Interest Rates and What They Mean for You

Interest rates are on the rise. What does this mean for you?

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Trouble is brewing, and mortgage rates are behind it. You see, the average 30-year fixed mortgage rate recently rose to 4.94%. Just for reference, that's the highest level we’ve seen in nearly eight years.

It's true that we've had some stock market volatility since then, and this has tempered the mortgage rate a bit.

That's because volatility in the stock market causes investors to look for other opportunities, which tends to push interest rates, including the mortgage rate, downward.

However, in the near to mid term, I believe that mortgage rates will stay at these higher levels or even rise. This situation is certainly having an effect on the real estate market. For example, mortgage applications are 16% lower than they were a year ago.

And mortgage applications to buy a home, rather than refinance, are at the lowest level in two years. In other words, it took a while, but rising mortgage rates are finally taking a toll on homebuyers.

Now, to be fair, this isn't just about the mortgage rate, it’s about the rise in home prices as well.
 

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This isn't just about the
mortgage rate, it’s about the
rise in home prices as well.

”

 

When you combine those two things, you get lower housing affordability. In fact, earlier this year, housing affordability reached a 10-year low and home prices and mortgage rates have only risen since.

So what does this mean for you? Well, if you're thinking of selling your home, this means that you should start the process as quickly as possible.

Demand for homes still remains high, and there's a good chance you could achieve a top price for your home and sell quickly.

On the other hand, if you're looking to buy, then the market might finally become more favorable to you, as more homes have become available than was true in the recent past.

If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.

Enjoy a Free Pumpkin Pie This Thanksgiving

How can you score a free pie this holiday? Find out here.

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The Chad Schwendeman Real Estate Group's Pie Day Giveaway will take place on November 19 and 20 from 4:00 p.m. to 7:00 p.m. You can stop by our office and pick up a pumpkin pie at no cost to you. Simply register online here. While you take care of the turkey and stuffing, we’ll be taking care of dessert.

Join Us at Our 3rd Annual Octoberfest

Our third annual Octoberfest is coming up soon
and we hope to see you there.

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Our third annual Octoberfest celebration is just around the corner, and we hope to see you there. Join us on Saturday, October 6, from 5 PM to 8 PM at our Baxter office (7153 Forthun Road).

The event will be catered with food from Prairie Bay and beer from Jack Pine Brewing, and there will be a live musical performance by The District. All in all, it’s sure to be a great time.

This is just our way of saying thank you to our friends, family, and clients for all of your business, referrals, and support.

Best of all, this event is totally free. However, we do need a headcount in advance so please RSVP here to save your place.

If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to seeing you soon.

Why Investing in a Starter Home May or May Not Be a Good Idea

Investing in a starter home isn’t the right move for every homebuyer.
However, it may be an advantageous move for some.

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Should you invest in a starter home? Or is it a better idea to wait and save up for your "forever" home?

First off, let's make sure we are talking about the same thing. Economists often define a "starter home" as being in the lower third of a market's valuation (as opposed to trade-up homes and luxury homes). For many homeowners, however, the decision to purchase a starter home is not about price. Instead, it is about how long they plan to stay there.

This is where the dilemma really lies. Buying and selling a home, as well as moving in and out, both carry specific expenses. Also, since the bulk of the mortgage payments for those first years go to interest, you are unlikely to build up much equity if you only own the home for a short while.

In fact, according to one estimate, the break-even point for a starter home is somewhere between five to seven years. In other words, if you're planning to stay in the home for just a few years, it might not make sense to buy it in the first place.

Am I telling you not to buy a starter home? No. There are definitely situations in which buying a starter home makes perfect sense.
 

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A starter home can help you save money and build equity.

”

 
For example, if you’re planning on staying put for five or more years, a starter home will save you money on rent and help you build up equity. Purchasing a starter home also makes sense if the home has the potential to become your forever home with the right renovations or additions.

If you are open to keeping the home and renting it out later in case plans change, buying a starter home may be a wise choice, as well.

Ultimately, this will be a decision that is based on your own unique preferences and places.

If you weigh all of these factors in and do decide that a starter home makes sense for you then there's something important you must realize: The best time to buy a starter home is coming up soon. Fall is the season when starter home inventory peaks and listing prices drop, according to the real estate portal Trulia. This means you will have the most options, at the most affordable prices.

If you have questions about the current Baxter real estate market, including whether a starter home is right for your unique circumstances, give me a call at (218) 831-4663. I'm here to help.

Vote EXIT Lakes Realty Premier as Best Real Estate Company

Vote for EXIT Lakes Realty Premier!

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The EXIT Lakes Realty Premier team and I were nominated by the Brainerd Dispatch as a candidate in their “Best of” contest. I just wanted to take a minute to encourage you to vote for us as the best real estate company in the Brainerd Lakes area. We have been working hard to bring you quality service for a long time and would appreciate your vote. You can follow this link to vote daily until August 21.

Why Now is a Great Time to Be a Real Estate Investor

Do you know what a triple play is when it comes to real estate investing? We’re going over that and more today.

