Have you heard about these buy now refinance free later offers lenders are offering?  Do they make sense? Let’s explore what these are and if they make sense for you.

Buy Now Refinance Free Later

Is the refinance later part really free? It depends on how you look at it. If by free you mean no cost to the borrower and the rate and payment goes down, then yes, it is free. Could the borrower receive an even lower rate if they paid their fees, the answer is yes. So, in a sense, it did cost the borrower versus the rate they could have gotten.

Let’s break it down. There are closing costs associated with financing or refinancing a home. There is a possible appraisal, title insurance, doc stamps on the note, and intangible tax on the note. These fees must be paid somehow. The lender can pay them for you, but they typically roll them into the mortgage rate, or what they call the spread.

This cost could equal as much as half percent to three quarter percent in the rate from the lender I asked. Let’s say you have a 7.5% mortgage on your current property. Rates go down to 6.5%. If the cost for a no closing cost refinance is half percent, you could refinance your current rate of 7.5% down to 7% and it wouldn’t cost you anything. You’d be wise to take that deal, wouldn’t you?  And if rates went down to 6%, you could do it again and receive a new refinance of 6.5%, and it wouldn’t cost you anything.

You could keep doing this every time rates went down. Perhaps this is why refinance applications are up 7.6% this week over last week. Homeowners are refinancing their existing rates and saving money. For anyone that purchased in the last year or so, this could be an excellent strategy to save money.

Pro Tip Strategy

When rates begin dropping it will create more buyer demand. Right now, buyers have excellent choices in housing, and sellers are more willing to deal or pay concessions this year than last. Once buyers flood back into the market, sellers will be less accommodating.

Wouldn’t it make more sense buying a home today with excellent inventory options rather than fighting more buyers down the road for the best properties? Once you’ve secured your home, you’ve locked in your housing costs. The landlord cannot raise your rent and housing prices won’t go up for you because you’ve already purchased. If the rate goes down, you can refinance it at no cost to you. If rates go up, you’re locked in.

How to Finance

Should you take the offers I’ve heard on the radio that say buy today and we’ll refinance you for free down the road? The lender is either putting building costs into your rate now, in which case you’d be paying a higher rate today, or they’ll add it later.  I would not select the added cost now if I were purchasing. Personally, I would wait and just deal with it later. What if rates don’t go down enough, soon enough? You paid extra money upfront for something you may not use. The costs are the same, so why not pay it when you use it? And, as we discussed, are you really paying it if you receive a benefit later and it costs you nothing to lower your payment?

Always Call the Ellis Team

We have lenders we work with that can help you make the best decision. If you want, we can offer advice too. We are not loan officers, but when we hear your story, we can help guide you to the lenders that have good choices for you.

Why Wait?

Financially, we don’t see a reason to wait for rates to come down. While you wait for rates to move lower you face increased competition from other buyers.  We have a limited window to take advantage before other buyers figure this out. Give us a call at 239-489-4042 and get a jump on the competition, and lock in your housing costs. Once we do that, things can only get better. You won’t be at the mercy of your landlord, interest rates, or other buyers bidding against you.

Search the MLS like a pro.

The Ellis Team has Two Locations to Serve you. Call us first so we can make sure we have someone to help you.

Fort Myers

12840 University Dr

239-489-4042

Cape Coral

3208 Chiquita Blvd S

239-540-9070

 

The Ellis Team Current Market Index predicts future real estate pricing accurately by analyzing key data that influences the direction of the market. Back in 2003 we were able to predict the market would take off, and it did.

2005 Warning

In October 2005 we warned people the market was about to turn. I remember doing a lengthy article on NBC where we tell people the end of the bull market is near. We all know what happened after that.We will work to find that story and upload to our YouTube Channel.

Agents told us back then we were crazy. This was a runaway bull market, and it couldn’t be stopped. People were flipping houses and making $100,000+ per house. They couldn’t, nor did they want to see the data that was driving the market. Back then we advised Ellis Team clients to stop buying, even though it cost us commissions. We could see what was about to happen because of our index.

CMI Predicted Bottom in 2009

We knew the market was on its way to stabilization in 2008. In 2009 we called the statistical bottom of the market, even when prices were about 30% of what they were a few years ago. View the CMI Index back in 2009. Again, in 2009 people thought we were crazy calling the bottom of the market. We wrote several articles back in 2009 and went on WINK TV telling everyone the bottom was here, but people didn’t believe that either. People tend to follow the crowd and believe where the market has been rather than where it is going.

