Home values are up. Can you still afford to buy?

Home prices in California are going up and will probably continue to do so. Does that mean they are less affordable?

The news can be misleading and confusing as it recently touted the significant move higher in the median home price, currently up 15% nationally versus last year. And 14.3% in Sacramento County, says the Sacramento Association of Realtors. 15% sounds awfully high. But the median home price does not measure appreciation. Instead, it marks the middle price point of recent home sales. 

With a substantial lack of inventory for lower-priced homes, more transactions occur for higher-priced homes, which pushes the median home price higher.

The actual Sacramento home price appreciation rate was about 1.25% for the last quarter, or 5% annualized. And it is forecasted to increase by a similar margin next year. So have you been priced out of the market?

The short answer is no, or at least not yet. California’s affordability factor has improved year over year because mortgage rates are down by almost a full percent, and incomes have gone up (Avg. weekly net pay is up 5.7% year over year nationally). Also, remember, only a portion of your income goes towards paying your mortgage. A 5% rise in income can offset a much more significant percentage rise in housing expense.

Let’s assume your monthly earnings did not improve from last year. Consider a buyer’s max purchase price of a new home, based on his/her income and debt was $450,000 last year. Maybe this buyer decided to wait because they were nervous about the market. Now, that home is worth about $472,500.

As a mortgage professional, if I were to use the same income and debt structure I used last year, this buyer would now afford a home for $490,000. This tells us that homes are actually more affordable, even though they have appreciated.

Granted, I am using very simple math here, and this does not get into down payment or cash required to purchase this home but is purely to show you the media doesn’t’ always get it right. Take the time to work through these numbers with a mortgage professional you trust, and don’t give up your dream of homeownership!

ALERT! 3 Mortgage Scams to Watch Out For (And How to Avoid Them)

Scam Alert! Three Mortgage Modification Scams to Watch out for (And How to Avoid Them)As if homeowners in Sacramento who are facing foreclosure don’t have enough to worry about, a multitude of loan modification scam artists have invaded the internet, public files and even foreclosure notices in newspapers in hopes of targeting their next victim. By identifying the top three modification scams and learning how to avoid them, at-risk homeowners can protect themselves (and their homes). Continue reading

If You Miss One Mortgage Payment Will it Hurt Your Credit Rating? Yes! Here’s What to Do if You Miss One.

Can One Missed Mortgage Payment Affect Your Credit Rating? Yes! Here's What to Do if You Miss OneMost people don’t know whether or not a single missed mortgage payment can have serious consequences for their credit score. As a Sacramento Lender, it is amazing how much time we talk about credit. Most people focus on interest rates, and monthly payments, but forget about that pesky credit report.

The good news is that there are things that can be done to mitigate the damage and help anyone who has missed a payment repair their credit. What are some options to help homeowners get back in the good graces of their creditors? Continue reading

Can I Have A Co-Signer For My Mortgage Loan?

Can I Have A Co-Signer For My Mortgage Loan?Like credit cards or car loans, some mortgages in Sacramento allow borrowers to have co-signers on the loan with them, enhancing their loan application.

However, a co-signer on a mortgage loan doesn’t have the same impact that it might on another loan. Furthermore, it poses serious drawbacks for the co-signer. Continue reading

Buy A New Home Just One Day After A Short Sale or Foreclosure? Yes, You Can!

Flex-Banner_600x315px_mockup5Comstock Mortgage, has been helping buyers into homes for over thirty years. Buyers can qualify for the Flexible Credit Home Loan Program just six months after bankruptcy – and just one day after short sale or foreclosure.

Losing your home to foreclosure or going through a short sale is one of the most disheartening experiences the modern homeowner can endure. Traditionally, a defaulted mortgage has meant years of poor credit and renting rather than buying. Continue reading