What will your monthly mortgage payment be?

Here's an easy way to calculate what your mortgage, tax and insurance payment will be every month if you buy a home here in So. Cal.

First, THIS IS JUST AN ESTIMATE CALCULATION. Your payment may be different, but let's assume for now that all other things are equal -- you have good credit, lack excessive debt, and are putting 20% down on your home purchase.  Now, divide the purchase price in half and take off two zeros (or use one of the many great online calculators).

Examples:
- $500,000 purchase price = $2500 month mortgage, tax, insurance (called PITI).
- $1,000,000 = $5000/mo PITI
- $1,200,000 = $6000/mo PITI
- $1,500,000 = $7500/mo PITI

...And so on.  Condo and townhouse buyers will need to add their HOA dues on top of this.

It's really important to know that the Federal Reserve intends to raise rates more this year, so these numbers are just for now.  Yes, property taxes and insurance are still somewhat deductible from your taxes, but the numbers above reflect the outgoing cost each month.

The Fed raised interest rates again, and probably will do so two more times this year.

Today's L.A.Times ran this article about interest rate rises and what they might mean to you.  Interest rates up = home prices down, right? Not so fast.  From another article about how expensive homes are here: The UCLA Anderson Forecast said there is no sign of a correction in home prices around the corner. The report forecasts job growth of 2.2% this year, 1.7% in 2019 and 0.8% in 2020.

The Federal Reserve says they are definitely, positively going to raise interest rates.

Check out this article from today's L.A. Times.  Click here for link.  Yup, the Fed now says that there is no doubt they'll raise interest rates, and soon. Nooooo!  The good news is that the rise will come gradually, so it doesn't shock the economy.

What that means for home buyers: interest rates have been gradually inching up this fall anyway, but it means that buyers will have higher mortgage payments than in the recent past.

What this means for home sellers: there will be fewer buyers, especially for starter homes and condos.  There probably may still be multiple offers on properties, because inventory is short.  However, if a house for sale sits on the market for more than a few weeks, a price reduction is probably warranted.

No interest rate hike in 2015? That's good news for buyers.

Check out this article from today's L.A. Times here.  Interest rates, including mortgage interest rates, won't be going up this year. This contradicts pretty much everything the Fed has been saying about interest rate hikes since the beginning of 2015, but hey, I'll take it.

The Fed is leaving rates unchanged

For now, the Fed is leaving rates unchanged. Whew! What will this mean for Southern California real estate? Buyers won't have to worry about their interest rates spiking, and sellers won't have to worry about a lot of buyers being knocked out of the real estate market due to high rates.

And now for a little good news

The Federal Reserve Bank has announced that they will keep the prime rate low for two more years.  This likely means that mortgage interest rates will stay low, too.

Happy Mothers Day! And Sunday Morning Reading

Happy Moms' Day to all you mothers out there. There are some interesting real estate-related articles in today's papers. First and foremost, from the L.A. Times, is an article titled Appraisal Shake-Up Sparks Ire. My take on this: a computer in, say, Des Moines, can't appraise your house. It can't determine your upgrades or ambience (which, yes, do make a difference to prospective buyers). The other articles are from the New York Times. Gretchen Morgenson's first several paragraphs are interesting. You can skip past that. I've also included "When Should the Fed Crash the Party" and an article on storage space "foreclosures." Yikes.