 

The point is market outcomes have more to do with data than they do with emotions. Buyers today want the market to fall. Sellers want the market to rise. The market does not care what anybody wants, it rises and falls because of the data. The trick is learning which data to use and how to interpret it.

Ellis Team Current Market Index Predicts Future Real Estate Pricing

The Ellis Team current market index currently sits over 4.3. We no longer publish this index publicly as we keep it for paying customers of the Ellis Team. Southwest Florida real estate prices rose from the 90’s through 2005. 2006 is when we saw prices begin to fall. The Ellis Team Current Market Index (CMI) predicted that would happen around July of 2005 when the market was absolutely red-hot. The market peaked in January of 2006.

The CMI has been rising. We focus on the direction of the CMI as the actual number. When the index reaches 4+, either on the upswing or the downswing it begins to move prices. There is typically a 2–6-month lag between the index and the actual price movements, so knowing where the index stands, and the direction is critical ahead of time.

Back in 2006 the Ellis Team was able to advise seller clients to get aggressive with pricing before the market forced them to take even less. All our clients listened, and they were glad they did as they watched the market plunge. These decisions were based off data, not emotions or I think this might happen.

Later when home sales became tough, we went on TV again and showed a different way to sell homes when others weren’t able to sell.

The Ellis Team Current Market Index will go up and it will go down, as will prices. It was designed to help interpret the forward direction of pricing. You cannot read more into it than that, as we have to look at the actual number, the direction, and the pace. Back in 2006 the pace was significant. While the current number is rising, it is nowhere near the pace of 2006, so we are not calling for a plunge in values.

Consultants Vs Salespeople

The cool thing is this index will tell us the forward direction of real estate prices before they happen. If you have questions about your home and the Future of Real Estate, call Brett Ellis or Sande Ellis 239-310-6500. We’ll be glad to evaluate your situation and give you the information to make good decisions for your family. We consult with you after listening to your needs.

Good luck and Always Call the Ellis Team at Keller Williams Realty!

 

Latest released data shows SW Florida 12-month housing prices hold steady. The data was sort of a mixed bag.

Median sales price is down $25,000 from $425,000 down to $400,000 this October. However, average sales price was up $16,068. The median sales price is down 5.9% over last year while the average sales price is up 3.0%.

We like to look at year over year data because there is some seasonality to our local SWFL home prices. The larger luxury homes tend to sell in season or just after. Luxury buyers tend to visit in season and put in offers in the first half of the year more so than the second half. Don’t mistake that you cannot sell a higher priced home in the second half, it’s just that there are more buyers here in the first half.

Uptick in Buyer Activity

Last week we wrote about how interest rates influence home sales and provided historical data. We are happy to report that recent mortgage rate decreases have led to some buyers getting off the fence. Rates trended down for 3 straight weeks before leveling off, and buyers took advantage. Total pending sales increased by 37 this past week, which is a good sign.

1 weeks’ worth of data doesn’t identify a trend, but it is something we will be watching. It is slightly significant because it reverses a trend of declining total pending sales.

Home Prices Down From Peak

Median home prices are down $70,000 from their peak in April 2022 when they were at $470,000. Average home prices are down $111,210 from their peak in May 2022. Keep in mind, both those peak months are seasonal closing months, so they are usually higher than the averages.

Selling Your Home Today

If you are selling your home today, you need up to the minute home statistics to make the best choices in marketing your home. One of the best indicators around is the Ellis Team Current Market Index. We no longer publish this publicly but it is available for Ellis Team clients. We can say that the Current Market Index has been rising since April 25^th of 2023. This past week was the fourth week we’ve seen it take a pause in rising, only to begin rising again in subsequent weeks.

Current Market Index

We will be watching the Current Market Index to determine if and when a new trend begins, or if we have a continuation of the old trend. This is important because it tells us where housing prices will go. Like I said, if you are a seller, you would most definitely want to know what the future holds. If you knew prices were heading down, you’d want to get ahead of the market.

Back in 2006-2009 Ellis Team clients benefited because we were able to tell them what the market would do ahead of the market. Many thanked us for saving them thousands of dollars.

Buyers

Ellis Team buyers benefit from this data too. It helps knowing what to offer. If you are a buyer, we suggest checking out www.LeeCountyOnline.com and searching the MLS like a pro. We have some advanced search features you won’t find anywhere else. Our team of buyer agents can help you setup your searches with advanced fields you won’t see. They can also assist you with neighborhood market reports and more.

