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How a Stock Market Shakeup Affects Mortgages

Will the stock market shakeup affect mortgage rates and home sales? If you’ve been thinking about buying or selling a house, the recent financial headlines might be making you anxious. The Dow Jones Industrial Average, after peaking at 26,616 on Friday, Jan. 26, (Google Finance) dropped by 363 points on Tuesday, Jan. 30 – the sharpest drop since last May. The Dow lost 540 points over two days. As investors sold bonds, stock prices declined.

The Stock Market Shakeup and Home Sales

Since then the market has continued to be turbulent. In February, it registered its biggest monthly drop (4.3%) in two years. Then, President Trump’s tariffs announcement made it drop 420 points on March 1.

Investors are fearful because they don’t know whether these changes are the beginning of a serious correction or just a blip in the 8,000-point upward trend the Dow has experienced since President Trump’s November 2016 election. So how does the recent shakeup affect you if you’re thinking about buying or selling a home?

Buying in a Turbulent Market

The yield on 10-year U.S. Treasury notes has risen. When the yield on these notes increases, mortgage rates increase. On Nov. 10, 2017, the average 30-year fixed-rate mortgage charged 3.73%, according to Bankrate; by Feb. 9 the rate had climbed to 4.26% – an increase of more than 0.5% over just three months.

To put that in perspective, for every $100,000 you borrow, a 0.5% interest rate increase will cost you $28 per month ($336 per year). On a $250,000 mortgage that’s $70 per month ($840 per year).

Another factor that’s pushing mortgage rates up is that the Federal Reserve raised the federal funds rate target by 0.25% in December and is expected to continue to raise this rate over the course of 2018. Meanwhile, a lack of housing inventory has pushed home prices up.

If the recent stock market fluctuations are the precursor to a recession, layoffs could be widespread, and no one wants to be saddled with a new mortgage while they’re unemployed. Still, for the average individual pursuing home ownership as a lifestyle choice and a long-term investment, timing the market shouldn’t be the goal; making a wise, long-term decision should.

If a recession materializes,home prices could fall, perhaps making it easier to buy a home if you remain employed – and most people do. But as interest rates rise, you could find yourself facing a monthly payment similar to what you would have with higher home prices and lower interest rates. And, of course, if you’re also selling a house, the lower prices will leave you with less to spend on your new home.

Stock-market volatility underscores the importance of buying a home you can comfortably afford, one whose mortgage payments, maintenance costs, homeowner’s insurance and property taxes are well within your means. It also underscores the importance of having an emergency fund. It might be a good time to buy a home before rates increase any further, but only if you’re otherwise ready and only if you find a home you will be happy living in for years. You’re not going to care if your monthly payment is $80 cheaper if you don’t feel satisfied with your home.

Selling in a Turbulent Market

The median U.S. home price has increased by about $100,000 since January 2010, according to data from the National Association of Realtors. However, the association says we do not appear to be in a housing bubble, so there’s no need to panic and try to sell your home before prices plunge.

Home sales are often driven by factors beyond our control, such as job change, death and divorce. Choosing to sell a home when market conditions are ideal is rarely an option. Still, if you do have flexibility in when to put your home on the market, is now a good or bad time to do so, given what’s happening in the stock market and the broader economy?

If your home’s value has increased substantially since you bought it, then you should have the positive equity you need to pay off your mortgage and make a down payment on your next home. Mortgage rates are still relatively low, making it a good time to take out a home loan. Inventory is low, which could put your home in high demand but also make it hard to find a place to buy. Indeed, finding the right home to buy is the biggest challenge buyers face, according to the National Association of Realtors.

The Tax Bill Tie-In

Because the December 2017 tax bill doubled the standard deduction, fewer homeowners will itemize their deductions, including mortgage interest. The $10,000 limit on state and local income taxes (SALT) and property taxes also makes it less likely that homeowners will itemize and get a tax break for these homeownership costs.

In addition, new homeowners will only be able to deduct mortgage interest on a maximum of $750,000 rather than $1 million in mortgage debt as they can now. This change, however, won’t affect all that many home buyers.

Cumulatively, the tax bill changes could affect home prices, especially in states most affected by the SALT provision. Homeownership could become more expensive without the tax deductions, decreasing demand. However, the higher standard deduction, across-the-board tax rate cuts and the expanded child tax credit could put more money in home buyers’ pockets, offsetting this change. The National Association of Realtors predicts that existing home sales volume and prices will moderate in 2018 because of the tax law. (For more, see How the GOP Tax Bill Affects You.)

The Bottom Line

Buying or a selling a home is a slow and expensive process with long-term implications for your lifestyle and finances. Short-term stock market shakeups should not be a factor in home buying or selling decisions. Your personal circumstances – including your personal finances – should be the biggest driver of your real estate decisions. (For more, see Playing Hardball When Selling Your Home.)

Read more: How a Stock Market Shakeup Affects Mortgages | Investopedia https://www.investopedia.com/personal-finance/how-stock-market-shakeup-affects-mortgages/#ixzz596SVio68
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National Federation of the Blind Applauds Introduction of AV START Act

National Federation of the Blind Applauds Introduction of AV START Act

Legislation Will Promote Access to Automated Vehicles for the Blind


Baltimore, Maryland (September 29, 2017): Today the National Federation of the Blind commends Senator John Thune, Chairman of the Senate Committee on Commerce, Science and Transportation, Senator Gary Peters, Senator Roy Blunt, and Senator Debbie Stabenow for introducing the American Vision for Safer Transportation through Advancement of Revolutionary Technologies (AV START) Act (S. 1885). This bill will promote equal access to automated vehicles for the blind and others with disabilities through the prohibition of discriminatory licensing practices and the promotion of accessible user interfaces.

“The advent of automated vehicle technology presents tremendous potential benefits for the blind and other Americans with disabilities,” said Mark A. Riccobono, President of the National Federation of the Blind. “From more reliable transportation to greater access to employment, automated vehicles will be a valuable tool improving the opportunity of blind people to live the lives we want. But none of these benefits will materialize if the principles of equal access and opportunity are not front and center. The National Federation of the Blind therefore calls for automated vehicle technology to be accessible to everyone through nonvisual user interface options and nondiscriminatory public policy, and applauds Chairman Thune and Senator Peters for introducing a bill that takes positive steps in that direction.”

The AV START Act specifically prohibits states from issuing licenses in a manner that discriminates on the basis of disability. The legislation also creates a disability access working group, tasked with promulgating best practices and recommendations on the accessibility of user interfaces and vehicle design more broadly. The bill specifically denotes “accessibility” as a component of reporting requirements for vehicle manufacturers.

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About the National Federation of the Blind
The National Federation of the Blind knows that blindness is not the characteristic that defines you or your future. Every day we raise the expectations of blind people, because low expectations create obstacles between blind people and our dreams. You can live the life you want; blindness is not what holds you back.

CONTACT:
Chris Danielsen
Director of Public Relations
National Federation of the Blind
(410) 659-9314, extension 2330
(410) 262-1281 (Cell)
cdanielsen@nfb.org

 
 
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