going to stop information technology specialist Richard Fame, 51, of Eastpointe, MI, from selling his home to buy a new one.

"It is inevitable," Fame adds, of his family's facing the possibility of an economic downturn. "If I make money on my current house, that's great, but I know I'm going to need to move."

In his family's case, moving to a better school district outweighs fears of a housing crash.

"Our next house will be for the long term," explains Fame.

Low mortgage interest rates could help to buoy the housing market as well. Rates fell to just 4.06% this week on 30-year fixed-rate loans, according to Freddie Mac. This could spur more buyers to close before rates go back up again.

The housing slowdown, which began over the summer as prices in many markets reached unheard-of highs and more sellers rushed to list their homes to cash in, could also lure buyers to seal the deal. It's resulted in more inventory and given home shoppers more options. And while home prices aren't coming down in most of the country, they are seeing a slower rate of appreciation.

Why a recession could be heading our way 

There are a number of factors that suggest a downturn could be looming—but that doesn't mean folks should panic just yet. Despite high home prices, it doesn't appear that there's a housing bubble about to burst due to bad mortgages and an over-inflated market. Instead, a U.S. trade war with China could spur one; or a disastrous Brexit. Or it could just be that after some really good years, the good times eventually have to end.

"Workers are scarce, with the unemployment rate near record lows, and that's pushing up wages," says Hale. "Employers have to pay to attract workers, which could eventually translate into higher prices and cause consumption to slow."

That can cause inflation, a problem that can snowball if it increases at a higher pace than wages. The U.S. Federal Reserve typically tries to keep inflation in check by raising interest rates. This, in turn, makes it costlier for companies to borrow money to open up new operations, invest in new equipment, or hire new employees. And that can slow down the economy.

"I don't think the next recession will be as severe for the housing market as the last one," says Hale. "This one isn't likely to be as bad."

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

5241 Sugarpine Cir  

Price: $265,000    Beds: 2    Baths: 2.0    Sq Ft: 1188

Charming home thats been well maintained. Covered front entry with 2 car garage. Open kitchen & dining combo, tile floors, white cabinets, laundry room, and walk-in pantry. Open living room with pellet stove. Fenced & private back yard with patio and...View this property >> 

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Good Monday Morning!

I am seeing a trend in our local housing market that is not good.  The overall market remains strong, but the inventory of homes remains low and dropped from that of March.  In February we had an inventory of 2.2 months and this declined in March to 1.8 months.  At the same time, we had an increase in the cost of homes in our area.  There are fewer homes on the market and those homes that are for sale are continuing to be more expensive.  The primary issue here is that there really are not many homes available for the first time buyer in our area.  First time buyers purchasing homes are what keeps a housing market healthy.  Our market in Eugene and Springfield in my mind is anything but healthy at this point.  It has been a great market for sellers and a horrible market for buyers for some time now.  Now with housing prices soaring, the market is becomeing tougher for sellers, even though the inventory is lower.  This is due to affordability.  This cannot sustain itself and I am predicting that at some point this year, we will see this market shift dramatically. Time will tell.  Here are the numbers for Lane County home sales during March of 2019.

March Residential Highlights

Lane County saw an uptick in seasonal activity this March, but had cooler activity than in 2018. There were 453 pending sales, ending 7.4%under the 489 offers accepted last year in March 2018 but 47.1% aheadof the 308 offers accepted last monthin February 2019.

New listings, at 444, slipped 16.4%from March 2018 (531) but ended 35.0% ahead of the 329 new listings offered last month in February 2019.

Closed sales (314) fared similarly, showing a 22.3% decrease from March 2018 (404) and a 9.0% increase compared with February 2019 when 288 closings were recorded.

Inventory decreased to 1.8 months in March, with total market time decreasing to 60 days.

Average and Median Sale Prices

Comparing the average price of homes ending March 31st of this year ($311,900) with the average price of homes sold in the twelve months ending March 2018 ($292,800) shows an increase of 6.5%. The same comparison of the median shows an increase of 7.5% over the same period.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

2945 Ava Street  

Price: $337,000    Beds: 3    Baths: 2.0    Sq Ft: 1570

New Construction. this home is sure to impress. Open Living, Dining, & Kitchen. Great for entertaining. Master suite with walk-in closet and master bath. Two additional bedrooms are on opposite side of house. This home includes a Laundry room and a...View this property >> 

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Good Monday Morning!