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We’re finally starting to see home prices rebound in the Brainerd Lakes area and the market has finally shifted into a seller’s market. Now, more than ever, is the ideal time for people to get involved in real estate investing.

There are three profit centers that real estate investors can take advantage of to make money:

1. Use change. This comes from fixing up a property and flipping it for a profit.

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When you put these three profit centers together, you get a triple play.

”

2. Cash flow. You gain this from holding the property and accumulating passive rental income on a monthly basis.

3. Appreciation. This is from renting a home, fixing it up, and enjoying appreciation over time.

When you put these three profit centers together, you get a triple play. If you’re thinking about getting into real estate investing and you want to take advantage of this triple play, we would love to hear from you. Give us a call or send us an email and we can help you get started on the right path today.

Real Estate Remains Hot, Aside From the Luxury Market

Current market conditions are favorable for certain buyers and sellers. Here are the latest details.

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The real estate market remains red-hot. In fact, Zillow estimates that homes sold more quickly in 2017 than ever before. 2018 seems on-pace to beat 2017. However, one segment of the real estate market seems to lag behind.

I’m talking about luxury homes.

Prices in the top 5% of the real estate market increased just 5.1% in 2017, almost 2% lower than the rest of the market. What's going on?

Affordability does not seem to be an issue. More Americans can afford a top-level home than ever before. Instead, it might come down to two other factors.

First, uncertainty surrounding the new tax bill could be affecting luxury homes more strongly, and this might be the reason why some potential buyers are choosing to sit and wait until the details of the tax plan become more clear.

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Demand and supply are more evenly matched
at the top of the market.

”

Second, there is simply a greater supply of luxury homes compared to other types of homes. In fact, 53% of the available housing inventory is in the premium segment, compared to 23% for starter homes and 24% for trade-up homes.
 
In other words, demand and supply are more evenly matched at the top of the market, while in other segments, demand far outpaces supply. What does this mean for you?

If you've been thinking about trading up to a luxury home, now might be the ideal time to do so. With the lack of buyers in this price point, you may be able to get the very best deal for a luxury home that we’ve ever seen. The red-hot demand for starter and trade-up homes means you could sell your home for top dollar and at record speed. The limited price growth and greater inventory at the luxury end mean you could have your pick and find a special, unique, and customized home that perfectly suits your preferences.

If you have any questions about the current Baxter real estate market, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

Introducing a New Way To Sell Your Home

Avoid the hassle of listing by selling to us directly through our new “Buy It Now” program.

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I am excited to inform you of a new program we are rolling out.

Across the country, we are seeing companies such as Opendoor and OfferPad take many markets by storm. In cities such as Phoenix, Las Vegas, Dallas, Orlando, and more, there are double-digit market shares for these companies. This allows sellers to avoid listing their home for sale but still get an offer.

In response to this popular option, I want to introduce you to our “Buy It Now” program.

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We will buy your home for cash and
close when you want.

”

If you are thinking of selling your home, but do not want to deal with the hassle of open houses, unqualified buyers, and deals that fall apart because of home inspections or financing this may be the program that is right for you.

You can visit our new website clickthensold.com and check out our new Buy It Now program for yourself. If this option makes sense for you, we will buy your home for cash and close when you want.

If you have any questions or are thinking about listing your home, please feel free to contact me. I would be happy to speak to you about this exciting new program.

Join Us for Hypnotism, Laughs, and Free Family Fun at Chad's Comedy Night

To show just how much we appreciate your support, we’d like to invite you to join us for a free night of comedy and family fun.

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I’ve got exciting news: You’re invited to our 2nd Annual Comedy Night!

This is going to be a great event, so please come out and join us this Saturday (May 19) at the Tornstrom Auditorium for a family-friendly show. The doors open at 5 p.m. and the show will start at 6 p.m. You won’t want to miss it.

Our special guest for the evening will be comedian hypnotist Steve Meade. Steve has hypnotized hundreds, if not thousands, of people and has performed worldwide for crowds as large as 30,000. Best of all, the show will be totally free. This is just our way of saying thank you to all of our friends and clients for their support.

“

This great event is just our way of saying thank you to our friends and clients.

”

To RSVP, simply go to www.chadscomedynight.com.

If you have any other questions or would like more information, feel free to give me a call or send me an email. We look forward to seeing you there!

What You’ll Need to Get Pre-Approved

Our market is extremely competitive at the moment, so getting a pre-approval is paramount for buyers. Today I’ll let you know what you’ll need to get to that point.

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One no-brainer aspect of preparing to buy a home is getting pre-approved for a mortgage. Do you know what it takes to get pre-approved for a mortgage? If not, then you’re in luck. I’ll be discussing the process for you today.

In a seller’s eyes, a buyer with a pre-approval is a buyer with a suitcase full of money. In our ultra-competitive market, pre-approval could be the difference between having an offer accepted and watching your dream home slip into someone else’s hands.

