Accessing Your Home Equity

• Mortgage Rates¹ – A little good news to report: for the first time in weeks our benchmark rate dropped considerably, and we are back in the sixes!  Our benchmark rate is now at 6.750% (6.836% APR) driven primarily by Wednesday’s release of the June Consumer Price Index (CPI) report which showed year over year inflation has declined from 4.0% to 3.0%, which was lower than the expected 3.1%.  The Core rate, which strips out food and energy prices, also declined more than expected from 5.3% to 4.8%.  And let’s not forget about the June Producer Price Index (PPI), which revised May numbers in a positive direction and posted a better than expected 0.1% — putting it at its lowest level since August 2020.  In a market looking for reasons to be optimistic, these reports delivered.

• Weekly Market Data² – In additional good news our number of active listings has climbed to almost 6,000 and is now at 5,997.  This was driven by a combination of (a) decent listing activity of 1,266 coming after the holiday week, and (b) a continued low percentage (21%) of new listings going under contract in the first week as buyers take their time deciding which house will be the target of their affections.  Our median days on market dropped slightly to 8 days.  (Source: REColorado, all DMAR counties, this past week -Thursday to Wednesday).

• Columbine Team Insight – We had solid success this last week with 100% of offers being accepted.  It came as a variety pack, with the standard mix of over list price, at list price and with concessions.  The pattern seems to be that homes just listed (first weekend) receive ‘over list’ offers, if they make it through the first weekend, they roll into more of an ‘at list’ range, and when a home goes past 30 days, seller concessions and/or similar trade-offs come into play.  While clearly that is not always the case, the pattern seems to have been holding for the past few weeks… and so if you are looking for a ‘deal’, perhaps the 55% of listings that have been on the market for more than 30 days might be the place to start.

• Market Trends – If you currently own a home but would like to move, there is a good chance you are grappling with finding the cash for a down payment.  For many of us, the natural place to start would be the equity in our current home.  But accessing that equity takes a little bit of planning.  Of course, you can make an offer contingent upon the sale of your current home, but contingent offers still represent a source of transaction risk for the seller and closing on your sale before you have another home to move into can be hard on you and your family.  In many cases, using a Bridge Loan or a Home Equity Line Of Credit (‘HELOC’) can help fill the gap.  The least expensive option is typically a HELOC, but a HELOC can take a little more time to close and whether you intend to retain or sell your home is important for some lenders.  Bridge Loans can typically be done faster and don’t carry the same limitations as a traditional HELOC option, but they generally come with slightly higher fees because they are specifically intended to fill a short-term need.  If you are unsure which is the right choice for your situation or otherwise need a little extra guidance, I am here to help.

NOTES:

(1)     The mortgage loan scenario presented assumes the purchase of a primary residence, excellent credit, an 80% loan-to-value (LTV), a loan amount of $480,000, a 30-year fixed interest rate of 6.750%, and a P&I payment of $3,114.  The Annual Percentage Rate (APR) is 6.836% with a 0.132% discount fee ($634).  Monthly principal and interest payments, which will continue for the stated term until paid in full, do not include mortgage insurance, property taxes or homeowners’ insurance premiums and actual monthly payments may be higher.  Interest rates are current as of 07/13/2023 and are subject to change at any time without notice.  All loans are subject to credit approval.  Other terms and conditions may apply.  Not all loans or products are available in all states. Regulated by the Colorado Department of Regulatory Agencies, Division of Real Estate.

(2)     Source: REColorado®, Inc for the period 07/06/2023 to 07/12/2023.   Data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties. This representation is based in whole or in part on content supplied by REColorado®, Inc. and REColorado®, Inc. does not guarantee nor is it in any way responsible for its accuracy. Content maintained by REColorado®, Inc. may not reflect all real estate activity in the market.