Potential home buyers should take note of the change in interest rates. The average rate on 30-year fixed-rate home mortgages hit a record low this week, after the Federal Reserve announced it would purchase Treasury securities over the next six months.

The 30-year mortgage averaged 4.85% in the week ended March 26, the lowest point since Freddie Mac’s weekly survey began in 1971. Last week, the mortgage averaged 4.98%; the mortgage averaged 5.85% a year ago.

Fifteen-year fixed-rate mortgages and five-year adjustable-rate mortgages also hit record lows. The 15-year fixed-rate mortgage averaged 4.58% and hasn’t been lower since 1991, when the survey began tracking the mortgage. The 15-year mortgage averaged 4.61% last week and 5.34% a year ago

This change amounts to a savings of about $450 in monthly mortgage payments for a $400,000 loan.

To obtain the rates, the fixed-rate mortgages as well as the five-year ARM required payment of an average 0.7 point. The one-year ARM required payment of an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

For a free loan consultation, contact us for a lender referral. Now is truly the time to be a buyer in this market.

I recently had clients who were looking to purchase a home in DC. After months of searching, we found a house that seemed to fit all of their criteria: size, location, amenities, and price. The seller’s agent had priced the property very competitively according to my research, and I turned in that information to my clients. We then put together an offer that was mutually agreeable to all parties.

I signed the paperwork and my clients said that they would go around and scope out the neighborhood to get as much information as possible. I commended them for their efforts and told them to keep me posted, and they were on their way. Low and behold, a few hours go by and I get a phone call from my clients who are in a panic, telling me not to send the contract back to the sellers. Why? They found some not-so-pleasant information pertaining to the property

First, the property was used as a halfway house for the mentally challenged. Second, a few months ago, one of the past residents was found bleeding to death in front of the house. They proceeded to talk to neighbors, went to the police station, and after all of this, they decided not to go forward, which is understandable.

Here’s the problem: Was the seller agent or the seller obligated to tell us about any of these? The answer is “no.” Why, you ask, when previous knowledge of these things could have a tremendous impact on how one drafts their offer, let alone write one? Well, in DC, along with many states, there is a statute that only covers “material” facts in seller disclosures. These pertain to actual knowledge of the property and its condition. It does not go beyond that, and therefore, lets the seller off the hook. This means that things like crime, death, suicide, hauntings, etc. are considered “immaterial” and therefore do not need to be disclosed

Here’s an excerpt taken directly from the Washington, DC Consumer and Regulatory Affairs website:

Licensees owe their Clients Standard Duties. What are those duties?

• Perform the terms of the brokerage agreement
• Promote the client’s best interest by seeking a transaction acceptable to the client
• Provide financial accounting
• Disclose known material facts about the property or the transaction
• Exercise ordinary care
• Maintain client confidentiality, unless the information is required by law to be disclosed or the client consents to disclosure.

Licensees also owe their Customers Standard Duties. What are those duties?

• Treat all parties honestly and do not knowingly give false information
• Inform all customers and potential customers of the nature of their brokerage relationships, if any
• For what you are aware, disclose material adverse facts pertaining to the physical condition of the property
• Comply with the laws, particularly the Fair Housing laws (see DC Human Rights Act)
• There are limits on what an agent must tell a customer. Customers may wish to look to other sources for information important to their decisions (e.g., a real estate attorney).

It is, however, mandatory for agents to disclose any fact related to the property if they have full knowledge of it. This means that if you ask an agent who knows the history of the property and they lie to you, they’re in big trouble. Proving this can be difficult. In this case, I didn’t ask the agent about the previous use of the property, nor was there ever a question about crime in and around the property. Therefore, the seller and his agent have not committed a disclosure violation.

It is unfortunate to have something like this come up, but better to know this before moving in than after the fact. That’s why it is of utmost importance that the buyers do a thorough search of the property, its history, and make sure that all is within what they’re comfortable with. The burden of this research, unlike a home inspection, falls on the buyers. In other words, Buyers Beware!

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