In today’s competitive real estate market, potential home-buyers need every advantage they can get.
One way to differentiate your offer from the myriad of others is a true “TBD underwritten” loan approval.
I’m not talking about the typical pre-qualification letter that is a cursory overview of a borrower’s ability to gain an approval, but a fully underwritten approval that is only waiting for a contract.
This process is for the home-buyer who wants a
solid, iron clad pre-approval that has been fully underwritten and signed off
by mortgage underwriters.
How does that work?
Well, it
works very similarly to a full-fledged underwrite – except the address is left
blank – or “TBD” (to be determined). The
underwriter analyzes the file as if it was a true loan – and provides the
actual loan conditions that the borrower must meet.
What’s the downside?
The only real
downside is time. This process could
take as long as a few weeks, because all documentation needs to be gathered
(tax returns, W2s, pay stubs, bank statements, etc.) and then analyzed by the
underwriter.
What’s the advantage?
There are a multitude of advantages. First and foremost, the borrower will know the exact size of the mortgage that they will be able to qualify for. They will have a very good idea of the monthly payment and be assured that the loan will go through.
Equally important, the offer you submit will essentially be like a cash offer. The real estate agent presenting the offer will share with the seller’s agent that the mortgage approval is actually confirmed – not pre-qualified. This will make your offer much more attractive to the sellers, as they don’t have to be concerned about mortgage approval.
Finally, the closing can take place more quickly than standard
financed transactions. Essentially all
that’s needed is an appraisal to confirm the value of the property. Instead of a 30 to 45 day close, these can be
done in less than 20!
In Conclusion
If you know that you will be purchasing a home in the near future,
ask your mortgage lender about a “TBD approval” to see if that’s an
option. If so, I highly recommend that
you go through the process early – and in that way you will be miles ahead of
your buying competition!
Please do reach out to me for more information, as I can absolutely help you with a “TBD” underwrite!
Saving for a down payment can be one of the most important and most challenging facets of buying a home. The larger the down payment, the lower your loan amount – and that results in a lower monthly payment, a lower interest rate in many cases, and it could help you to avoid mortgage insurance.
But, there are some out there that can get around bringing in a large down payment. Many have family members or others who are willing to help them out – and that’s when “gifting” comes into play.
The Gift Letter
Borrowers
can get help from parents or other people that care about them, but they will
need to get a signed statement from that giver that the money is, in fact, a
gift and not a third-party loan.
The
mortgage gift letter must include the giver’s name, address and contact
information, as well as the banking information of that particular account, as
well as the recipient’s name and relationships to the giver and the dollar
amount.
In most
cases the lender will have a template letter that will help you with this step.
A Key Piece – Documenting the Gift
When putting
together the gift letter, the giver needs to include documentation of where
that gift is coming from – this is extremely important
For instance,
the lender will most likely need to see a bank statement or other form of proof
verifying that the donor has the money to provide that gift and/or paperwork
showing an electronic transfer between the donor’s account and yours.
If the person
gifting the funds is selling shares of stock or other investments to provide
the cash for a down payment, the giver will need a statement from their brokerage account showing that
transaction.
Most
importantly, as a borrower, you don’t want to add the gift funds with any of
your other finances. Doing so could complicate the paper trail and cause the
lender to reject the gift altogether.
It’s easiest
to have the giver wire the money straight to escrow at closing – that way there
are no issues with documenting the gift.
Rules and Limits On Gifts
You might assume that you can just use
whatever financial gifts your loved ones give you for a down payment,
but using gift money is not as simple as you might think. The source of the
funds in your bank account, and the givers, will matter just as much as how
much money you actually have.
Secondly, the amount of down payment funds that can be gifted depends on the type of mortgage loan involved. If you’re getting an FHA loan with a 3.5% down payment, for instance, the entire down payment can be a gift.
