Q: Our granddaughter and her husband were starting to look for a house until the interest rates on mortgages went up to 6.0%. They’re in shock and now say that they’re going to wait for them to come back down to 3.5% – 4.0%. My husband and I laughed and told them that our first mortgage was at 14% in the 1980s. I don’t think they believed us. Can you please give them some insight?
A: With age comes experience and wisdom. Over the last 11 years people have gotten spoiled with historically low interest rates that were below 5% for a 30-year conventional mortgage. Historically that is/was not normal. From 1972 to 2022 the 50-year average is 7.9%. Here’s a quick snapshot by decade: 1972 = 7.38%, 1982 = 16.04%, 1992 = 8.39%, 2002 = 6.54%, 2012 = 3.66%, 2022 = 4.52% (through June). I dug a little further to find in 1956 the rate was 5.5% and in 1964 it was 5.45%. Just a reminder that in October 1981 the mortgage interest rate was 18.45%! At the time of finishing this column on August 1, 2022 the rate for a 30-year mortgage was around 5.5% which historically speaking, is below the 50-year average of 7.9%. Higher than what everyone got use to, but not too shabby either. Will we see rates in the 3%-4% range again soon? I certainly will not be holding my breath. If the rates drop in the future they can always refinance to the lower rate.
Q: We sold our home recently and while reviewing the closing documents a week later, I noticed that we paid for title insurance and so did the buyer. Was this an error and did we get taken advantage of? If it’s correct how come we paid so much more than the buyer?
A: You did not get taken advantage of. When you have a property sale with a mortgage involved there will be two title insurance policies; an owner’s policy and a mortgage/lender’s policy. In layman terms, the owner’s policy is paid for by the seller to ensure that the buyer has clear title to the property from the seller. The mortgage/lender’s policy is paid for by the buyer to ensure that the lender has clear title to the property from the buyer (especially being in the number one position in front of all other liens). The owner’s policy costs more than the mortgage/lender’s policy because it is the main policy.
Market Update: June’s market update for Macomb County and Oakland County’s housing market is as follows. In Macomb County prices were up by almost 15% and Oakland County prices were up by more than 10% for the month. Macomb County’s on market inventory was up by more than 26% and Oakland County’s on market inventory was up by almost 7%; a continued welcome sign. Macomb County average days on market was 15 days and Oakland County average days on market was 13 days. Closed sales in Macomb County were down by more than 7% and closed sales in Oakland County were down by almost 16%. (All comparisons are month to month, year to year.)
Steve Meyers is a Real Estate Agent/Realtor at RE/MAX Metropolitan located in Shelby Twp., and is a member of the RE/MAX Hall of Fame. He can be contacted with questions at 586-997-5480 (voicemail) or email him at Steve@AnswersToRealEstateQuestions.com You can also visit his website: AnswersToRealEstateQuestions.com
