Mortgage rates still falling — just not as quickly

 

Following last week’s substantial drop, rates leveled off but still declined modestly, while pending home sales were flat.

Key points:

• The 30-year fixed rate mortgage averaged 6.61%, down from 6.67%.
• Pending home sales were up in three regions, but on a national level did not increase (or drop) in November.
• Economists continue to express optimism about the housing market in 2024.

After speeding toward 6% territory, mortgage rates leveled off a bit at the close of 2023.

The 30-year fixed-rate mortgage averaged 6.61% this week, according to Freddie Mac's latest survey. That's down from 6.67%, and while the drop was not as dramatic this week, it represents the ninth consecutive week of declines.

It's also the lowest rate since May.

"The rapid descent of mortgage rates over the last two months stabilized a bit this week, but rates continue to trend down," said Sam Khater, Freddie Mac's chief economist.

The 15-year fixed-rate mortgage also fell slightly to 5.93%, down from last week's 5.95%.

Mortgage News Daily reported a slight uptick in rates on Dec. 28, suggested that another big drop isn't likely as the year wraps up. While the weekly decline was relatively small, the trend over the past several weeks appears to bolster economist predictions for a happier new year for the housing market.

Pending home sales flat, but optimism abounds 

Pending home sales held steady as well, the National Association of Realtors reported. The Northeast, Midwest and West saw an increase in pending transactions, while sales fell in the South, resulting in an overall increase of 0% nationwide in November.

Though pending home sales in all regions were down year-over-year, NAR Chief Economist Lawrence Yun found reason for optimism.

"Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings," Yun said.

Yun expects home sales to improve in 2024, and Khater is similarly bullish, even though home prices show few signs of decreasing.

"Heading into the new year, the economy remains on firm ground with solid growth, a tight labor market, decelerating inflation, and a nascent rebound in the housing market," Khater said.

BY: Cheryl Reid-Simons

Original Post

Shark Tank's Barbara Corcoran says you're 'dead wrong' if you try to wait for a better deal on the housing market

 

• Don't wait for a better deal in the housing market, Shark Tank's Barbara Corcoran says.
• As rents and mortgage rates drop, prospective buyers may be tempted to see how low they go.
• "The minute actual interest rates come down just one more point, everybody's going to jump into the market."

As mortgage rates and rent prices drop, prospective buyers may be tempted to wait out the fall before diving into the market.

That's a fool's errand, "Shark Tank" investor and real-estate legend Barbara Corcoran says.

"You're much better off buying something now when you can," Corcoran said in a CNBC interview on Wednesday. "Because if you don't have a chit in the game, and you continue to be a tenant and wait the market out — which many people are thinking right now they should be doing — they're dead wrong."

Redfin noted recently that median asking rents saw their biggest year-over-year drop since February 2020. Corcoran said rent prices had probably hit a short-term peak as inventory concerns eased, but it was a minor decline at best.

Mortgage rates, too, have been sliding on the market's conviction that the Fed is pivoting to rate cuts soon. The 30-year fixed rate has tumbled to 7.03% from 8% in October. 

Some people have been cashing in on the downtrend. In fact, median home sales prices as of last week are clocking in at $364,535, Redfin data shows. That's down from $414,000 in October.

But those trying to time the housing market may see their plans backfire.

"The minute actual interest rates come down just one more point, everybody's going to jump into the market, and you're going to be paying a lot more for your house," Corcoran said.

Her advice echoed her previous warnings about home prices back in August when she said, "All hell's going to break loose" once the Fed cuts rates and mortgages get cheaper.

"If you have any way of getting cash together and getting into the market and buying a house and getting out of a rental, which is tempting to keep because it's a little cheaper, don't do it," she said. "Buy yourself a house."

Similarly, a Bank of America executive told Business Insider recently that trying to time the housing market by waiting for lower rates wasn't a good idea.

"It's really when you're financially ready, emotionally ready, and, ultimately, you find that home that fits your dreams and/or your needs," said Matt Vernon, the bank's head of consumer lending. 

