A Big Investment: A Look at the Mortgage Market

Christopher Minardi.
Christopher Minardi.
Christopher Minardi.

Christopher Minardi, a mortgage broker in the East Hampton office of Guard Hill Financial, talks about how the mortgage industry is affected by fluctuations in the overall financial market and why he believes East End real estate is such a smart investment.

  1. What, if any, effect did the Federal Reserve’s recent .25 percent rate increase have on the mortgage industry?

The fed raise caused about two weeks of panic for nothing. The rate increase was built into the current yield and was easily digested. Bond yields are actually lower now than they were in December. The biggest change is that if anyone has a home equity line, most are prime-based and therefore those all went up by .25 percent.

  1. What do you see as good reasons to refinance and what are the benefits to doing so?

Saving money and time are two good reasons. We can always change from a 30- to a 20-year fixed, or 30 to 25, so the fear of losing time shouldn’t affect a decision to inquire. Some homeowners are also in ARM loans and now is a great time to convert to a fixed rate. If you can save 1 percent on your rate, usually there are some compelling options to refinance. I get people who call from time to time and the biggest reason is that they are lazy or don’t fully understand.

  1. At one point does it make sense to rent vs. buy?

It’s so hard to purchase out here and real estate is very expensive. You need a decent income and also a ton of savings, so my opinion is that if you can buy, you should. My question would be, is this a place you wish to stay and raise a family? If you have the savings, then real estate is a decent place to put your savings, as you can see the stock market is not a sure thing, and there is zero return on a savings account. Paying mortgage interest is a tax deduction, so there is an alternate savings there as well, plus a house can be rented out if needed or desired.

I think the cut off [between renting and buying] is really if you have the income and savings. Realistically you need to make 100 thousand dollars annually and have a ton of savings, 50 thousand dollars plus minimum, to purchase a house in East Hampton or Sag Harbor. If someone gets to that level, a home purchase usually falls into place.

  1. What kind of financial assistance is available to first-time home buyers on the East End?

None, honestly. The best thing out there is that first time home buyers that fall into a certain income range are exempt from paying the Peconic Land transfer tax. Most traditional and qualified mortgage products have the ability to go up to 95% financing for some products. There are many different ways to structure a loan. Most banks and lenders don’t have different guidelines or rates for first time buyers. The towns offer low to moderate income housing as a few areas were developed in the area, however that is not so much from the bank, it’s the town offering a lottery for a home at a lower price. However, the town still has some ownership on that land, so it’s not for free.

  1. What do you foresee for the next 12-18 months in terms of mortgage rates and the overall financial market? 

My guess is that mortgage rates will stay very stable for the next six months and if the economy and stock market can stabilize and gain, we might see a slight increase in mortgage rates. My feeling is that we are going to hover where we are now for a long time. The markets are too fragile now and slow and steady is my best recommendation. The financing market will be unchanged and banks are willing to lend to anyone that is qualified to pay them back.