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All-Cash Sales Declined in June, Opportunities Arise For Home Buyers

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Florida had the highest share of all-cash home sales at 50.9 percent in June.

Chicago, IL (PRWEB) September 12, 2014

The Federal Savings Bank shares two recent releases highlighting the data showing all-cash sales declined in June.

The Federal Savings Bank was intrigued by a recent September 9th report from Corelogic has revealed a decline in all-cash home sales, giving mortgage-dependent home buyers more footing in the housing market.

In June, 33 percent of home sales were made with cash, according to recent data from CoreLogic. June’s rate of cash sales was down from 34.4 percent in May and 36.6 percent in June 2013. The decline marked a six-year low, and the last time cash sales were at this rate was 2008, which is seen as the unofficial start of the housing downturn. Since the U.S. real estate market has been improving, the presence of cash transactions has been decreasing, with CoreLogic noting there have been year-over-year drops each month since January 2013.

All-cash sales hit a peak in 2011, when they accounted for 46.2 percent of total sales. Prior to the downturn, these type of transactions averaged 25 percent.

The Federal Savings Bank found the CoreLogic in alignment with another recent report from RealtyTrac, which revealed a decline in all-cash and investor home sales in the second quarter of 2014.

New York has one of the highest cash sale rates
CoreLogic also broke the data down by states, noting Florida had the highest share of all-cash home sales at 50.9 percent in June. The Sunshine State was followed by Alabama (48.1 percent), New York (44.6 percent), Kentucky (40.1 percent) and Nevada (40 percent).

The high rate of all-cash transactions has been a notable trend in New York, particularly in New York City’s Manhattan area. Citing data from real estate expert Jonathan Miller, DNAInfo reported nearly 60 percent of condo and 30 percent of co-op purchases in the first quarter of 2014 were made with cash. Many of these home buyers are happy to avoid the steps required for buying a house with a mortgage and present stiff competition for first-time buyers who typically require financing.

Average down payments increased in Q2 2014
Despite the declining presence of cash sales, buyers are still doing what they can to remain competitive in the housing market. A recent report from LendingTree revealed the average down payment for a conventional loan granted to the marketplace’s customers was 17.28 percent of the loan amount in the second quarter of 2014. This was an increase from 15.78 percent the previous quarter.

Doug Lebda, founder and CEO of LendingTree, said the rise in average down payment percentages could be the result of buyers offering more to appear more attractive to sellers.

“We’ve seen an overall downward trend in down payments over the past 18 months, but appreciating home prices and pent-up demand has brought borrowers back into the housing market with more funds available for a down payment,” Lebda said. “Additionally, in certain markets, a competitive real estate environment may be forcing some homebuyers to put more money down in order to strengthen their offers.”

Contact the Federal Savings Bank, a veteran owned bank, for more information about preapprovals for low-cost financing, a viable tool for staying competitive in the housing market.


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Steer clear? auto loan refinancing

A lower car payment, what’s not to like?

It’s an enticing proposition, but refinancing an auto loan can often significantly increase the amount you have to pay over the life of a loan.

“The concept of lowering your monthly payments will often outweigh the financial sensibility of that decision,” said Jack Gillis, auto expert for the Consumer Federation of America.

And yet, a growing number of borrowers are electing to refinance their auto loan. Last year, auto loan refinance inquiries on LendingTree.com nearly doubled from a year earlier, according to the online lending service. Completed loans jumped 47 percent from the previous year.

But when might refinancing your auto loan be a smart move? Here are four factors to consider:

1. INTEREST RATES

Refinancing an auto loan enables you to pay off your lender and take on a new loan at a more favorable annual percentage rate, or APR.

That means that you generally wouldn’t consider refinancing unless you can get a lower APR. But there is an exception: If you want to lower your monthly payment and are willing to extend the repayment period for your loan. Of course, you will be paying more money over time.

Unlike mortgage loan refinancing, lenders generally don’t charge fees or closing costs to refinance an auto loan. That places a priority on shopping around for the best rate. In recent weeks, auto loan refinancing offers on LendingTree have been available for 1.99 percent for borrowers with the best credit scores.

Check lender websites or portals like Bankrate.com or LendingTree.com.

2. ESTIMATED SAVINGS

The most attractive outcome in any refinancing is to lower the amount of you will repay during the term of the loan.

Maybe you didn’t shop around when you went car shopping and feel you could have negotiated a lower interest rate. Or perhaps your credit score has improved significantly since you took out your auto loan, so you are now able to qualify for a lower interest rate. Refinancing could trim your finance charges.

Paying off your original loan when you refinance could help boost your credit score, as the loan would show up in your credit history as paid off.

Lenders and financial information sites often have online calculators that can help you estimate whether a new loan will save you money, such as: http://apne.ws/1ebKdr7

Many free financial apps are also available for smartphone and tablet users.

3. TERM OF LOAN

Prolonging the life of a car loan also can be risky because — unlike real estate which can appreciate — cars lose their value over time. Extending the loan term means that you will owe more on the vehicle than it’s worth for a longer period.

“This is a terrible position to be in if the car gets stolen or gets in a serious accident or you desperately need to sell,” said Gillis.

One rule of thumb: If you have less than two years left on your loan, avoid refinancing. “If it’s a cash-flow issue, it’s a consideration, but I wouldn’t do it,” said Rick Finch, general manager of LendingTree’s auto segment.

4. LENDER LIMITATIONS

Banks often cap both the amount they will lend and the repayment period for a refinancing. They may also limit the kinds of vehicles that are eligible.

Some lenders won’t refinance loans on motorcycles or recreational vehicles, for example. And typically, lenders will only refinance vehicles that are no older than seven years.

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