BY: Aruni Soni

Original Post 

Holiday Real Estate: A Buyer’s Guide

 

There’s a myth that the real estate market shuts down over the holidays and that it’s a terrible time to buy a home—because who wants to buy a home when you could be spending that time with family. You saw where we said “myth,” right? 

The truth is that buying a home over the holidays can yield you a great deal while minimizing the competition. Here’s what you need to know if you’re in the market now. 

Look past the sparkle

You’re going to see some inflatable Santa's and lights galore. Some homes might have 20 years of holiday décor displayed throughout every square inch. While these sellers may have been smart to declutter and keep the holiday stuff light this year, it’s up to you to try to see beyond it. What do the bones of the house look like? Is the floorplan what you’re looking for? What about the size of the rooms? How much updating will you have to do? Regardless of what sellers have—and have not—done to their home, you’ll want to keep your key questions in mind while touring.

Decide what’s important to you

It can be easy to be seduced by a home that’s priced low and be blinded by the affordability to the point that you overlook a floorplan that doesn’t really work for you or a neighborhood that's not in your top tier. Creating a “must-have” list before you go house-hunting can help keep you on track. 

Look past the imperfections

But, a home that goes on the market over the holidays might not be updated and staged to your standards. There’s likely a reason the home is for sale at this time of year. Perhaps there was a job loss or a transfer to another area. If you can look past the little things, you might be able to get a great deal.

Understand there’s less competition

“If there’s one undeniable truth about the holidays, it’s that real estate inventory is limited during the holiday months,” said Fortune Builders. “There’s simply less real estate activity — less people selling less homes — during the holidays. To compound this fact, there are fewer mortgage lenders, realtors and inspectors available than usual. But rather than seeing this as a major obstacle, this can add up to a huge advantage for home buyers during the holidays: less competition. If you’re able to find a property, there’ll be a lot less buyers — and the strong possibility that you’ll negotiate a favorable price that can put additional savings in your pocket.”

But understand that there are limits to how low you can go. Work with your real estate agent to make sure your offer is a strong one. You don’t want to offend the seller and lose out on the house. 

Don’t underestimate other buyers

Just because there is less competition over the holidays doesn’t mean you can dawdle. If you’re smart enough to be out there looking for a home right now, there are other savvy buyers doing the same thing. If you find a house you love, don’t sleep on it.

Hire the best agent

In many areas, a handful of real estate agents sell the majority of houses,” said The Mortgage Reports. “Usually, they are at the biggest agencies, and they talk to each other about what’s coming on the market. This is important, because fewer properties are listed between Halloween and New Year’s Day. You want early access to as many houses as possible…and a successful, connected agent can help you get it.”

Get prequalified first

Many real estate agents today won’t even take a client to see homes without knowing what they can afford. Maybe a friend or family member who is an agent will let that slide just for the sake of seeing what’s out there. But what you don’t want is to fall in love with a home and lose it because you had to go talk to a loan agent when another buyer was prepared, prequalified, and ready to make an offer. 

Get your house in order

If you have a house to sell at the same time you’re buying a new home, make sure it’s in listing condition. You could potentially delay or derail your purchase because your home wasn’t ready to list when you made an offer on the new home.

WRITTEN BY JAYMI NACIRI

Original Post

How To Get Free Money Or Make Easy Money For Your Down Payment

 

Want to buy a house but short on cash to get the deal done? It's a common problem that is keeping countless potential buyers on the sidelines. "Money issues often stand in the way of homeownership," said Bankrate. "A survey by rental service Apartment List found that 80 percent of millennial renters want to buy a home, but most say they can't afford to."

A recent story in Apartment Therapy titled "How I Saved $40K in 5 Years for a Down Payment" piqued our interest. Their tip: Get a side hustle and sock all that money away. Those are some Impressive saving skills, but if you're saying to yourself, "I don't even want to wait five months, let alone five years", we have some tips that can help. None of them are quite as hardcore as working a second job late into the night (but if you're just that committed, more power to ya!). Instead, we're focusing on ways to get free money or make easy money.

