Category: Mortgage (Page 34 of 63)

Forecast Shows That 2020 Will Be a Big Year for 1st Time Buyers

December 14, 2019 / Tom Bonetto

Next year should be a big one for first-time homebuyers.

I’m linking to an article by Aly J. Yale at The Mortgage Reports that shows that the 1^st time buyer market is getting bigger.

According to new data, up to 9.2 million first-time buyers will hit the market between 2020 and 2022.

A New Frontier for First Timers

Says Yale, “according to a new analysis from credit bureau TransUnion, anywhere from 8.3 million to 9.2 million first-time homebuyers will enter the housing market between 2020 and 2022.

That’s up from just 6.67 million between 2013 to 2015 and 7.64 million between 2016 to 2018.”

Joe Mellman, senior vice president at TransUnion, the next couple of years should mark a turn-around for homebuyers.

“While we’ve recently seen a boom in refi activity, actual homeownership rates are down,” he said. “Challenges have included high home prices, sluggish wage growth, and limited housing inventory, but we may be starting to see daylight as slowing home price appreciation, low unemployment, increased wage growth, and low interest rates are helping affordability. As a result, we are optimistic that first-time homebuyers will contribute more to home ownership than at any time since the start of the Great Recession.”

Survey Results

TransUnion also surveyed potential first-time homebuyers on the perceived challenges that they face.

Interestingly, their results showed that most people are interested in buying a house for more privacy or the opportunity to build wealth.

Only about a quarter said they want to buy a home due to getting married or having children.

Per Yale’s article, “more than a third said they want a more steady job before buying a house. Another third said home prices are just too high.”

Finally, the survey also found that many first-time buyers aren’t aware of their financing options.

“Many of our potential first-time homebuyer respondents don’t seem to be aware of the wide variety of financing options available to them,” Mellman said. “It suggests there’s a large opportunity for lenders to proactively identify consumers who are interested in becoming first-time homebuyers and then educating them on options they may not be aware of.”

Where to go for help

It would be my pleasure to help any first time buyers through the home buying process. Don’t hesitate to reach out to me for more information or to schedule a consultation.

Buying a Home Is the Most Affordable It’s Been in Almost 3 Years

December 7, 2019 / Tom Bonetto

Home prices have slowed a bit in some areas, but they continue to climb in the majority of markets in the U.S. Inventory is stubbornly low in many parts of the country, but even with these factors, now is actually a good time to purchase.

Believe it or not, research shows that housing has actually become more affordable this year, despite home appreciation and tight inventory. Affordable homes are possible thanks to lower mortgage rates and greater purchasing power.

“Affordability is about the best it can be compared to what it is likely to be over the next few years. So, in that sense, it’s a good time to buy right now if you have the financial means.” –Lawrence Yun, Chief Economist, National Association of Realtors

However, this positive development may not last for too much longer. That’s why it pays to hunt for homes and mortgage rates now, as waiting could prove expensive.

I’m linking to an article from Erik Martin at The Mortgage Reports – you can find the entire piece here…

What The Numbers Show

Martin highlights a Black Knight study (found here) that shows “housing affordability hit nearly a three-year high in September.” Other findings from the report include:

The drop in mortgage rates since November has been enough to amp up buying power by $46,000 while keeping monthly principal and interest (P&I) payments the same
The monthly P&I needed to buy an average-priced home is $1,122. That’s down about $124 a month from November 2018, when interest rates were near 5%
Monthly P&I payments now require only 20.7% of the national median income. That marks the second-lowest national payment-to-income ratio in 20 months

Martin writes “that last point may be the most important. For the average home buyer, month-to-month housing costs are lower than they’ve been at almost any point in the last three years.”

Why Is Housing More Affordable Now?

Lawrence Yun, the chief economist for the National Association of Realtors, states that lower mortgage rates right now are helping to offset higher home prices.

“Assuming you put down 20% on a median-priced home, your monthly mortgage payment would be $1,070 at this time last year. That’s assuming a 4.7% mortgage rate at that time,” he says.

Today, your monthly payment on that same home could be down to $990 — $80 less — even though you would have paid more for the home thanks to rising real estate prices.

Will This Trend Continue?

Yun, and many other economists, believe that mortgage rates will likely remain attractive through 2020.

“But then they will rise, which will knock off many buyers from the pool of eligible purchasers,” predicts Yun.

Should You Act Now?

Please do reach out to me so we can analyze your current situation to see if a home purchase might be in your best interest. Based on the data, now is really the time to get started…and it would be my pleasure to help you.

New and improved conforming loan limits for 2020!

December 2, 2019 / Tom Bonetto

The Federal Housing Finance Agency announced last week that it is raising the conforming loan limits for Fannie Mae and Freddie Mac to more than $510,000.

In most of the U.S., the 2020 maximum conforming loan limit for one-unit properties will be $510,400, an increase from $484,350 in 2019.

