2022 Trends

To say 2021 was a crazy year in real estate is an understatement. House prices increased, loan rates decreased, and as a result, a lot of inventory moved quickly.

 

But what does 2022 have in store for us? Here are some of the predictions that industry leaders have released.

 

Mortgage Rates. In January 2021, the average rate on a 30-year loan fell to an all-time low of 2.93%, according to Bankrate. Nearly everyone expects mortgage rates to climb in 2022. The Mortgage Bankers Association expects the average rate on a 30-year loan to reach 4% by the end of 2022.

 

Home Prices. From March 2020 to June 2021, the median price of homes sold by realtors increased 29%.  Because that type of growth is not sustainable year over year, experts predict that prices will stay where they are – and most likely not go down.

 

Home Sales. Realtor.com chief economist, Danielle Hale predicts that home sales will increase another 6.6% in 2022. With the demand from Millennials increasing, builders are expected to ramp up production, increasing single-family starts by 5% in 2022.

 

Income Changes. A competitive jobs market is going to help all home shoppers. Incomes are projected to increase by 3.3%, and with employers looking to attract and retain top talent without impacting costs, workplace flexibility will continue. Potential home buyers will be able to broaden their search and move further into the suburbs.

 

Renovations. As prices and mortgage rates rise, many homeowners will opt to upgrade their existing home rather than buy a new one. A Zillow survey of homeowners found that nearly 75% would consider at least one home improvement project in the next year. The top rooms on their list – bathrooms (56%), kitchens (46%), adding or improving their office space (31%), or finishing a basement or attic (23%).

 

If you are in the market to buy or refinance a home, and you want to ensure you are making the best financial decision, contact one of our loan officers today. We’ll speak to you one-on-one to find the best solution to fit your situation.

The Federal Housing Authority Announces Update to Student Loan Policies

Understanding which home loan program is the most beneficial for you when purchasing or refinancing a property is key to making a successful loan choice. Our loan officers are up to date on the best programs and newest guidelines, and are here to educate you on your most advantageous options.

If you have current or past student loan payments, the Federal Housing Administration’s (FHA) updated policy could be great news for you! The Federal Housing Administration (FHA) helps buyers with low incomes and low down payments who may not qualify for conventional mortgages.  FHA insures the loans, giving lenders the confidence to provide financing to people who otherwise would not qualify.

Effective now, monthly student loan debt may be excluded from your debt-to-Income ratio ( DTI) when the program, creditor or student loan servicer indicates that the full loan balance has been forgiven, cancelled, discharged or otherwise paid in full.

For outstanding student loans, regardless of payment status, to calculate monthly obligation:

o            Use the payment amount reported on the credit report or the actual documented payment (when payment is above zero), or

o            Use .5 % of the outstanding loan balance, when the monthly payment reported on the credit report is zero.

What does this mean for borrowers with student loans?

This new update allows student loan debt to be calculated at 0.5% of the loan balance if the payment is not reported on the credit report when determining loan eligibility. This may give more purchasing power to some buyers with existing student loan debt.

For more information about these beneficial changes, contact one of our experienced loan officers today!

New Conforming Loan Limits for 2021

LOAN LIMITS FOR FANNIE MAE AND FREDDIE MAC INCREASE TO $548,250 IN 2021, AN INCREASE FROM $510,400 IN 2020.

The Federal Housing Finance Agency has announced the Fannie Mae and Freddie Mac conforming loan limits for mortgages for 2021.

Each year, the baseline conforming loan limit is adjusted accordingly with the change in the average U.S. home price. House prices during the third quarters of 2019 and 2020 have increased by 7.42 percent on average; therefore, the Federal Housing Finance Agency is increasing 2021’s maximum conforming loan limit by the same percentage. This marks the fifth year in a row that there has been a limit increase by the FHFA. The baseline loan limit has increased by $131,250 since 2016.

The limit is different in some places known as high-cost areas. These are areas in which 115 percent of the local median home value is higher than the baseline conforming loan limit. The Housing and Economic Recovery Act establishes the maximum loan limit in those areas while also setting a ceiling on that limit which is 150 percent of the baseline loan limit. The new ceiling loan limit in most high-cost areas for 2021 will be $822,375, which is 150 percent of $548,250.

Here at First Home Mortgage, we continue to provide the highest level of customer service while adhering to social distancing guidelines. Our innovative communication technologies allow us to exceed your expectations while keeping everyone as safe as possible.

If you are considering purchasing or refinancing a home, please contact one of our Loan Officers today!

Low Housing Inventory Leads to an Increase in Bidding Wars

Many changes are facing home buyers currently house hunting during the Coronavirus pandemic – most notably housing inventory. State and county restrictions directed towards protecting our health have led to new methods of interacting with realtors, loan officers, and home sellers. Virtual tours and meetings abound, and open houses are limited and require additional precautions. One of the most surprising impacts, however, is the very real shortage of available homes on the market. While demand for homes has declined, supply has declined much more drastically, leading to an unprecedented percentage of bidding wars.