Get down payment assistance

Many people don't think about looking for down payment help (beyond asking their parents, anyway). And many of those who do think about it don't realize they might be eligible. Yes, many grants and other programs are specifically for low income borrowers, but others have surprising income caps that could spell the difference between buying now and having to wait a while.

"Grants and loans help you cover the upfront costs of purchasing a home," said NerdWallet. In Nevada, for example, prospective homeowners can qualify for a grant of up to 5% of their mortgage to put toward a down payment and closing costs. District of Columbia residents can qualify for a down payment assistance loan of up to 3.5% of their mortgage. The loan needs to be repaid only if you sell, refinance or vacate the property within the first five years. Help isn't reserved for low-income borrowers. Nevada's grant program is available to those with an annual income below $98,500. The D.C. program caps income eligibility at just over $132,000."

Move your money around

You may be aware of intro offers on credit cards that allow you to do a balance transfer to a lower (or zero) interest rate. While these are great options to take advantage of if you are trying to pay off an existing balance at a higher interest rate, be sure to check with a lender before you take on any new credit; if you're looking to buy a house soon, this could ding your credit and make it harder to get a loan.

Credit cards aren't the only place you can take advantage of great offers to save - or make - some money. Some banks and credit card companies also offer cash incentives for opening up checking or savings accounts with them. 

Sell your stuff

You might be shocked to learn how much you can make just by selling the stuff you already own - and probably don't want to take with you to your new place anyway. Garage sales can yield a couple hundred dollars, depending on the crowd and the goods. Craig's List is a great place to list items you don't want to let go of for a couple bucks at the crack of dawn on a Saturday. Everything from gold and other jewelry to silverware and old phones can be listed online. Furniture, art, and designer clothing can fetch more money at a consignment shop.

Switch providers

Seeing great deals out there for cable/satellite and Internet that are far better than what you're getting? Packages that offer super low prices to everyone but existing customers are frustrating. Don't be afraid to look around, even if you're planning a move in the next few months. Providers typically have a moving package that will allow you to transfer your service to your new address for free.

If you called your existing provider and you're getting stonewalled, call again and ask for the loyalty department. Our recent call to DISH resulted in a $70 monthly savings and upgraded equipment at no cost. This was a far better deal ($65 a month better, and no $100 new equipment fee) than we were offered by customer service.

Ask your boss for a flexible schedule

Working from home one day a week can save on gas, tolls, and even daycare if you're in a situation where your young child could behave while you're working alongside her and your daycare will work with you on price for using them four days per week instead of five. Some employers will also allow you to work more flexible hours on a daily basis so you could leave in time to pick your child up from school and forgo after-school care. Letting them know you're saving for a house may help elicit the cooperation you need.

Collect plastic bottles

If you drink bottled water and are accustomed to putting all the bottles in your recycling bin, collect them and sell them back to make a little extra cash. Will it be life-changing money? No. But it may be enough to enjoy a meal out here and there during your super-saving mode, or pay for a few knickknacks after you move. "The number of bottles that recycling centers will pay per bottle depends on the type of plastic, as well as how many you have," said Small Business. "Michigan pays 10 cents a bottle whereas most other states pay anywhere from a few pennies to 5 cents for each bottle. Check with the recycling center that you intend to use for its rules. Some prefer that you keep caps on the bottles or if they don't accept them at all."

Negotiate your closing costs into the deal

This isn't exactly free money because you end up paying for the closing costs anyway (albeit over 30 years), but if you're a little short on cash getting in, adding the closing costs into the mortgage could get you where you want to go faster. Even better: If the seller will pay the closing costs! This could save you thousands of dollars upfront.