What this means is that many buyers who were unable to qualify for $500,000 mortgages due to “jumbo loan” restrictions can now re-visit an application!

Data from FHFA shows that home prices increased by 5.38% on average between the third quarter of 2018 and the third quarter of 2019. So, the baseline maximum conforming loan limit in 2020 will increase by the same percentage.

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2020 in all but 43 counties or county equivalents in the U.S.

Find out more from Housingwire here…

Conforming Loans – what are they?

A conforming loan gets its name because it meets or “conforms” to specific guidelines set by the two largest government-controlled loan entities — Fannie Mae and Freddie Mac. Loans that are greater than $510,400 in general are considered “jumbo” mortgages and are not controlled by Fannie Mae or Freddie Mac.

Recent History

This marks the fourth straight year that the FHFA has increased the conforming loan limits after not increasing them for an entire decade from 2006 to 2016.

In 2016, the FHFA increased the Fannie and Freddie conforming loan limit for the first time in 10 years, and since then, the loan limit has gone up by $93,400.

Back in 2016, the FHFA increased the conforming loan limits from $417,000 to $424,100. Then, the next year, the FHFA raised the loan limits from $424,100 to $453,100 for 2018. And in 2018, the FHFA increased the loan limit from $453,100 to $484,350 for 2019.

Median home values generally increased in high-cost areas in 2019, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600 — or 150% of $510,400.

Find out More

Please do reach out to me and find out what the conforming loan limit is for your neighborhood!

Quick Credit Score Improvement Tips

October 31, 2019 / Tom Bonetto

Let’s talk credit, as it’s so important. Your FICO scores can determine whether you are able to purchase that home or not, and save you a good deal of money on the rate you’re going to pay if your scores are good.

Of course, you want to make your payments on time, but how can you actually improve your credit score in a relatively short period of time? What can you do?

Here are a few things that you might be able to do relatively quickly and improve your scores…

Lower The Balances

It’s a good idea to keep the balance you owe on any of those accounts below 30% of the credit line. If you have a credit card with $1000 limit on it, keep your balance to $300 or less.

Increase The Trade Line

So, what if your balance is higher than that and you can’t bring it down? Well, go to that credit card issuer and ask them if they’re willing to give you a higher limit. By bringing the limit up, the amount you owe becomes a smaller percentage of your limit. That will help your score.

Don’t Close Accounts

One key thing to remember, don’t close off any credit lines that you have from the past. That’s good history that you’ve built up. You want to keep that good history. It’s like getting straight A’s in high school and not wanting to show the report card. Keeping good history will help your credit score.

Collection Accounts

Finally, think about some of those collection accounts – only if they’ve popped up. If the seven-year reporting period is up (starting from when you first went delinquent with the original debt), dispute the debt from your credit report. Any proof you have regarding the first date of delinquency will strengthen your dispute.

When All Else Fails

If you’re not able to get the collection account removed from your credit report, pay it anyway. A paid collection is better than an unpaid one and shows future lenders that you’ve taken care of your financial responsibilities. Once you’ve paid the collection, just wait out the credit reporting time limit and the account will fall off your credit report.

If you have more questions about your credit and how it impacts your ability to finance a home, please do reach out to me, as it would be my pleasure to help!

The Cost of Waiting to Purchase a Home and Trying to Time the Market

October 28, 2019 / Tom Bonetto

If you’re shopping for a home today, you know it can be hard work. You might not find something right away and it’s easy to become frustrated and fatigued.

Sometimes buyers get discouraged and say, “Let me take off a few months, maybe I’ll come back 6 months later.”

Some, on the other hand, think that the market might weaken shortly or that interest rates will fall even further…and are trying to essentially “time the market” Is that the right strategy?

The Cost of Waiting

Here’s the potential problem with that thinking…while you might want to take time off and away from your search, the market isn’t taking time off!

The cost of waiting to buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.

The market is quite good in terms of appreciation right now in California and Arizona. The forecasted growth in value is 2.4% in just the next 6 months; let’s quantify that.

The Numbers

A home worth $300,000 today would be worth $7,300 more in 6 months. Additionally, if you were planning on putting the same percent down, you would have to borrow more because the home is more expensive.

What about interest rates? Rates today are at very attractive levels, so does it make sense to wait for rates to go down further…and what if they don’t?

No, the monthly savings with a lower rate are nice but are dwarfed by the missed appreciation and amortization, and it would take many, many years to recoup what you would have lost.

One other thing to consider…if rates drop significantly after your purchase, you can always refinance in the future to take advantage of that lower rate.

Today’s Data

Here’s the data from FHFA – see how the forecast is for nearly 5% appreciation in the year ahead. The longer you wait, the more you miss out on appreciation and the more expensive you new purchase will be.

Stick with it, keep shopping, and you will find something. Don’t hesitate to reach out to me with questions, as it would be my pleasure to help!