As with the law of supply and demand, Unusual Holiday Home-Buying Surge Pushes Mortgage Demand Higher for everyone this season

Case-Shiller Home-Price Index Slows In September

In September, the S&P CoreLogic Case-Shiller national home-price index began to fall, with a year-over-year increase of 19.5 percent. Although this increase was significant, it was down from 19.8% the previous month. Moreover, the U.S. index declined on a month-to-month basis for the first time in 14 months. The 10-city and 20-city composite indexes also saw smaller annualized increases month over month, with the 10-city index growing 17.8% (down from 18.6% in August) and the 20-city index rising 19.1 percent (down from 19.6 percent in August).

According to CoreLogic deputy chief economist Selma Hepp, the slowdown is in part usual and seasonal. Still, there are signs of “a slow, but welcome return to a more sustainable balance between buyers and sellers.”

2022 Conforming Limits Rise 18 Percent to $647,200

The Federal Housing Finance Agency announced new conforming loan limits for mortgages that can be purchased by Fannie Mae and Freddie Mac (FHFA). The changes, as anticipated, reflect the near-unprecedented price increases of the previous year. The FHFA released third-quarter adjustments in its Housing Price Index as well (HPI). The expanded-data index grew by an average of 18.05 percent between the third quarter of 2020 and the third quarter of 2021. The baseline conforming limit will be raised by the same proportion.

Effective January 1st, 2022, the single-family residential unit limit in most U.S. counties will be $647,200, a $98,950 increase over the previous year’s ceiling of $548,250. The baseline limit for two-unit properties will be $828,700, and for three-unit houses will be $1,001,650. In most counties, a loan for a four-unit dwelling will be capped to $1,244,850.

Unusual Holiday Home-Buying Surge Pushes Mortgage Demand Higher

Mortgage demand increases due to an unusual rise in home purchases, just as the market is entering the typically slow Christmas season. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume increased by 1.8 percent last week compared to the prior week. The increase was mostly fueled by a 5 percent increase in home purchase applications for the week, the third consecutive weekly rise.

Mortgage rates have been steadily rising for the past month, and this trend continued last week. For 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less), the average contract interest rate rose to 3.24 percent from 3.20 percent. Mortgage refinancing applications were virtually unchanged from the prior week, gaining only 0.4 percent. 

Next week’s potential market-moving reports are:

  • Monday, December 6th – No Report
  • Tuesday, December 7th – Unit Labor Costs Revision, Consumer Credit
  • Wednesday, December 8th – Job Openings, Job Quits
  • Thursday, December 9th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, December 10th – Consumer Price Index, Federal Budget

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047

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Is This Year The Right Time For You To Make That Home Purchase? California Platinum Loans Explains How Mortgage Rates Can Guide You Make That Decision Today

Did you know that most mortgage loan professionals have their calculators at hand all of the time? You don’t have to do that, but if you’ve been thinking about buying a house in the next three to twelve months, how can you choose which is the right time? Many people look at home purchase prices to guide their decisions. With prices steadily increasing, you might find that the longer you wait to buy, the fewer homes you’ll find available in your price range. But what about interest rates? Should they influence your decision to buy a home in the year to come?

Yes — mortgage interest rates can make a big difference in home buying

Would you believe that in 1981, home loan interest rates averaged over 18%? Between 1980 and 1982, the lowest average 30-year fixed-rate mortgage was 16.35%. If you bought a $300,000 house in 1981 with a 20% down payment and a 30-year mortgage at an interest rate of 18%, your monthly principal and interest would be $3,617. At a 5% interest rate, your principal and interest would be $1,288. So, yes, mortgage interest rates can make a big difference.

Fortunately for homebuyers, interest rates have been much lower than 18% in the past ten years. The average interest rate in 2018 was 4.54%. In 2019, this average dropped under 4%. Bankrate reported that 90% of mortgages as of 2018 had interest rates between 3.5% and 6%.

Fannie Mae and Freddie Mac, the two largest government-affiliated mortgage corporations, are predicting that 30-year fixed-rate mortgages will average between 3.6% and 3.7% throughout 2020. The Mortgage Bankers Association predicts that interest rates will be about 3.9% throughout 2020. Other organizations, including the National Association of Realtors, are predicting 3.6% average interest rates for a 30-year fixed-rate mortgage.

Will these low rates last forever?

