There are Plenty of Reasons to Buy a Second Home at the Beach
Buying a home while prices are sliding is not an easy decision. After all, you never know when things will bottom out. But if your goal is to have a second home for your family to enjoy and then use it as a retirement home in five or ten years, and you can afford to buy now, today’s tepid housing market may offer a great opportunity to put your plans in motion early. Here’s why.
First, home prices won’t weaken forever, and they most certainly will be much higher in 10 years. Waterfront and resort properties and those with spectacular views- just the features you dream of for a retirement home – can be expected to rise the fastest. Yet for even prime properties in today’s market, competing bids are rare, and sellers are eager to deal. You have bargaining power and you have time to research your purchase. Mortgage rates remain low for those with good credit. Equally important: a cottage in the mountains or a house on the beach where you plan to spend the rest of your days doesn’t have to be subjected to the same rigorous evaluation as other investments. In theory, your retirement house won’t be sold until you are not here to worry about it anymore. You are buying a lifestyle not a bond.
Such thinking resonates with millions of people in their 40’s, 50’s and 60’s who are keeping the second-home market alive. Last year, even as sales of primary residences fell, vacation-home sales rose nearly 5% says the National Association of Realtors. The typical buyer of a vacation home was 44; a third of those people said they plan to move to their home fulltime later on.
No need to be rash however. The whole point of buying in a soft market is having the time to think things through. Here are some reasons that buying a vacation home now to live in later makes sense for you:
ROOTS: When you buy before you’ve retired, you start making the area part of your life right away. This helps to build a social network, which will ease the transition when you move in your home fulltime.
FAMILY CONNECTIONS: Kids grow up and change jobs and cities. One way to bring the entire family together more often is by living in a fun and familiar house in a great location.
YOU CAN RENT TO OWN: In the long term, prices are going to go up. By not acting soon, you risk eventually being priced out of the market. If money is tight, consider buying now and collecting years of rent to defray your costs. Many homes remain too expensive for this plan. But for the first time in years, home prices have slipped enough in some regions for the math to work. The trick is getting over our fears. With retirement facing all of us sooner or later, now is the time to buy and enjoy a vacation home.
Susan B. Garcia
Prudential Carolina Real Estate
Isle of Plams, SC 29451
843-886-8110
SC Wind and Hail Insurance
You may have read in recent articles that big increases in premiums are on the way for Wind and Hail policies. One article in the Post and Courier stated that original proposals could have lead to a 65% increase in homeowner W/H premiums, but there will be a 35% increase instead. I asked a local agent, Sam Schirmer from Nationwide, to give us some information on these changes….
SC WIND & HAIL ASSOCIATION - CHANGES
The SC wind & hail association is making quite a few changes that all home buyers and their real estate agents should know about.
1. Effective October 1, 2007 a rate change of up to + 35 % will apply to all new and renewal business. The barrier Islands are hit the hardest.
2. Minimum Deductible available is 3%, optional deductibles of 4% , 5%,10% are available.
3. Replacement cost not available if home built before 1950. Replacement cost is removed at renewal if home built prior to 1950.
4. A flood policy is required as of January 1st 2008 in order to get replacement cost on the dwelling. Simply put, no flood-no replacement cost.
5. 15 day waiting period if no closing. Must bind coverage 24 hrs prior to closing to have effective date the same as date of closing,
15 day waiting period begins the next day after receipt of premium /app/pictures in SC wind & hail office in Columbia SC.. This is important to note due to the slow mail time. This could be a problem during hurricane season
If you have any questions or concerns feel free to call me, Sam Schirmer , Agent/Owner 843-881-4707 Email: schirms@nationwide.com
Sam’s office is located at 1312 Bowman Road in Mt. Pleasant- Call him for your island insurance needs!
Linda Gordon, RSPS
(843)324-3476 mobile
(843)242-3011 direct
Mortgage Update
We are experiencing an unprecedented time in the mortgage business.
WHAT HAPPENED?