Sellers

If you have a property to sell, you can check out www.SWFLhomevalues.com It’s a great place to start and will give you a home value for Free, instantly. Of course, you can always call Brett or Sande Ellis 239-310-6500 to talk about your home, your situation, and go over the latest statistics and see how they affect you moving forward. We’d love to talk to you, even if you aren’t ready yet to make a move. Preparation is key to making the best decisions.

12-Month Housing Prices Hold Steady

While median prices are down from the peak, they have held steady the past few months. Aerage prices increased slightly last month, so we are seeing 12-month housing prices hold steady for now. we’ll keep an eye out in future months to see if this holds true going forward.

Good luck and Happy Selling!

Today we want to explore real estate false imprisonment. Back in 2007-2012 we used the term real estate prison because people felt they were in prison in their own home because they were upside down on their mortgage.  The only way out was to short sale, bring a bunch of money to closing, or default and risk foreclosure. Their needs changed but they could not financially get out.

Get Out of Jail Card

Virtually nobody is in real estate prison today because so many paid cash in the big runup or paid a large down payment because they were competing with other buyers. Additionally. prices appreciated so much and have not fallen like they did back in the 2000’s. Sellers today do not feel like they are a prisoner in their own home because of home values, they feel locked in for another reason. We call it real estate false imprisonment.

So many people financed their home at rates around 3% and they don’t want to give that up. If they were to make a move today, they would trade in that 3%ish rate for something closer to 7% or more. So, many are holding tight.

Waiting For Interest Rates to Change Could Cost You

Last week we talked about how waiting for rates to come down might hurt many home buyers. This is also true for homeowners who feel locked into their existing home. There is a downside to waiting to make a move.

Here is what we do know. A home feels comfortable for you for a period of time. It meets your needs. Then things change in your life, and your homeownership needs change. Some people outgrow their home, others want to downsize when the kids move out, and others need to change locations. Still others get tired of the homeowner life and opt for the carefree condo life. Some try the condo life and love it while others say not me and move back to a single family.

Whatever your needs are, they change over time. Back in the early 2000’s people were locked into their homes due to financial reasons. This isn’t true today.  While it can be uncomfortable living in a home that no longer works for you, many do it. Most do not realize there is a better way. Sellers today have options, and there is more inventory available to move to. When rates were rising, many sellers didn’t pull the trigger because they didn’t know where they would move to. Be sure to read last week’s article “Interest rate Purchase Strategy”

New Programs

We literally have new programs now that allow you to purchase another home, so you are not homeless, then sell your existing home. You only make 1 payment on the new home with no payments on the existing home. This gives you time to move into the new home and sell the home that is no longer working for you. You also avoid having 2 payments.

Trusted Advisor

The key is sitting down with an experienced Realtor you trust and going over your options. We perform a needs analysis and identify where we can improve your situation. Our team has resources to help you identify ways to make a move happen for you at the least inconvenience to you, and the least cost. It doesn’t cost anything to sit down with us and discuss your options.

We know what it’s like to sell and buy. We’ve done it ourselves, and we’ve helped thousands of clients just like you do it. Making a move doesn’t have to be hard if you’re working with the right people.

Give the Ellis Team a call. 239-310-6500. Brett and Sande will sit down with you and discuss your needs. Is a move right for you? We won’t know until we talk. For some it is the right move. Some decide to stay put. The decision is yours, and it’s always easier with the right information. We are not here to sell you anything. We enjoy giving people their options. Should you decide a move is right for you, of course we’d be honored to work with you. Don’t let real estate false imprisonment keep you from living in the home that best suits your needs. Or visit www.swflhomevalues.com to get a quick estimate of your home’s value.

Good luck, and Happy Selling!

We’ve been having a lot of discussions lately with buyers regarding their interest rate purchase strategy. With rates rising so fast, naturally they ask the question if now the right time is to buy.

Here is what we know about interest rates, and the 3 implications of waiting for rates to drop.

Interest Rates Could Go Up

If rates go up, it will cost you to wait. As rates increase, so does your payment.  You may even qualify for less home if rates continue to rise.

Interest Rates Could Stay the Same

We could have a period where rates stay the same for a while. In this scenario, as a renter you’re getting nowhere.  Your landlord thanks you, but you are gaining no equity whatsoever. When you rent, the interest rate is always 100% because all goes to somebody else and none to you or your equity.

Interest Rates Could Go Down

This is perhaps the worst possible scenario for buyers. Like you, other buyers have been on the fence too. When rates decline, other buyers hop off the fence and jump into the game. They become your competition for buying the same homes you are looking at.