On the other hand, if you’re using a conventional Fannie Mae or Freddie Mac loan, the entire down payment can only be a gift if you’re putting down 20% or more of the home’s purchase price. If your down payment is less than 20%, some of the money has to come from the borrower.
These rules are subject to change based on lending regulations,
so check with your mortgage lender to make sure that you transaction qualifies
for the use of gift funds.
Primary Residences
If a borrower is purchasing a primary residence, they can use
gift funds for their down payment. These following regulations apply:
If it’s a single-family home, you can use gift funds without
having to contribute any of your own money to your down payment.
If it’s a multi-family home, you can get a home without having
to contribute to the down payment as long as the down payment is 20% or more.
If the down payment is 20% or less on a multi-unit home, you have to contribute
at least 5% of your own funds to your down payment.
Second Homes
For a second home purchase, the following regulations apply
regarding gifts and gift limits:
If you’re making a down payment of 20% or more, all funding for
the down payment can come from the gift.
If it’s less than 20%, then 5% of your down payment must come
from your own funds.
Investment Properties
Gift funds cannot be used toward the down payment on any
investment property.
Who Can Gift a Down Payment?
Depending on the type of loan, there are different regulations
on who may give a down payment gift.
Conventional Loans (Fannie Mae/Freddie Mac)
A conventional loan through Fannie Mae or Freddie Mac means the
gift must to come from a family member. Per their regulations, family is
defined as:
Spouse
Parent (including step and foster)
Grandparent (including great, step and foster)
Aunt/uncle (including great and step)
Niece/nephew (including step)
Cousin (including step and adopted)
In-laws (including parents, grandparents, aunt/uncle, brother-
and sister-in-law)
Child (including step, foster and adopted)
Sibling (including step, foster and adopted)
Domestic partner
Fiancé
FHA Loans
With FHA loans, the list is nearly identical to the conventional
rules, including future in-laws. But, some restrictions do apply – so do check
with your lender for details.
While cousins, nieces and nephews aren’t able to give your gift
under normal family guidelines with an FHA loan, the FHA does allow for gifts
from close friends who have a clear interest in your life. This can include
extended family like cousins, nieces and nephews and even former spouses.
In addition to the ‘close friend’ guideline, the FHA also allows
for gifts from the following:
Employer
Labor union
Charitable organization
Finally, you can receive funds from a government agency or
public entity that provides homeownership assistance to low-to-moderate income
or first-time home buyers.
In Conclusion
Please reach out to me for more information on gifts and mortgage qualification, as it would be my pleasure to help you!
Let’s get this straight and right up front: every real estate transaction will have closing costs – title fees, origination fees for a loan (if you need to finance the property), and recording fees, just to name a few.
So, how can a buyer purchase a house without actually paying those closing costs? Well, read on for more!
What this really means is that the closing charges are folded into the loan balance — if the house can appraise for the selling price plus the closing costs.
And there are pros and cons to doing this, as will be highlight later.
It’s also likely that not every single closing cost can be rolled into your loan. The buyer will most likely still be required to pay some fees at the settlement table. Those specifics will vary by lender.
“Closing costs” is a
collective term for the various fees and charges you’ll encounter when buying a
home. Some of these fees come from the lender and others come from third
parties that are involved in the transaction, like home appraisers, homeowner
associations (HOAs), and title companies.
How much are closing costs
usually?
On average, homebuyers pay closing costs ranging from 2% to 5% of the purchase price. Unfortunately, this is only a ballpark figure, as there are many variables in each individual transaction. You can find out more specifics on closing costs here…
Many lenders will require that you apply for a loan prior to receiving a more precise estimate of closing costs; however, some lenders are more transparent with their available options and will do the necessary legwork to provide you a better idea of those costs.
Can you buy a house with no
closing costs?
The reality is that closing
costs have to be paid one way or the other – and by some or all parties in the
transaction. Your decision will be whether you pay them with cash when you sign
your loan, or as an added expense in each monthly mortgage payment.
