home loan
6 Tips For First-time Homebuyers
Market Update: Is Renting Cheaper Than Buying?
According to a recent survey done by Freddie Mac, 82% of renters think renting is more affordable than owning a home. But according to the actual data, renters spend more of their income than homeowners. Up to 36% of renters are spending a whopping 1/3 of income monthly! Even with these facts, renters still think it’s cheaper to rent due to the misconceptions of the amount of money needed for a down payment, as well as looming student loan debt.
Bills, Bills, Bills
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You toss and you turn as payday approaches and all you can think about is as soon as your paycheck hits… so do your automatic payments. As soon as the money comes in, the money goes out and that’s just the revolving door we watch as working middle-class individuals. However, today’s mortgage market update comes with some positive money saving news!
CoreLogic released it’s latest “Loan Performance Insights Report” and over the last 16-months, the national delinquency rate has been declining. Nationally we are currently sitting at 3.6% which is the lowest it has been in over 20 years.
{Image courtesy of CoreLogic}
In other national news, two housing bills were passed on Tuesday, July 9th, 2019, to await Senates vote before heading over to Trump’s desk for final approval. The first bill that passed was the “Protect Affordable Mortgages for Veterans Act of 2019”. This law will now allow a 210-day window of time to pass after the loan is established to start on the due date of the initial loan. This will help brokers and lenders remain compliant and allow those who are helping clients refinance know when the 210-day seasoning period starts.
The next bill that passed yesterday was the “Housing Financial Literary Act of 2019”. This bill will specifically help those who are purchasing a home for the first time.
How? You ask?
If the bill is to pass the Senate, those first-time homebuyers who take a pre-ownership counseling course, they will receive a 25-basis-point discount on their mortgage insurance. However, the bill is specific to only FHA loan products. In hopes that this bill passes it would allow first-time homebuyers to take more advantage of their financial futures and opens up more opportunity for those who are on the fence of being able to purchase their first home.
Mortgage Rates Are At A Three-year Low
Picture source: Google
This week mortgage interest rates have hit historical marks by reaching three-year lows. This significant marker of low rates comes just two months after The Federal Reserve announced rates have fallen and are not anticipated to rise again for the remainder of 2019. Low rates in conjunction with a surplus of home sales, the housing market is expected to continue to improve and show favorable conditions. Not only are the lower rates good news for potential homebuyers that are looking to enter into the market, but also continues to open opportunities to homeowners that are looking to refinance.
Market Update: The Federal Reserve Holds Rates
Image Source: Investopedia
No news is good news for the mortgage industry right now. The Federal Reserve announced; rates are holding steady! This recent announcement comes just 2 months after the initial Fed meeting that resulted in the decision to drop rates and is anticipated to keep them low for the remainder of 2019. Weaker inflation and labor economic data has also aided in keeping rates low. With the excitement of rates remaining steady and purchase season in full swing, now would be an optimal time to purchase a new home. The Federal Reserve holding mortgage rates provides optimism surrounding refinancing to lower mortgage payments, removing or lowering mortgage insurance and pulling cash out for Spring home projects.
Baby Boomers: Looking For Dream Retirement Homes
A lot of baby Boomers are retiring and looking to buy their retirement homes. According to the National Association of Home Builders, builder confidence has reached 76 for the 55 and older market. With the recent decline in mortgage rates, this has been particularly favorable for the demand on 55 and older housing. There could be slight challenges with the new demand of retirement homes being built for Baby Boomers. Rising construction costs and a lack of skilled labor, will present problems for builders, which could rev up cost.
For the last several weeks Mortgage Applications have been on the decline but that’s all changing. Within this past week, applications are on the rise and purchase season is picking back up. According to the Mortgage Bankers Associations, there has been a 2.7% increase compared with the previous week. Majority of new applications were from purchases. The average loan size for purchases has elevated slightly from $332,000 to $335.600.
Don’t forget before purchasing a home to take all cost into consideration, especially property tax. While property taxes range in price, they are calculated on the area you live in. According to ATTOM data solutions, property taxes have gone up on average. One of many reasons why property taxes are rising, is due to changes in the cost of government and the level funded by State taxes. Another factor in the rise of property taxes is that State and local governments are receiving less from the federal government and need to pay for all services provided by residents.
Down payments can feel like a looming cost and be the greatest financial barrier to home ownership according to research. However, there is a common misconception about the amount of money new homeowners need to put down. According to The Mortgage Report, new homeowners do not have to put much down at all. Most buyers put down only 10% in comparison to the 20% that many people think they need.