Nationally, homes sales were up slightly during the month of March of 2019. At the same time, home prices increased slightly as mortgage interest rates dipped.  This slight increase in both sales and home prices is good news for what is now appearing to be a steady Real Estate market for most of the country in 2019.  If mortgage interest rates hold or even decline further, this will certainly help maintain an active market. The key is to keep home prices from escalating at any kind of fast pace.  Home price increases would potentially negate the decrease in mortgage interest rates.

With a market that appears to be stable and home prices remaining high, this is a very good time to think about selling your home.  This is especailly true in the Eugene and Springfield area where demand for homes remains very high and inventories remain low.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

3329 Coburg Road  

Price: $455,000    Beds: 3    Baths: 2.5    Sq Ft: 1771

New Construction. Acacia engineered hardwood in entry. Office, living room, kitchen, and family room. Bathrooms and utility room have tile flooring. Home has stained hickory cabinets & quartz countertops throughout. Master suite with tile bathroom...View this property >> 

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Good Monday Morning!

If you are purchasing a home, the home inspection is an integral part of this process. To protect your best interests, having the home you are purchasing inspected first can give you a look at the condition of the home and may save you from purchasing a home with unknown issues.  My advice to my clients is to never make a home purchase blindly and without having an expert look at all of the homes components.  Here is an article form Realty Times that gives you go information on home inspections.

If you're hiring someone to inspect the home you want to buy, or you're a seller trying to find out if there are any hidden problems that need fixing before you put your home on the market, here are five things you need to know:

1. You can choose your home inspector.

Your real estate professional can recommend an inspector, or you can find one on your own. Members of the National Association of Home Inspectors, Inc. (NAHI), must complete an approved home inspector training program, demonstrate experience and competence as a home inspector, complete a written exam, and adhere to the NAHI Standards of Practice and Code of Ethics.

2. Home inspections are intended to point out adverse conditions, not cosmetic flaws.

You should attend the inspection and follow the inspector throughout the inspection so you can learn what's important and what's not. No house is perfect and an inspection on any home is bound to uncover faults. A home inspector will point out conditions that need repair and/or potential safety-related concerns relating to the home. They won't comment on cosmetic items if they don't impair the integrity of the home. They also do not do destructive testing.

3. Home inspection reports include only the basics.

A home inspector considers hundreds of items during an average inspection. The home inspection should include the home's exterior, steps, porches, decks, chimneys, roof, windows, and doors. Inside, they will look at attics, electrical components, plumbing, central heating and air conditioning, basement/crawlspaces, and garages.

They report on the working order of items such as faucets to see if they leak, or garage doors to see if they close properly. Inspectors may point out termite damage and suggest that you get a separate pest inspection. The final written report should be concise and easy to understand.

4. Home inspectors work for the party who is paying the fee.

The NAHI Standards of Practice and Code of Ethics clearly state that members act as an unbiased third party to the real estate transaction and "will discharge the Inspector's duties with integrity and fidelity to the client." A reputable home inspector will not conduct a home inspection or prepare a home inspection report if his or her fee is contingent on untruthful conclusions.

The inspector should maintain client confidentiality and keep all report findings private, unless required by court order. That means it is your choice whether or not to share the report with others. If you're a seller, you don't have to disclose the report to buyers, but you must disclose any failure in the systems or integrity of your home.

5. Inspectors are not responsible for the condition of the home.

Inspectors don't go behind walls or under flooring, so it's possible that a serious problem can be overlooked. Keep in mind that inspectors are not party to the sales transaction, so if you buy a home where an expensive problem surfaces after the sale, you won't be able to make the inspector liable or get the inspector to pay for the damage. In fact, you may not be entitled to any compensation beyond the cost of the inspection.

As a buyer, you need the home inspection to decide if the home is in condition that you can tolerate. You can use the report to show the seller the need for a certain repair or negotiate a better price. You can also take the report to a contractor and use it to make repairs or to remodel a section of the home.