How a no closing cost purchase
works – it’s all in the financing
Per Bundrick in his article: “lenders can structure no closing cost loans in two ways. The differences between them are subtle, yet the result is the same.”
You
finance the closing costs. In
this case, the lender will add your closing costs to your total loan balance.
Your monthly payments will be slightly higher, and you’ll be paying these
closing costs, with interest, for the full term of your loan — so, for example,
over a period of 15 or 30 years.
The
lender will absorb the closing costs in exchange for a higher interest rate. Again, you’ll pay a bit more each
month, and your total interest cost will be greater over the life of the loan.
Either way, your
monthly payment rises slightly. You’ll pay less at the closing table, but more
over the long term.
Is a no closing cost
mortgage a good idea?
The answer is….it
depends!
If you are a little low on cash and have found your dream home, then yes – rolling $4,000 to $8,000 into your mortgage is a good idea. It won’t increase your monthly payment by much and generally doesn’t impact qualification.
Also, if you plan on
moving, selling, or refinancing in the short term, wrapping your closing costs
into the balance can be a good strategy.
However, if you’re
going to live in your new home for the long-term, you will pay more over the
life of the loan by financing your closing costs or accepting a higher interest
rate.
So if this is your forever home and you plan on keeping the mortgage for 7+ years, it’s probably best to pay the closing costs up front.
It’s a good idea to put together a list of questions to ask potential lenders in order find out which one will be best for you. These and other questions should help you choose the right lender and the best home loan.
How do I obtain pre-approval?
One of the best ways to
ensure a smooth home buying process is what you do before you begin
your home search.
Mortgage pre-approval,
without the pressure of a closing date, is easier than trying to engineer a
full approval from the ground up. And having a pre-approved mortgage means you
can close faster when you’re ready to buy.
Ask the lender what documentation they need and what processes they have in place to secure and automated underwriting approval. If they can’t provide that information, find another lender! You can find out more about the pre-approval process here….
Which type of mortgage is best for me?
This question will help you know if you’re talking to someone who wants to sell you a loan quickly — or a trusted loan advisor who will be looking out for your best interest.
When you ask, “What are my
options?” for a particular type of loan, the mortgage lender should dive deeper
into your situation and ask YOU questions about your financial goals. You can really gauge the professionalism of
the lender by the questions he/she asks.
What’s your communication style?
Mortgage lenders can communicate with you in
multiple ways – including by phone, email and text. Some are tech savvy and
others prefer traditional methods.
The point is to be clear about what you
prefer.
If you respond more quickly to text messages
versus voicemail – tell your loan officer. Often times, there are time
sensitive issues that arise during the loan process, so it will make everyone
happy if your loan officer knows how to get questions answered, additional
documentation etc. in a timely manner.
How often will I be updated on the loan’s progress?
You
should be introduced to all parties that will be involved with your loan – from
the originator, to the processor, and any other assistants. Have their contact information handy during
the loan process.
And how
will you be updated on the progress: by email, phone or an online portal? How often?
I
recommend that you share your service expectations upfront, and check to see if
the lender you are working with has these types of processes in place that meet
your requirements. If not, move on!
How much down payment will I need?
A 20% down payment may be nice, but borrowers have multiple choices. Qualified buyers can find mortgages with as little as 3% down, or even no down payment, depending on the property location.
Again, there are considerations for every down payment option and the best lenders will take the time to walk you through the choices, based on your stated goals. You can find out more about down payment requirements here….
Will I have to pay mortgage insurance?
If you put down less than 20%, the answer will probably be “Yes.” Even if the mortgage insurance is “lender paid,” it’s likely passed on as a cost built into your mortgage payment, which increases your rate and monthly payment.
You’ll want to know just how much mortgage insurance will cost and if it’s an upfront or ongoing charge, or both. You can find out more about mortgage insurance here….
Are You Equipped to Approve Loans In-House?
Underwriters review loans and issue conditions
before approving or rejecting a loan. Ask
if the lender handles its own underwriting and does their own approvals. This can be a make or break proposition if
you need to close the loan in a timely fashion.
