Growing Pains

A guide to moving in today’s real estate market.

If you are already a parent or you are about to be one, you may feel pulled in a hundred different directions between your kids, work, partner, etc. With all of this going on, considering a move in today’s market may make you feel a bit lost. But the process doesn’t have to be so scary.

Destination and Duration

When buying a home, know where you are going and how long you are going to stay. Don’t let the market or the process of finding a new home do the steering. Make sure you have a definitive idea of the type of neighborhood you are looking for and the length of time you wish to own your home. At the very least, make a decision as to whether you are interested in a short or long term investment— five years versus 15. Everything else will follow from there. The length of time you wish to own your home will not only direct the particular school districts you are investigating but also the type of mortgage available to you.

Know Your Course

What type of mortgage will be the best for you in today’s market? In shopping for a mortgage, there are several factors to consider. The first, as noted above, is the length of time you wish to own your home. If you only anticipate holding onto the investment for between five to ten years, you may consider an Adjustable Rate Mortgage (ARM). An ARM sets your monthly interest rate lower than a Fixed Rate Mortgage. However, an ARM is subject to change based on market conditions within ten years of your purchase. Accordingly, it is important to have a general grasp on the factors affecting interest rates.

The national economy affects interest rates. Typically, the Federal government lowers interest rates to stimulate growth in a poor economy. Conversely, in a good economy, the Federal government will raise interest rates to combat inflation, as higher inflation negatively affects economic stability and long-term growth. At this time, however, inflation (excluding energy and food costs) is tame— around two percent.

In addition, the Treasury bond market serves as the benchmark from which mortgage rates are set. The bond market is sensitive to the decisions of the Federal government and other economic factors including but not limited to inflation, economic growth, consumer spending, housing, unemployment, etc.

Interest rates are still at favorable levels for buyers. However, as interest rates rise, purchasing power is affected as monthly payments increase. If your budget is sensitive to such changes, it would be in your best interest to lock in on current rates.

Road Side Assistance

With so much already going on to raise a family in New York, it is important to know that you can delegate a lot of the heavy lifting to professionals. The individuals who typically guide buyers and sellers are real estate brokers, mortgage brokers and real estate attorneys. In order to ensure you have responsible, competent professionals, rely on a referral. Ask your friends, family members and other professionals you trust to recommend someone good. A referral will provide a level of credibility for the professional.

  • Real Estate Broker: Typically, the seller is responsible for the real estate broker’s fee. As a result, a broker can serve as a great resource at no cost to the buyer. A broker who is well heeled in the market provides expertise on market conditions, researches properties that make the most sense for you and negotiates on your behalf. In addition, a broker provides comparable sales, similar to an appraiser, to ensure you get the best possible price for your new home.
  • Mortgage Broker: An experienced mortgage broker not only makes sure you are approved for the best loan available based on your circumstances, but also ensures you receive the best rate available in the market. Once you have decided which product best suits your needs, the mortgage broker will help secure the best interest rate available. As interest rates fluctuate every day, an experienced broker will help you decide the appropriate time and duration to lock in at the best available rate. Additionally, once locked, your broker may ‘float’ your rate with another bank both as a backup bank for your loan and to allow the possibility of improving on the rate if the market improves.
  • Real Estate Attorney: The role of a real estate attorney is to provide the buyer or seller with objective information regarding his or her transaction. If you are buying a cooperative or a condominium, your real estate attorney will investigate the financial health of your building. In addition, your attorney will draft and negotiate the terms of the contract, specifically clauses dealing with mortgage terms and closing dates. Make sure you discuss the terms of the closing date with your attorney before signing the contract. Under New York law, either party has a right to push back the closing date 30 days. As a result, the actual closing date will likely be later than the contract closing date. Make sure you are aware of this in advance, so that you can plan accordingly.

Make sure you fill the gas tank— moving is stressful so take care of yourself. The process of moving is typically lengthy. It may take anywhere from two to six months to complete the transaction. In order to withstand the long haul, make sure you take care of yourself. Delegate what you can to the professionals you have hired, so that you can take the time to relax with a yoga class, good book or long walk. By taking some time out for yourself, you will not only be able to withstand the stress of the move, but you will also be able to celebrate owning your new home.