One thing you should not do when buying a home is skip having the home inspected because of cost or undue pressure by the seller. A home inspection is reasonable, it can save you money in the long run, and it's required by many lenders, particularly for FHA loans. There's a reason why buyers should beware, and a home inspection gives you the information you need to make a sound buying decision.

Have An Awesome Week!

THIS WEEK'S HOT HOME LISTING!

39285 Upper Camp Creek Rd  

Price: $950,000    Beds: 5    Baths: 3    Sq Ft: 3520

New Construction. this home is sure to impress. Open Living, Dining, & Kitchen. Great for entertaining. Master suite with walk-in closet and master bath. Two additional bedrooms are on opposite side of house. This home includes a Laundry room and a ...View this property >> 

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Good Monday Morning!

Last month, homes sales were down nationally and home values also dipped slightly. This took place at the same time that home mortgage rates were down over the previous several months. It is too early to tell, but this could indicate the fact that the housing market is going to flatten out this year and the trend for home price increases could be over for now. We will certainly know more by mid year, but the trend over the last few months looks as if the housing market is going to slow from the fast pace of the last several years. This trend could be extremely favorable to would be homebuyers.

Have An Awesome Week!

THIS WEEK'S HOT HOME LISTING!

3346 Roanoke Ave 

Price: $610,000    Beds: 4    Baths: 2.5    Sq Ft: 2577

This beautiful one level home features an open concept floor plan, tall ceilings, 4 bedrooms and 2.5 baths. Stainless steel Dacor appliances. Office space/den with french doors & builtins. Large island bar off kitchen, granite counters, and hardwood floors...... View this property >> 

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Good Monday Morning,

The national home sales statistics for October 2018 indicate that the national housing market remains flat.  There was little change in home sales numbers and home prices from the month of September.  Mortgage interest rates were up slightly, but still remain favorable.  These numbers indicate that the national housing market remains healthy.  With little change going into the Fall months, this suggest that we should see a very healthy and stable national housing market into the first quarter of 2019.

The housing market in the Eugene and Springfield area remains very robust for the price ranges of $300,00.00 and under, but drops off considerably in the upper end price ranges over $500,000.00 and above.  The housing market for homes that work for first time home buyers remains a strong sellers market, but changes considerably from a sellers market in the upper end market.  This trend should remain unchanged going into 2019.

View video HERE.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

 88139 KEOLA LN

Price: $495,000   Beds: 4   Baths: 3   Partial Baths: 1   Sq Ft: 2794

Gorgeous & private rural living! Serene tree views surround 1.37 acre estate. Well-manicured gardens w/ paths, sitting areas & huge patio. Finished 3-car garage & half bath, w/ guest suite above. Features media rm, open layout & private master suite...View this property >>

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Good Morning!

There can be some confusion in the minds of the average consumer about interest rates, especially as it relates to the Federal Open Market Committee, or FOMC, meetings. About every six weeks, the FOMC meets to discuss the current state of the economy with an eye toward the future. One important task is to monitor and adjust the cost of funds. In general, the “Fed” tries to keep inflation in check and in theory raise or lower the cost of funds. They do so by adjusting the Federal Funds rate and this is the rate that gets so much press each time the FOMC meets.

The Federal Funds rate is the rate banks can charge one another for short term lending. Short term as in overnight. Why does a bank need to borrow money on such a short notice? Banks are required to keep a certain amount of liquid capital, in other words “cash,” at the end of each business day. These funds are essentially demand funds. When a consumer wants to withdraw some cash either at the bank or at any automated teller, there needs to be cash available to meet those withdrawal requests. If the bank sees their reserves to meet these requests do not meet the reserve requirements, banks seek out a short term loan from another depository institution to meet the reserve requirements. This is what the Fed adjusts, the overnight lending rate. But the Fed doesn’t directly impact the everyday 30 year conforming fixed rate mortgage.

When lenders set their rates each day, they refer to a specific mortgage bond. For example, with a 30 year fixed conforming loan underwritten to Fannie Mae standards, the lender will review the current yield on the FNMA 30-yr 3.0 mortgage bond. Just like any bond, with the price of the bond goes up, the yield will fall. And when the price goes down, the yield will rise. Investors buy bonds, all types of bonds, as a safe place to park cash. When the economy appears to falter, investors can get a little skittish and pull some funds from the stock market and transfer those funds into bonds, including mortgage bonds. If on the other hand the economy is healthy and improving, the opposite will occur.