What other costs will I pay at closing?
Fees that are charged by third parties, such as for an appraisal, a title search, property taxes and other closing costs, will be paid at the loan signing. These costs will be detailed in your official Loan Estimate document and your almost-time-to-sign Closing Disclosure.
Of
course, you want to know what your target closing and move-in dates are so you
can make preparations. And just as important: Ask what you should avoid
doing in the meantime — like buying new furniture on credit and other
loan-busting behavior.
Is there anything that can delay my closing?
Well, buying a home is a complex process with many stages and requirements. While delays are normal, the best way to avoid them is to stay in touch with your lender and provide the most up-to-date documentation as quickly as you can. If you have any past credit issues or job related changes, let your lender know immediately to avoid any last minute delays.
Unless all of your clients are cash buyers, mortgages are an integral part of any real estate agent’s business. Knowing some basics about mortgages will make you a better adviser to your clients and a more effective agent.
With that in mind, here’s a brief list of topics that real estate agents should understand in order to best help and advise their clients.
Although it is by no means necessary to become a mortgage expert, the following five mortgage insights will increase your value as a real estate professional.
The minimum down payment is not 20%
Most agents already know this, but a 20% down payment is the amount necessary for a buyer to avoid paying private mortgage insurance (referred to as PMI) on the loan. There are many conventional loan programs require as little as 5% down.
For first-time homebuyers, recent conventional loan programs introduced to the market allow buyers to get a loan with only 3% down. If you work primarily with first-time homebuyers, you should also be aware of down payment assistance programs offered by local governments and municipalities.
Even move-up buyers should get a mortgage pre-approval
Many of the first-time buyers I work with get pre-approved so they
know how much they can afford to spend on their new home. But not all realtors
encourage move-up buyers to seek pre-approval, and I think they should.
The situation may have changed from the time their clients
originally took out a mortgage. Even if they’ve built up a lot of equity, it
may not help the buyer if their income or credit is not aligned with the price
of the property they hope to buy.
Oftentimes, people who have qualified for a mortgage at one time
are surprised by new and current restrictions and underwriting standards. For
this reason, real estate agents should encourage their clients to speak with a
mortgage broker even if the client thinks they already know the ropes.
This can help avoid surprises or disappointment further down the
line and save time for agents and their clients.
Shopping around for a mortgage will not hurt your credit score
Shopping around for a mortgage with multiple
lenders is highly recommended, and even though credit inquiries do impact a borrower’s
credit score, there is an exception when it comes to credit inquiries from
mortgage lenders.
All such inquiries made in the 30-day period
prior to scoring your credit are usually ignored. Furthermore, inquiries
outside of that 30-day period that fall within a typical shopping period are
counted as only one inquiry.
If you’re working on a condo deal, it is in
your and your client’s best interest to work closely with the mortgage loan
officer to make sure the property meets the lender’s underwriting criteria.
This is typically done through a condo questionnaire.
If you are the seller and state on your listing that the property can be conventionally financed, I highly recommend that you have the HOA documentation ready for the prospective buyer.
Among other things, they will be looking out
for things such as pending litigation against the condo association, the
percentage of units that are owner-occupied and whether any part of the
building is used for commercial activity.
Many condo transactions are either seriously
delayed or completely derailed by last-minute surprises that should have been
discovered early in the process.
Some realtors encourage their clients to shop around for rates at
the last minute or promise mortgage interest rates to clients that they have
seen online. This can often lead to frustration because not everyone will
qualify for those advertised, ultra-low promo rates and there may be additional
stipulations such as a quick closing or mortgage insurance.
That’s why I personally don’t promise rates until I have a
completed application and all supporting documents. No two files are the same,
so it’s best not to promise something over which we have no control.
There is a lot more to know when it comes to mortgages – and like I stated early, there’s no reason to become a mortgage guru! With that said, these five tips will help you look like a more that capable advisor in the eyes of your clients.
