Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.

However, it is not just the price of a home that determines its affordability. The monthly cost of a home is determined by the price and the interest rate on the mortgage used to purchase it.

Today, mortgage interest rates stand at about 4.5%. The average annual mortgage interest rate from 1985 to 2000 was almost double that number, at 8.92%. When comparing affordability of homeownership over the decades, we must also realize that incomes have increased.

This is why most indexes use the percentage of median income required to make monthly mortgage payments on a typical home as the point of comparison.

Zillow recently released a report comparing home affordability over the decades using this formula. The report revealed that, though homes are less affordable this year than last year, they are more affordable today (17.1%) than they were between 1985-2000 (21%). Additionally, homes are more affordable now than at the peak of the housing bubble in 2006 (25.4%). Here is a chart of these findings:

 

What will happen when mortgage interest rates rise?

Most experts think that the mortgage interest rate will increase to about 5% by year’s end. How will that impact affordability? Zillow also covered this in their report:

 

Rates would need to approach 6% before homes became less affordable than they had been historically.

Bottom Line

Though homes are less affordable today than they were last year, they are still a great purchase while interest rates are below the 6% mark.

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BINSR (Buyer’s Inspection Notice and Seller’s Response)

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You’ve hired a team of professionals and finished your home inspection. You have a list of items that you find deficient. Now what?

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The BINSR

The Buyer’s Inspection Notice and Seller’s Response (BINSR) is a document used in conjunction with the Arizona purchase contract. At the end of the 10th day of your inspection period you and your real estate agent will talk about what you want to be repaired/replaced. For example you may need an air conditioning repair, but you may also need to get a complete siding replacement or window replacement if you want to sell your home at the asking price. You may also need to complete major issues around your property such as roofing repairs with the help of residential or commercial roofing services.

Even though the document is titled “Buyer’s Inspection Notice” it is better defined as a request for repairs that were found during the inspection.

The document itself consists of three parts that happen in this order: the request, the response, and acceptance or cancellation.

The Request

A timeless English idiom states: “It doesn’t hurt to ask”. No matter how big or how small if a buyer wants it the BINSR is their time to ask for it. It’s not uncommon to see people asking for small things such as GFCI’s to be installed, or huge items like a new patio roof to be repaired by hiring the experts available on https://www.baroofers.com site

Ultimately what the buyer wants to be repaired on the house they can and will ask for it, even if it’s not necessarily broken.

The Response

Maybe the buyer asked for the everything and the kitchen sink, or maybe the buyer just asked for the leaky kitchen sink to be fixed. Whatever it is The Response is the part of the BINSR that the seller lets the buyer know which requests they are willing to perform.

For example if the buyer asked for the broken kitchen sink to be replaced, the house to be cleaned, and for the cracked patio cover to be replaced the seller does not have to do any of it. The seller can choose to just to replace the kitchen. If the seller doesn’t think the sink needs to be replaced and just wants to repair it they can indicate that in the response.

Acceptance or Cancellation

The seller has responded to the BINSR and the buyer is left with a decision. At this point in the Arizona Association of Realtors Contract the buyer is left with two options: Acceptance or Cancellation.

Acceptance means that the buyer will move forward with the purchase of the home.

Cancellation means that the buyer will cancel the purchase of the home, close escrow, and receive a full refund of the earnest money. As a buyer ultimately it’s up to you if the seller’s response will make or break the house for you.

How To Cancel The Contract to Buy a Home

In Arizona there are multiple different ways buyers can cancel a contract.  Here are the 5 main contingencies in the Arizona Residential Purchase Contract that provide buyers the opportunity to cancel buying the home without needing the seller’s approval.  The best part, you also get your earnest money refunded!

1. After Your Inspection

As a home buyer in Arizona your first opportunity to cancel is during the inspection period.  After you have completed your inspections and had a good look at the property you can reject the property by delivering the Buyer’s Inspection Notice and Seller’s Response, commonly referred to as the “BINSR”.  However, to cancel this way you must specify your findings that drove you to cancel.  For example, the roof needs to be replaced, or the A/C system is non-functioning and need to undergo emergency ac repair by experts like 7 Services – ac repair or other services that do AC replacement in Minster, OH and HVAC installation in Yukon, OK. If your cooling system breaks down during the peak of summer, finding reliable AC repair like ac repair in columbus quickly can make all the difference in restoring comfort to your home.

So if you are a home seller, it is strongly advised to prepare your home and ensure it is in good condition. To do this, you may need the assistance of professionals who have electrical training especially if your home needs electrical repairs and upgrades. Make sure that you hire professional electricians for expert services. The condition of other elements of your home like the roof and gutters is also essential. Therefore, you may have to hire contractors who specialize in Gutter System Repair and roof repair services.

2. Loan Contingency

If the bank won’t loan you the money to buy the home that you have agreed to purchase you aren’t expected to. The second way a buyer can cancel their home purchase is through a loan denial.  Loan Denial is after a “diligent and good faith effort” you are unable to get loan approval. Also, the notice to the sellers must be 3 days before your Close of Escrow or “COE”.  However, loan denial cannot be for the following two reasons: inability to get the interest that you wanted, or not having the down payment or funds needed to get the loan.  It is also important for you to understand what a “diligent and good faith effort” truly means.  Depending on the situation simply applying with one lender may not meet the requirements.

3. Appraisal Contingency

When you are buying a house in Anthem Arizona, one of the most important things to the bank is “what is it worth”.  In order to figure that out your lender or bank will order an appraisal of the property.  An appraisal is an evaluation done to determine the value of the property, what it is worth.  In the event that the appraisal comes in below the purchase price, the contract provides the buyer 2 options.  The first would allow the buyer to continue and make up the difference between the purchase price and the appraised value.  The second provides the opportunity to cancel buying the home and receive a full refund of your earnest money.

4. Title Commitment Review Period

Upon receiving the Title Commitment from the Title Agency you have 5 days to review all the information given to you. During your review period if you find information, such as deed restrictions, that would effect your desire to purchase the house you can cancel.

Say you are a furniture maker looking to buy your perfect home with a large back lot to build your workshop. However, when you review the Title Commitment you find that there is an easement in the back of the property right where you’d like to build the shop. This means you cannot build your shop and it negatively affects your desire to buy the property. Now you have the opportunity to cancel buying the home, because of the easement.

5. Covenants, Conditions, and Restrictions Review Period

The way to cancel a contract during the Covenants, Conditions and Restrictions, CC&Rs for short, the review period is almost identical to that of the Title Commitment Review Period. The Home Owner’s Association (HOA) will send you a copy of the CC&Rs for the house that you are buying. During your review period if you find information that would affect your desire to purchase the house you can cancel.

A good example of this is if you wanted to paint your house purple. It had been your lifetime goal to own a purple house and you are finally making it happen. Upon review of the CC&Rs you see that they only allow brown, tan, and light brown. Now you have the opportunity to cast your dreams of purple house away or you can cancel buying the home.