When the Fed makes an announcement at the end of their two-day meetings, investors are anxious to hear if the Fed raised, lowered or kept rates the same. If the Fed announces they decided to raise the cost of funds by 0.25%, it can tell investors the FOMC decided the economy is doing rather well but to hold of any potential inflation, it will raise the cost of funds that banks will pay for short term lending. It’s not a direct affect on mortgage rates, but definitely an indirect one.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

825 SAND AVE

Price: $550,000    Beds: 3    Baths: 2    Sq Ft: 2344

Grand very well-maintained home! Light filled vaulted open layout w/ large windows & skylights. Living rm w/ gas fireplace opens to dining area. Office/bonus rm w/ exterior entrance & Shoji sliding dr/rm divider. Massive kitchen w/ cook island, pant...View this property >>

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Good Morning!

A loan program that was popular several years ago is making a comeback and many lenders are now offering options for a mortgage loan program called "the Piggyback mortgage".

The following will give you some insight into just what a Piggyback mortgage is and also it will give you some information to help you decide if a "Piggyback" loan is a good option for you, if you are searching for a home loan.

Definition of a Piggyback Mortgage

Also called a “purchase money second mortgage,” a piggyback loan is used by homebuyers with less than 20 percent down to avoid paying for private mortgage insurance (PMI).

Types of Packages

Typical packages might be called 80-10-10 (80 percent first mortgage, 10 percent second mortgage, and 10 percent down payment from the buyer), 80-15-5 (a 15 percent second mortgage, and a five percent down payment) or even an 80-20 (80 percent first mortgage, 20 percent second mortgage, and no down payment from the buyer).

Buyers considering this financing should compare the costs of a second mortgage (they do have higher interest rates than first mortgages) with the cost of a bigger first mortgage plus mortgage insurance. They should compare the after tax costs, because borrowers with higher incomes may not be able to deduct mortgage insurance, but they may still be able to write off mortgage interest.

Piggyback Loan Explained

Essentially, a piggyback loan helps homebuyers who don't have the traditional 20 percent down payment when applying for a mortgage.

A piggyback loan occurs when a borrower takes out two loans simultaneously: one for 80 percent of a home's value, and the other to make up for whatever cash is lacking to make up a 20 percent down payment. This is used as an alternative to private mortgage insurance. A piggyback loan is also known as a second trust loan.

The most common type of piggyback loan is an 80/10/10 where a first mortgage is taken out for 80 percent of the home’s value, a down payment of 10 percent is made and another 10 percent is financed in a second trust loan at a higher interest rate. In some cases, you may even qualify for a piggyback loan with as little as a 5 percent down payment (known as an 80/15/5).

Many lenders will finance loans with down payments of less than 20 percent, but you'll pay a price. Usually, the lender insists you buy private mortgage insurance (PMI) which guarantees that the outstanding balance of your loan will be paid off if you default. You will either pay a lump sum each year for PMI or add the cost to your monthly mortgage payments.

Piggyback loans eliminate the need for PMI. You combine this loan with your down payment to reach the 20 percent down needed for a conventional mortgage. This can significantly lower the interest rate of your mortgage.

If you get a piggyback loan, you will close on it the same time as you close on the mortgage. You will most likely have to pay closing costs, which will require additional upfront cash.

You will probably also have to make two loan payments each month — one for your mortgage and one for the piggyback loan. The interest rate on the piggyback loan will probably be higher. But, the monthly payments of both loans are often still less than they would be if you were paying PMI.

Another benefit of a piggyback loan is that the interest may be tax-deductible, potentially saving you even more money. Check with a tax adviser on how a piggyback loan would affect your tax situation.

Have an awesome week!

THIS WEEK'S HOT HOME LISTING!

176 V Street

Price: $225,000   Beds: 3   Baths: 1   Sq Ft: 1,011

Lovely Hayden Bridge home centrally located! Pride of ownership shows. Step-down living rm w/ pellet stove. Kitchen opens to dining area w/ sliding door. Combination mud/pantry/laundry rm. Workbench in garage, large covered deck w/ hot tub...View this property>>

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