U.S. Air Force illustration/Senior Airman Grace Lee
Many consumers are shocked to find out that their Credit Karma or other online scores do not match their true FICO score when it’s finally run by their mortgage lender.
This happens quite often – and it’s important to understand
the differences and reach out to your mortgage professional first.
Unfortunately, many would-be buyers have an incorrect view
of their actual credit worthiness and begin looking at homes too soon in the
process.
To repeat, the key thing to remember here is to reach out to your mortgage professional to get your official FICO score.
Dive Deeper
I’d invite you to find out the particulars here – as the free online credit products and the FICO score used in mortgage qualification process are noticeably different. Essentially, they use different algorithms to come up with their own score.
Most lenders determine a borrower’s creditworthiness based
on FICO® scores, a Credit Score developed by Fair Isaac Corporation (FICO™).
This score tells the lender what type of credit risk you are and what your
interest rate should be to reflect that risk.
FICO scores have different names at each of the three major
United States credit reporting companies. And there are different versions of
the FICO formula. Here are the specific versions of the FICO formula used by
mortgage lenders:
Equifax Beacon 5.0
Experian/Fair Isaac Risk Model v2
TransUnion FICO Risk Score 04
The Key Takeaway
The major takeaway is that your Credit Karma score will be different than your FICO score…and in most cases, the free, online score is better than the FICO score – at least that has been my experience.
Most experts expect that the summer homebuying season will be quite strong. But a question remains about this real estate market: will it favor buyers, sellers, or both? Let’s take a closer look at who might benefit the most from the upcoming real estate buying season.
Remarkably, based just on consumer confidence, it appears that the summer homebuying season may be beneficial for both buyers and sellers.
According to Fannie Mae, one of the nation’s top mortgage investors, Americans are extremely optimistic about the housing market’s direction.
Growth typically means that it’s a good time to both buy and sell a home, and indicators are that Americans believe interests rates will stay relatively in check while their incomes will increase.
While consumer confidence may be high, some economists are ambivalent about the strength of the housing market.
There are some signs that the market is flattening, instead of continuing to race upward. Experts are actually divided on this issue, as home prices are still appreciating.
For instance, home sales at the national level are slowing slightly, although the rate of home appreciation is still increasing, albeit at a slightly slower rate. In addition, it’s taking a bit longer for homes to sell in some areas of the US, which means the days of homeowners benefiting from bidding wars might be on the wane.
This isn’t necessarily the case out west, as inventories are still low and there are more buyers that sellers. At the same time, with interest rates stabilizing, homes are still extraordinarily affordable, compared to historical norms.
So, who actually is going to benefit from the strong summer market?
Taking into account these facts, it looks like home buyers will have a slight advantage this summer. For starters, home prices are still on the rise but not as sharply as they once were.
Some sellers are also reducing their original listing price, which indicates they’re having trouble attracting buyers. Finally, the Federal Reserve has signaled that interest rates should stay relatively stable through the summer, which is the reason for the strong market, and as almost everyone knows, low interest rates are better for buyers. Rates have been steadily ticking downward over the last 2 months or so.
The summer homebuying season is going to be very strong, and tilted in favor of home buyers. If you’ve been thinking about buying a new home, now might be the perfect time – feel free to contact me for more information!
Despite the popularity of house flipping, the biggest barrier to entry and success in this space is cash. Without enough money, you can’t purchase the home, pay for renovations, or find a buyer for the property when the time comes to sell.
Fix and flip loans are used by short-term real estate investors to purchase and renovate a property before flipping it for a profit or refinancing it after rehab. This type of financing for flipping houses offers investors fast closings for properties in any condition.
Finance of America has a fantastic set of offerings in this category…..
Not sure whether you need the Fix & Flip Single Loan or
the Fix & Flip Exposure Limit?
The Fix & Flip Single Loan is designed for
investors who need funding to flip a single investment property.