It’s unlikely that the current low mortgage interest rates will stay the same indefinitely. If you have a higher interest rate home loan, you may be able to refinance for a lower interest rate and lower monthly payments. If you’re interested in buying a house over the next year, you should be aware that rates began to decrease in November 2018, but trends like this don’t last forever. Right now, mortgage interest rates can make many homes affordable and can help you to lock in a 30-year or 15-year fixed-rate home loan for the home you want to buy.

Sources

https://www.investopedia.com/mortgage/mortgage-rates/house-price-vs-interest-rate/

https://www.valuepenguin.com/mortgages/historical-mortgage-rates

https://www.dallasnews.com/sponsored/real-estate/2019/11/23/experts-predict-where-mortgage-interest-rates-land-in-2020/

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What is the Best Mortgage Advice You Ever Heard? How Big Should Your Monthly Mortgage Payments Be and More

Buying a house is one of the biggest financial decisions most people will ever make. We’ve put together a few tips from people who’ve done it successfully.

Get multiple quotes from multiple lenders without multiple credit inquiries or hard hits to your credit

You can improve on your interest rate by having your application shopped across multiple lenders, but not having your credit run multiple times.  This is very easy when working with an independent mortgage broker.  Since the independent mortgage broker is working on your side.  They take your loan application and when the independent mortgage broker runs your credit they can then shop with multiple lenders to get multiple quotes giving you the best options. Lenders are aware you’re applying for loans with more than one lender when you’re working with an independent mortgage broker, who submits your loan applications.

Since the Independent Mortgage Broker WORKS for the CONSUMER and NOT the LENDER, they have several choices from where they ultimately send the loan to. Since the lenders are getting a lot of business from the independent mortgage broker they are likely to be more diligent in responding to your application. Also, the very lowest mortgage interest rate may not be the very best choice for you. Working with a knowledgeable independent mortgage broker who can apply with multiple lenders will also give you a good idea of which lender is the best communicator and best to work with overall for your unique situation.  Since different lenders are better for different borrower situations.  Such as quick fast closing timelines, and streamlined limited paperwork, for situations where time is of the essence.  Or other lenders that may provide the rock bottom cut-throat discount rates but require a ton of paperwork and letters of explanation and extensive income documentation, those lenders may be a good option if the borrower/consumer is not in any hurry and can afford to delay closing and is willing to come up with all the needed paperwork.  So working with a mortgage broker helps the consumer navigate the sea of lenders and loan product choices out there.

If you’re concerned about multiple credit inquiries reducing your credit score, this is also why a mortgage broker is a great option since this reduces multiple inquiries on your credit report.  With a single credit report run by a mortgage broker that broker can shop your loan with dozens of lenders, without any additional credit inquiries or hits to your credit report.

Lock in your home loan interest rate for the longest-possible time needed

You may not have even heard the word “escrow” before you started looking for a home to buy, but it can last longer than you may think. When you’re applying for a loan, go ahead and lock in the rate for the longest time your lender will allow, depending on the situation. You don’t want to be surprised with a higher interest rate and higher payments at the close of escrow should interest rates go up while you are floating.  It’s also best to get your Realtor Real Estate Agent introduced to your Independent Mortgage Broker earlier on in the home buying process.  When they are both on the same page things run smoothly.  You may be able to out-negotiate other buyers and get that home you really want since your Realtor would know from the Mortgage Broker how quickly they can close.  This would help when writing the purchase offers, since your agent can offer the seller shorter contingency time frames, where your loan can close quickly with a shorter escrow, making you stand out above the competition of other home buyers.

Keep your mortgage payment under or close to one paycheck

This is one of the simplest forms of mortgage advice and overall, the most reliable. No matter what the future holds, you can plan financially to manage a mortgage payment that equals one paycheck (if you’re paid weekly). If you have a two-income household and are paid twice a month, the same advice holds true.

Sign for a mortgage that will let you save for retirement

Think about how you will best be able to save and invest your money. If your mortgage payment will allow you to save $1,000 a month and you can invest it at an average rate of 6%, you’ll build up a substantial retirement fund. Even if your home increases in value, chances are you’ll have a more secure retirement if you allocate your money this way.

And finally, get preapproved for a mortgage before you start home shopping. Few things are more frustrating than being uncertain of how much you can offer on a home, and losing the home you really want to a buyer who’s been pre-approved and is prepared to make a better offer.

Sources

https://www.realtor.com/advice/finance/best-mortgage-advice-ive-heard-ever/

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