Going Digital: Zillow offers 3D home tours
New technology is on the horizon that will make it easier to attend home tours. Zillow has created a new 3D virtual tour, that is available for consumers. Potential buyers will never have to leave their home to attend open houses again. It’s a free resource that real estate professionals can use to help them serve more clients at a lower cost.
Home prices seemed to be higher toward the beginning of the year, which has increased the Housing Price Index according to the Federal Housing Finance Agency. The FHFA monthly HPI is based off the home sale prices from Fannie Mae and Freddie Mac. The HPI excludes cash sales and jumbo loans. Across the nine census divisions, the East South-Central Division saw a 1.4% rise in February. However, the Middle Atlantic Division didn’t experience any growth at all, as there was an appreciation decline of 1.2%.
Homeowners could be tapping into a nice amount of pent-up wealth in their homes. In the last quarter of 2018, US homeowners had a collective amount of attainable equity, close to 5.7 trillion dollars. According to Corelogic, at the end of 2018, homeowners only collected nearly 10,000 in equity. Many Americans are hesitant to do cash-out refinances as rates are said to play a major role. With rates taking a nudge upwards, this has a negative effect on home-owners.
New home sales are on the rise. According to Housing Wire, home sales rise 3% above 2018 levels. The momentum of home sales growth is credited to mortgage rates staying relatively low. The Census Bureau and The Department of Housing and Urban Development analysis shows, new home sales have increased 4.5% in March from February’s revised rate of 662,000.
According to the Urban Institute, the government had made mortgage credits available in the last several months in comparison to the last 10 years. The HCAI rose at the end of 2018, which means lenders are willing to tolerate defaults and take more risks. All of which makes a good environment for loan approval.
The American Dream and the looming recession
Refinances are finally making a comeback after last year’s drought. Black Knight revealed that an estimated 3.27 million homeowners could benefit from refinancing. This is an increase year-over-year by 16% from 2018. This means a jump of candidates around 75%, with rates at a current 10-month low.
Various areas throughout the country give low-income families a chance at the American Dream. Being a homeowner gives people a chance to benefit from their communities, as well as gain wealth from their home equity. With metros becoming more expensive and having a lack of affordable starter homes, low-income residents aren’t typically able to share in the prosperity of home ownership
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. To escape the high costs of homes, buyers are looking to relocate to inland markets.
With perks such as no down payment, it’s no surprise that VA loans have become increasingly more popular for first-time home-buyers. Benefits such as no mortgage insurance and strong loan servicing protections accompany this loan as well. Both prime and non-prime home-buyers using VA loans are reporting less early delinquency rates.
With a confident forecast of 2% economic growth for the next year, JP Morgan Chase chief economist Anthony Chan is dismissing concerns over a looming recession. During the Chicago Agent Magazine’s Accelerate Summit at the Chicago Merchandise Mart last Tuesday, he predicted that while it won’t be as exponential as last year, the economy will still see growth.
Purchase season, who has the power?
Realtor.com just provided data that reveals Millennials are finally ready to dominate the market. In January 2017, Gen X finally gave up its spot at the top for the most new mortgages. Millennials have held this position strong as their share of the mortgage market continues to rise. At the end of 2018 they were responsible for 45% of all new mortgages. However, while they are taking on larger mortgage payments, their down payments are significantly lower. The average for Millennials was only 8.8% while Gen X boasted an 11.9%.
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Roofstock is a real estate platform for buying and selling single-family rental homes. The company just announced that is it introducing a new program that will allow consumers to invest in a share of a single-family rental home without having to act as the landlord. With this new program investors can reap the reward of property ownership without the risk. Roofstock itself will be responsible for the financing, the insurance, property management, asset management, and the leasing. Profits from investment will be price appreciation, along with tax benefits and potential dividends. Investments can start as low as $5000.
According to LendingTree, 86.5% of mortgages borrowers now have a rate under 5% regarding a 30-year fixed. The most common rate offered was a 4.625%, which accounted for 19.2% of borrowers. This is notably below 2018. In 2018 87.3% of purchase mortgages were given a rate under 5%.
Over the past week purchase applications have rose 2% after four consecutive declines. This is also increased 2.5% from last year. With interest rates remaining low, there is certainly incentive for not only purchasing, but for refinancing as well. The refinance index just moved forward 6% from the previous week, while the purchase index moved forward 7%. This is a solid 3% higher than where the index was in 2018.
The Hall Way 