It began with the sub-prime lending crisis in the spring. New Century Mortgage, one of the largest sub-prime lenders, was one of the first companies to collapse. New Century, like others, was not owned by a bank, but was an independent mortgage company. After borrowers closed on these sub-prime loans, the mortgage companies packaged the loans into mortgage backed securities, and the securities were sold by Wall Street. These securities did not come with any guarantees other than the loans themselves. When borrowers became delinquent in their payments on these sub-prime loans, these mortgage companies were being forced to buy back the loans. When they didn’t have the money to do this, their funding sources for future lending was shut off and these companies were forced to close their doors overnight. More recently, this has occurred with many other independent, non-bank affiliated mortgage companies….American Home Mortgage, First Magnus, Homebanc, Greenpoint and hundreds more. These companies were also unable to come up with the money to buy back their delinquent loans. And thus, their warehouse funding sources shut down their lines of credit, and they could no longer fund any new loans.
In addition, the mortgage backed securities market, other than the FNMA/FHLMC agency securities market, also was forced to shut down. This includes mortgage backed securities composed of jumbo loans and Alt-A loans (stated income or no verification loans). The FNMA/FHLMC securities are backed by a guarantee from the US Government, so these loans have not been affected. Therefore, we’ve seen major changes in the jumbo loan market and Alt-A products. Underwriting guidelines have dramatically been tightened, especially in the documentation required to verify income/assets, higher credit FICO scores required, the amount of downpayment required and the availability of second mortgages.
WHAT’S NEXT?
We will most likely see more mortgage companies close or file bankruptcy. We should see the mortgage backed securities market start buying jumbo loans again because these are quality loans. We will see a substantial increase in FHA/VA financing. Congress is reviewing a proposal to allow the maximum FHA loan to be $500,000 and the LTV increase to 100%. We will see increased usage of mortgage insurance for high LTV loans, and this is attractive because of the deductibility feature. There is growing support for a temporary increase in the FNMA/FHLMC maximum loan amount, so jumbo loans could be sold to FNMA/FHLMC. The Fed just lowered the Fed Funds rate to 4 ¾%, and this has improved the emotional mood of buyers. The Fed stands ready to do more if this is not enough. Long-term….independent, non-bank owned mortgage companies may be gone and independent mortgage brokers will be under great scrutiny and the government will impose increased regulation on them.
WHAT ABOUT HOME MORTGAGE CHOICES?
Home Mortgage Choices is a partnership between Prudential Carolina and Shelter Mortgage. Shelter Mortgage is NOT an independent mortgage company. Shelter Mortgage IS OWNED BY A BANK, Guaranty Bank. Guaranty Bank is a federally chartered bank headquartered in Milwaukee, WI and has been in business since 1923. Guaranty has 185 retail bank branches. The customers of the Bank have deposited funds into checking, savings, money market and certificate of deposits. This money is used to fund our mortgage loans. Over 90% of our loan fundings come from these deposits. Plus, we have $800 million available to borrow from the Federal Home Loan Bank. We have COMPLETE CONTROL over the money needed to fund the loans at closing. YOU CAN ALWAYS COUNT ON YOUR BUYER’S LOANS CLOSING AND FUNDING ON TIME. Home Mortgage Choices has the strength and longevity needed to sustain the mortgage fluctuations in the years to come. Our mortgage partnership began 12 years ago, and throughout the years, we have been aligned in our values, cultures and our ability to make sound business decisions. Our goal as your partner is to help you list and sell more properties and prosper in your business. Courtesy of Jason M. Watkins of Home Mortgage Choices.
Please contact me if you have any questions about today’s Real Estate market.
Elizabeth Whittle
REALTOR
(843) 901-0488
ewhittle@prucar.com
www.ElizabethWhittle.com
The thoughts on this website do not necessarily reflect those of Carolina One Real Estate.
Prudential Carolina Real Estate | 877-663-3456
1400 Palm Blvd Suite E, Isle of Palms, SC 29451
info@palmettobeaches.com