When this happens, it can put pressure on the market and cause prices to go up. We saw this movie a few years ago when the rates were lower. Buyers were tripping over themselves to buy anything they could. At this point, sellers are not your competition. Your competition is all the other buyers looking to purchase the same home you are.

Added Benefit

Not only can you lock in a home price today while there are fewer buyers competing for more homes, you have an added benefit. You may be able to refinance later when rates come down. Contrast this with buyers who wait. They may be paying a higher price for the home. You locked in your price when rates were higher, and now you can refinance at the same rate they’re trying to buy a similar home for. You’re both financing at the same rate down the road, but you may be in the home for much less because you bought before prices started rising again.

In all three scenarios a buyer is better off buying today than waiting for rates to drop. We haven’t even mentioned yet the tax advantages of writing off interest versus rent. It’s easy to follow the masses and do what everyone else is doing because there is safety in numbers.

The truth is, this is where the opportunity lays. Opportunity always comes from doing the opposite of the masses. In the stock market you buy when everyone else is selling and sell when everyone else is buying. While we are not giving stock advice or predictions on what the real estate market will do, we do know a few things.

Over time, owning your own home is a good bet. The sooner you start that process the more wealth you are likely to have over your lifetime.

Home Buyer Seminar

The Ellis Team conducts home buyer seminars for people wanting to learn how to get into their first home or build wealth through real estate. If you’d like to attend a future seminar, give our office a call at 239-489-4042 We’ll be happy to get you into our next seminar, or meet with you one-on-one if that helps too.

You can also search for all the homes in MLS at www.LeeCountyOnline.com Our team is experienced and can give you the latest market data to help you make better decisions. We also have access to financing options that you might not know about. We have ways to get that rate down and several programs to get that down payment down too.

The Ellis Team looks forward to helping you make a good decision for your family. If you are a seller, you should call us too. Put our Know How to work for you. Experience wins the day, and the Ellis Team definitely has the experience.

 

Good luck, and Happy House Hunting!

We’d like to introduce you to the neighborhood market report update, and it’s a good one. It’s a popular feature for those that know about it, and one we haven’t found on any other website. It’s just one of the features at www.LeeCountyOnline.com that makes it the Go-To real estate website in Southwest Florida.

Neighborhood Market Report Update

 What is the neighborhood market report update and why is it important to me you might ask? This report shows all the active listings, pending listings, and sold listings in one easy report.  However, it also allows you access to all the photos of each listing, even the pending and sold listings.

In a nice and easy to read format, you’ll also be able to see the price per square foot and the days on the market. It will also show you the sold date on each sold listing, so you can decide which listings you want to click on and check out.

We find this particularly useful for those who have a home on the market or are considering putting their home on the market. You can quickly look at your neighbor’s kitchen, bathrooms, and flooring when determining where to price your home. Many times, those considering selling see what their neighbors home sold for if they are lucky. They really don’t get to see the upgrades and renovations unless they personally go inside.

We’ve included a sample report. We randomly picked a neighborhood that only had a few listings so you could get an idea of how the report shows the actives, pending, and sold properties. This neighborhood doesn’t have any pending sales currently.

Upcoming Changes

 We believe there may be a change coming soon to the way listings are displayed in MLS and on the portals. If these changes occur, it could drive more traffic to the bigger players who hold more of the listings, and the data. Currently www.LeeCountyOnline.com holds more of the data, and the Ellis Team combined with Keller Williams controls a large share of the market. By control I simply mean we work with a larger number of listings than a lot of brokers.

Find Out What Your Home is Worth

One of the other things people love on this site is the Free home valuation report. The quickest way to get there is www.SWFLhomevalues.com but it is hosted on the LeeCountyOnline.com site. The home valuation tool not only gives a fast value for your home, but it also automatically updates the value each month. This is especially helpful when the market is changing.

Advanced Searching Capabilities

Customers love the advanced search, which gives you control over 20 additional MLS features you can search on. And if that’s not enough, our agents can log in and help you create a search on every single MLS feature, even the ones you don’t know about.

In Person

Of course, Sande and Brett Ellis love talking with people about their real estate needs. We don’t hide behind a website to serve you. Our website is there to provide additional tools nobody else offers. Brett and Sande are here to provide insight and experience few in this market possess. Simply call us at 239-310-6500. We can’t help you if we don’t talk to you. Even if you’re not ready yet, no question is a dumb question.

Always Call the Ellis Team at Keller Williams Realty and let’s see what’s in your future.

SW Florida Real Estate Market Update

 

See last week’s article “Local Home Prices Down 3.6% Officially From Last Year“