According to Bloomberg, roughly 40% of homes received multiple offers, with the number jumping to 60% in some major cities. Bidding wars are most common in entry-level homes and decline in homes priced over $1 million.

A CNBC article states that home listings nationwide were down 29% in May compared to this time last year. This is thought to be due to the seller’s concerns over having others tour their home during the pandemic. Even with limited options on the market, many home buyers are seeing this as an opportune time to move, as mortgage interest rates continue to hit historic lows. Some experts also conjecture that increased time at home due to the pandemic restrictions are causing people to look for properties with more interior and exterior living space, driving even more buyers to the market.

In these conditions, it is more important than ever to work with experienced professionals to help find the right home and loan for you. It is important to know as soon as new properties become available so that you can have the chance to view them and decide if you want to put in an offer before they sell. Acting quickly on a home you want to purchase is imperative right now and becoming pre-qualified before house hunting can allow you to get your offer in on your dream home as soon as you find it.

To learn more about your loan options and discuss pre-qualification, please contact one of our experienced loan officers today!

Sources: https://www.bloomberg.com/news/articles/2020-05-20/bidding-wars-are-back-even-in-housing-market-stung-by-pandemic
https://www.cnbc.com/2020/05/20/coronavirus-bidding-wars-in-a-pandemic-housing-is-heating-up-fast.html

Four Signs You Should Refinance Your Mortgage

With mortgage rates still hovering around all-time lows, it might be a good time to consider refinancing your mortgage to snag a lower rate. Refinancing can reduce your monthly payment and total interest costs. Even if your home loan is as recent as last year, it still may be worth replacing. Here are 4 signs it’s time to refinance!

Your current rate is over 4%

Freddie Mac’s weekly survey revealed that last month’s average rate for a 30-year mortgage was holding at 3.29%. Last year, the typical rate was falling around 4.1% for the same 30-year mortgage. A study recently done by LendingTree has discovered that borrowers that refinanced a home loan taken out in early 2019 can save $60 a month for every $100,000 borrowed. Over the life of the loan that added up to almost $20,000 in interest savings!

Your credit is in good shape

It is no secret that the better your credit score, the better chance you have on landing a low interest rate. Credit scores can range anywhere between 300 to 850 with 800 and higher considered “exceptional” and 740-799 considered “very good.” If your credit score falls in the exceptional or very good range, you are in a better position to refinance and get a lower rate.

However, if your credit score could use some improvement, here are some quick tips:

  • Pay off credit card debt and lower your credit utilization (this is the percentage of available credit you’re using).
  • Don’t close old credit cards you’re not using. As long as you’re not being charged annual fees, this can help lower your credit utilization which will in turn raise your credit score!
  • Check for errors on your credit reports. If any errors are found, alert the credit bureau so that the issue can be resolved and removed from your reports.

Cash out your equity

A cash out refinance may be right for you if you are ready to cash out on built up equity on the home. Homeowners choose to cash out in order to pay for education, additional home improvements, eliminate other debt, or start a new business. However, if you choose a cash-out refinance it is important that you can keep up with the payments in the event the home improvements do not add value, or the new business fails.

You plan to stay in your home for a long time

Due to closing costs, it can take months or in some cases years to break even and begin the actual savings. If you are moving or selling soon, refinancing may not be a great idea. But if you plan to stay in your home, a refinance can truly save you money in the long run.

Get in touch with a Loan Officer today to find out if refinancing is right for you!

 

 

Source: https://finance.yahoo.com/news/5-signs-refinance-mortgage-now-182906584.html

No Contact House Hunting

Amid rising Covid-19 cases and in consideration of the health and safety of agents and clients, Bright MLS has temporary loosened its restrictions on home listings which previously required properties be shown in person in order to stay on the market. If you are a future homebuyer or have been perusing listings you may have noticed a rising increase on homes with virtual options, such as virtual walk throughs and virtual open houses. With the current situation of the world today, real estate agents are forced to get creative when it comes to keeping business up. Some have even decided to live-stream tours of homes, allowing prospective buyers to sit back and watch while asking questions in real time. Some agents are still offering in-persons showings as well. However, extra precautions are in place such as sanitizing in between clients and limiting the amount of people in a home at one time.

Other aspects of the home-buying process have updated procedures as well to incorporate social distancing and respect the recommended self-quarantining. Home inspections and settlements are two areas in which precautions are being put in place. Recently, inspectors are advised to be the only one at the property while inspecting. Filming and taking photos of their inspection are ways they are ensuring clients are receiving the information they need and still being very much a part of the process. Now when it comes time to sign the paperwork and close on your new home you may find the room a bit emptier than expected. Realtors are now being asked to not be present during the settlement process and those that need to sign paperwork or present documents are being brought in separately to do so.

No doubt the current situation we are facing as a globe is drastically changing our everyday lives. But when it comes to buying a home, having a dedicated Realtor and Loan Officer in your court can make what seems like an impossible task at a time like this, very realistic. Due to technology and social media, you don’t have to put off your dreams of purchasing a home any longer!

Contact one of our Loan Officers today!

Which Renovations Have the Highest Impact on Your Home’s Value?