The Fix & Flip Exposure Limit is a line of
credit offered to experienced investors who plan to acquire and/or renovate
multiple properties.
All Fix & Flip Exposure Limits allow
investors to close quickly.
Both Fix & Flip Single Loan and Fix &
Flip Exposure Limit offer the option of rehab funding, if needed.
Our commercial offerings are quite unique. These products are in-house from
origination to funding. Controlling the financing from origination to funding
allows our investors to reliably plan the timing for their projects. Timing is
always important in the real estate market, especially in construction and
rehab.
For experienced investors we establish an exposure limit and for new investors we start our first project together with a single mortgage. Contact me for more details.
Now that 2019 is here, let’s take a look at what we can expect regarding interest rates and the housing market.
Experts are predicting some interesting shifts moving into 2019, including continued home appreciation (although at a slower rate) and slight interest rate increases.
Let’s
take a look at the key components that drive the real estate market….
2019 Geopolitical/Finance Dynamics
One important way to understand what lies
ahead has to do with taking a look at world events and the other issues that
drive the economy. Here are a few things
that will impact the market in 2019:
Trade issues with China
Possible economic slowdown, although early 2019 results have been positive
Late 2018 Stock Market pullback – Early 2019 Rally
The Federal Reserve – 2 planned hikes in 2019
Rates set to rise in year ahead – How much and what will the impact be?
Keeping an eye on inflation…watch oil prices and wage pressures
Continued stock market volatility?
The Federal Reserve
The Federal Reserve raised borrowing costs four times in 2018, ignoring a stock-market selloff and defying pressure from President Trump, while dialing back projections for interest rates and economic growth in 2019.
By trimming the number of rate hikes they
foresee in 2019, to two from three, policymakers signaled they may soon pause
their monetary tightening campaign. Officials had a median projection of one
move in 2020.
The
Federal Open Market Committee “will continue to monitor global economic
and financial developments and assess their implications for the economic
outlook,” the statement said.
Here are
some things to watch in 2019:
Every meeting will have a press conference, making every meeting a live meeting, increasing speculation and volatility.
Federal Reserve “Dot Plot” shows 2 hikes in 2019
Inflation could rise with higher oil prices and wage pressures
Fed scheduled to reduce their balance sheet of mortgage-backed securities and treasury bonds by $50B per month
Prediction:Fed will hike 1 time to get the Fed Funds Rate (FFR) to 2.75%, although they would love to get the federal funds rate to 3% – and they will stay course on balance sheet reduction.
The pause in Fed rate hikes acts as important catalyst to turn the
tide in favor of Stocks.
Interest Rates
It’s not very often that major players across
an industry agree, but on this point, almost everyone does. Nearly all industry experts predict the
30-year mortgage will average above 5% for 2019.
Five percent used to be considered an
ultra-low rate. But after years of rates in the 3s and 4s, it seems pretty
steep. Still, affordable home payments
won’t be hard to find, even as we adjust to the new normal.
The National Association of Realtors (NAR)
predicts 30-year fixed interest mortgage rates to average around 5.3 percent in
2019.
“The potential buyer who’s thinking if now is
the right time to buy needs to do the math and determine what the impact of
potential rising rates would be on their payment,” said Paul Bishop, the NAR’s
VP of Research.
Here are some of the key factors for 2019:
Inflation is main driver of rates, and inflation should tick higher with oil prices rebounding and wages increasing. Many states increasing minimum wages.
Fed will continue to allow $50B to roll off balance sheet and is no longer buying
US Government borrowing more in 2019, which will add supply to the market that will need to be absorbed
More supply and less demand = higher rates
Stock market increases will most likely hurt rates
Prediction:The 10-year Treasury Note will trade between 2.75% and 3.25% for most of the year. High point for 10-year is estimated at 3.5%. Mortgage rates will fluctuate in the low-mid 5% range
30-year Fixed Mortgage Rates in the 5% to 5.5% range for most of
the year
Housing
Most experts predict the fevered bidding wars
and snap home-buying decisions won’t be as big of a factor in most
markets. Slower and steadier will characterize next year’s housing market.