Here’s what you’ll need in order to get pre-approved:

1. Proof of income. At a minimum, the lender will want to see pay stubs for the past 30 days. If you’re self-employed, they may also require the last two years of your tax returns or statements.

2. Proof of assets. You’ll need to provide statements for your checking, savings, or other investment accounts in order to prove that you have the assets to put your down payment down on your dream home.

3. Good credit. Most lenders reserve the best rates and the lowest closing costs for those who have the highest credit score. Going to the right lender is critical—if you have a lower score, find a lender who can coach you through the process to repair your credit and improve your score.

  

“

In our ultra-competitive market, pre-approval could be the difference between having an offer accepted and watching your dream home slip into someone else’s hands.

”

 
The lender has committed to lending you a given sum of money for a certain period of time (typically 90 days). Once you’re pre-approved, what happens next?

Pre-approval will make the buying process faster, more convenient, and less stressful for you. Most importantly, it will make it more likely that your offer will be accepted anytime there’s a competing offer situation.

If you’re thinking about buying a home, don’t hesitate to reach out to me directly. I know several of the top mortgage lenders in the state of Minnesota and would be happy to make the introduction.

Why You May Be Sitting on a Pile of Cash

You can use the tappable equity in your home to improve that home or pay for other important expenses in your life.

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If you’re a homeowner with a mortgage, you may be sitting on a pile of cash.

How? The fact is, 42 million homeowners with mortgages have equity in their home. When added up, tappable home equity recently reaches as high as $5.5 trillion, which is $3 trillion more than what we saw when the market bottomed out in 2012.

In case you’re wondering, “tappable equity” is defined as the amount a homeowner could borrow before they hit the 80% debt-to-value ratio. Not surprisingly, many homeowners are looking to tap into these hidden reserves. Mortgage applications rose 4.1% last January compared to January 2017. Most of this increase was driven by refinances, as homeowners are looking to take advantage of low-but-increasing interest rates to take out some of that equity as cash.

Another option is a home equity line of credit, or “HELOC” for short. This is a kind of checking account for your home. While HELOCs have been growing in popularity, they’ve hit a snag recently because a new tax bill eliminates the deductions for the interest paid on a HELOC.

Many homeowners are looking to tap into these hidden reserves.

What are homeowners who tap into their equity actually doing with that extra cash? Most are using it to make their homes even better and more valuable. This could mean a kitchen remodel, some landscaping, etc. According to one survey, 80% of borrowers said they would consider using cash to renovate their home. However, there are other homeowners who are choosing to use their equity to cover things like education expenses, to pay down other debt, or simply to invest.

Should you tap into your home equity? I can’t say either “yes” or “no.” That’s something you’ll have to decide on your own. If you want to see what your home is currently worth in today’s market and what kind of equity you have, don’t hesitate to get in touch with me.

If you have any other questions or real estate needs I can assist you with, feel free to give me a call or send me an email. I’d love to help you.

Interested in Working in Real Estate? Apply Now!

We’ve recently opened a new office, and we’re looking to expand our team. Are you interested?

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I’ve got some really exciting news to share with you:

We have officially opened a new office in downtown Minneapolis, and we’re looking to grow our team!

If you’ve ever thought about a career in real estate, this is a great opportunity for you. In fact, we actually prefer those with no experience so we can train them from the ground up. You’ll be paid a salary, we’ll pay for your license, and help you create a lifestyle and opportunity like no other.

I’m proud to say that my buyers agents have been with me over 12 months. All of them make well over $100,000 a year.

If this is something that you’ve thought about and would like to explore, feel free to reach out to me directly at (218) 831-4663, or apply online at http://www.joinchadsteam.com/. I look forward to reviewing your resume and application in the future.

Interest Rates Will Be Rising Soon

Interest rates are creeping up. Here’s how people are taking advantage of the market now.

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We're in for a very competitive stretch in the real estate market.

First off, mortgage rates have started increasing. For the first time since last summer, the 30-year average mortgage rate is now over 4%. This follows a long period when mortgage rates were near record lows.

This latest increase might be more than just a temporary bump. Some experts predict that we've seen the last of sub-4% mortgage rates, thanks to strengthening inflation and broad-based economic growth.

Second, mortgage applications are also increasing. Applications were up in January by 4.1% compared to last year. This has been led by people looking to refinance their homes, while mortgage applications by homebuyers remained at steadier levels.

Homebuyers are looking to lock in the current, low rates.

Third, housing supply continues to be increasingly tight, with 10% fewer homes on the market than a year ago.

What do all of these numbers mean for you?

The growth in mortgage rates shouldn't affect the number of eager homebuyers very much because there is so much more demand than supply right now. However, this rise in mortgage rates might actually reduce the number of homes for sale even further.

Homebuyers should be looking to lock in the current, still fairly low mortgage rates. When mortgage rates increase further, homeowners will have less of an incentive to sell their current home and buy a new home, which will require a mortgage at a new, higher rate.

If you have any questions about where the current rates are at or you have any real estate needs we can assist with, please don’t hesitate to reach out and give me a call or send me an email. I look forward to hearing from you soon.