Remodeling your home is a wonderful way to make it your own when you first move in, or to update the space as your needs and styles change over time. Since home renovations can be pricey, balancing your budget and wish list can be tricky. Fortunately, there are lots of projects that can make you love your home even more, while also boosting its value. Increasing your home’s overall value increases your equity! This means that not only will you see a return on your investment when you sell your home, you’ll also have a lower loan to value ratio while you live in it, which can impact your options when refinancing, and even potentially eliminate the need for mortgage insurance.

The “2019 Cost Vs Value Report” (www.remodeling.hw.net), revealed which home renovations will give you the highest percentage of return on investment, and what they cost on average. According to the study, the top five renovations that provide the biggest bang for your buck are:

1. Garage door replacement

• Average out-of-pocket: $3,611
• Average return on investment: $3,520
• Percentage of cost recouped: 97.5%

2. Manufactured stone veneer

• Average out-of-pocket: $8,907
• Average return on investment: $8,449
• Percentage of cost recouped: 94.9%

3. Minor Kitchen Remodel

• Average out-of-pocket: $22.507
• Average return on investment: $18,123
• Percentage of cost recouped: 80.5%

4. Deck addition (wood)

• Average out-of-pocket: $13,333
• Average return on investment: $10,083
• Percentage of cost recouped: 75.6%

5. Siding Replacement

• Average out-of-pocket: $16,036
• Average return on investment: $12,119
• Percentage of cost recouped: $75.6%

Renovating your home can be a wonderful way to boost your enjoyment and your equity! Find more information from this study, including how project costs and values were calculated, at www.remodeling.hw.net/cost-vs-value/2019/.

Thinking about purchasing a fixer-upper, or refinancing to free up funds for your home renovation? Contact one of our Loan Officers today!

New Loan Limits!

Loan limits for Fannie Mae and Freddie Mac increase to $510,400 in 2020, an increase from $484,350 in 2019!

There has been an update provided by The Federal Housing Finance Agency. The agency has announced the Fannie Mae and Freddie Mac conforming loan limits for mortgages for 2020.

Each year, the baseline conforming loan limit is adjusted accordingly with the change in the average U.S. home price. House prices during the third quarters of 2018 and 2019 have increased by 5.38 percent on average, therefore, The Federal Housing Finance Agency is increasing 2020’s maximum limit by the same percentage.

It will be higher than the $510,400 baseline limit in certain areas where median home values were higher.

There are different calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. The baseline limit in these areas will be $765,600.

Click here for a map of 2020 loan limits by area!

If you are interested in learning more, contact one of our loan officers for information today!

 

 

FHA Revises Condominium Requirements

After a long-awaited update, the FHA is finally issuing a change to condominium guidelines. It was announced Wednesday that spot approvals are back, and steps are being taken in order to loosen eligibility requirements. With these revised guidelines, FHA is expecting the update to qualify an additional 20,000-60,000 condo units per year.

Changes that will come with the new guidelines include extending the re-certification deadline for approved condo projects from two years to three and loosening restrictions on owner-occupancy rules allowing projects to just be 50% owner-occupied. Department of Housing and Urban Development Secretary, Ben Carson, is hopeful the updated guidelines will open doors and allow more opportunities for homeownership. “FHA is publishing a new rule in the Federal Register that we believe will offer significantly more options for individuals and families to buy a home, specifically the kind of home more and more people are looking for in order to achieve homeownership, and of course that is a condominium,” Carson stated. Out of the 150,000 condo projects across the country, just 6.5% have approved financing through FHA.

The National Associations of Realtors has been advocating for change in FHA requirements for over a decade and stated they are thrilled with the change and the opportunities that will now be available to prospective homebuyers. NAR President John Smaby stated, “This ruling, which culminates years of collaboration between HUD and NAR, will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people.”

The updated guidelines will take effect on October 15, 2019.

Potential Federal Rate Cut

From what you pay on the balance on your credit card to inflation, rates can have an influence on our everyday lives. When the economy dips, rates tend to dip as well. This encourages people to spend more which gives the economy a boost. Jerome Powell, chair of the Federal Reserve, makes the big decisions when it comes to the federal fund rate and due to recent trade war news and the overall global economy, he’s hinting that rates could be decreasing soon.

But how will this affect your wallet? If you have credit card debt or plan to buy a home in the near future, the rate cut can be a benefit. Most credit cards that have variable rates are linked to the prime rate so a federal funds cut would lead to lower interest rates. The lower the interest rate on your credit card, the easier it will be to pay that balance down so be sure to take advantage.

Though the federal fund rate isn’t linked to mortgage rates, it can have an impact on them. Whether your mortgage is a fixed-rate or an adjustable rate will determine the impact a rate cut would have on your savings. An adjustable rate will generally decrease when the fed rate decreases but a rate cut would have no impact on a fixed-rate mortgage. Lower rates are beneficial for potential home buyers and with a federal rate cut it would be a good time to purchase. Even if you’re not in the market for a new home it would be a great time to consider refinancing to take advantage of a lower interest rate! Please reach out to a Loan Officer near you to discuss all of your options!

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