That follows a 2018 that started off
hot but softened into the fall as buyers – put off by high prices and
few choices – sat out rather than paid up.
Affordability
issues will remain a top concern going into 2019, exacerbated by rising
mortgage rates. But some of 2018’s more intractable issues will begin to
loosen up. The volume of for-sale homes is expected to rise and diversify,
while the number of buyers is forecast to shrink.
Below are a few of the factors to watch in
2019:
Negative media
Rocky beginning of the year
Stocks begin to stabilize positively
Spring market rebound
Demographics still favorable – More demand than supply
Prediction: 3.5% – 4% year-over year. Appreciation still creates significant wealth – and the media will get this wrong.
Sales and appreciation moderate slightly, but housing remains
healthy, especially after Q1 for much of the US
Finally, more homes to choose from
One of the biggest complaints among buyers in
the last several years is that there weren’t enough homes for sale. In fact,
the supply of houses hit historic lows in the winter of 2017 and has yet to rebound
substantially. That fueled bidding wars, price increases and frustration.
The supply crunch is expected to ease some in 2019 with inventory rising 10 percent to 15 percent, according to many experts. But the increase will be skewed toward the mid-to-high end of the market – houses priced $250,000 and higher – especially when it comes to newly built houses, said Danielle Hale, chief economist of realtor.com.
That’s good news for move-up buyers, but not
so much for the first-time millennial buyer. “There’s still a mismatch on the
entry-level side,” she said.
If you have more questions about 2019 – and are thinking of purchasing, don’t hesitate to reach out to me, as it would be my pleasure to help!
You might find this hard to believe, but home prices are rising twice as fast as consumers think they are. Lack of awareness could be costing home buyers thousands each year they delay their purchase.
According to Fannie Mae’s monthly National Housing Survey, 41% of surveyed consumers think it would be “difficult” to get a mortgage approved today with some believing that their credit is too poor. Others think they lack sufficient home equity. Interestingly, that data shows that these concerns are really unfounded!
Per The Mortgage Reports Newsletter, “today’s market gives the opportunity to buy homes — first-time home buyers, move-up buyers, and real estate investors, too.”
As an example, one year ago, consumers told Fannie Mae that home prices would rise 2.6% over the next twelve months. Values gained more than twice that, as it happened.
Rising home values are positive returns on investments
In a modest inflationary environment, increases in home prices can be a good thing. If the price of the home is rising, the homeowner is also increasing their purchasing power, as well as their return on investment.
Historically, if investments are rising and inflation is tempered, the economy is thought to be moving along at a productive and profitable pace. Everybody has heard the phrase “a rising tide lifts all boats” – and that data shows that’s where we are most likely headed. So while the existing homeowners are increasing their purchasing power, the buyers who want to enter the market are also gaining financial strength. It really is a double whammy for buyers and sellers!
Buyer Education of the Current Situation is Key
There is real opportunity for potential home buyers out there – and Realtors and lenders need to help folks understand the implications of underestimating the rise of housing prices. Effectively communicating the value of the market is crucial to supporting the needs of potential buyers and sellers.
If done well, there should be plenty of support for the owners looking to upgrade and the new buyers wanting to enter the market for the first time. Hence, a rising market like this can create opportunities for the entire real estate community, including the new owners.
Product Knowledge is Crucial
Since the election, rates have increased – but have started to moderate over the last few months. Make sure you have a solid relationship with a lender that has command of all the products to help figure out the best option for you!
Thomas Eugene Bonetto
Mortgage Loan Originator
NMLS: 1431961
About The Coach
Tom Bonetto has been helping his customers and players achieve their best for nearly 30 years. His goal is to provide both a superior customer experience and tremendous value for both his business associates and his players alike.