Research alternative mortgages

It could be that a different kind of loan than the traditional 30-year mortgage or FHA loan could greatly cut down on your down payment and also save you money monthly. USDA loans for homes located in certain rural areas may require no down payment. VA loans offered through the U.S. Department of Veterans Affairs "help active-duty military members, veterans and surviving spouses buy homes" with zero down payment, said Bankrate. HUD's Neighbor Next Door program "is designed to encourage renewal of revitalization areas by providing an opportunity for law enforcement officers, firefighters, emergency medical technicians and teachers to purchase homes in these communities," according to the HUD site. "HUD provides a substantial incentive in the form of a 50% discount off the list price of eligible properties."

WRITTEN BY JAYMI NACIRI

Original Post

Is Homeownership the Greatest Way to Secure Your Financial Future?

 

First-time homebuyers tend to focus on two things: The price of the home they’re buying and the monthly payment. And it’s entirely understandable. Affordability is key when you’re buying your first place—or any place, for that matter. And it’s especially relevant considering rising home prices across the country.

But there’s something else to consider: The future value of the home. Equity growth is likely something you’ve at least thought about if you’re in the market for a home. After all, the idea of paying someone else’s mortgage payment interminably instead of building equity in your own place has probably been driving you crazy. But let’s dive in a little further.

Appreciation in a nutshell

“Appreciation, or the rising of home prices over time, is how the majority of wealth is built in real estate,” said Forbes. “This is the ‘home run’ you hear of when people make a large windfall of money. While prices fluctuate, over the long run real estate values have always gone up, always, and there is no reason to think that is going to change.”

That makes real estate one of the more stable long-term investments. A paper from economists at University of California-Davis, University of Bonn, and the Deutsche Bundesbank (the central bank of Germany) culled together “the annual returns of treasury bills, treasury bonds, equities, and residential housing from 1870 to 2015 for 16 now-rich countries such as the US, Germany, and Japan” to study the effects of different forms of investments. They found that, “in the average wealthy country, the annual return on housing during that period was just over 7% when adjusted for inflation, while the return on equities was just under 7%,” said Quartz. “At the same time, the risk associated with housing was far lower. By standard measures of uncertainty, housing was about half as risky as equities, and slightly less risky than bonds.”

This is, obviously, important to those who are purchasing real estate for strictly investment purposes. But it’s also something to keep in mind when buying real estate for personal use.

Proving financial security later

“Paying off a mortgage during your working years allows you to remove a large expense from your plate during retirement,” said Forbes. “For retirees that see a drop in income once they start taking Social Security or pulling from their retirement accounts, this can be the difference between living a comfortable life and living paycheck to paycheck.”

And while it may be hard to look forward several decades and even try to picture what retirement will look like, especially if you’re just starting out, the idea of long-term savings is attractive nonetheless.

“Forced savings”

Need a little help saving? A house is great that way. “For those who haven’t made a habit of putting money away, paying a mortgage can create a savings cushion that renting cannot,” said Forbes. “Owning a home does not guarantee a higher net worth, nor does it remove the need to be financially responsible, but it does provide a structure within which one can build wealth.”

Buying young

The earlier you buy, the more wealth you have the opportunity to create. “Of today’s older adults, those who bought their first home from ages 25 to 34 accumulated the most housing wealth by their 60s — a median of around $150,000, according to a report by the Urban Institute, a nonprofit research organization,” said app. “In contrast, the median housing wealth for those in their early 60s who bought later (ages 35 to 44), was about half as much, at $76,000. Homeowners who bought after they were 45 had about $44,000 in housing wealth by their 60s.” What you do today can absolutely affect your future financial picture.

WRITTEN BY JAYMI NACIRI

Original Post

Smart Tips to Pay Your Mortgage off Early

New data shows that nearly 40 percent of all homes in the United States are owned free and clear, with “the highest share” in West Virginia at 54%,” said Bloomberg. “Maryland and the District of Columbia were on the other end of the spectrum with rates of 27% and 24%, respectively.”

When many a real estate dream is focused on the idea of buying a home and staying just long enough to earn enough equity to move up to something bigger and better, this may come as somewhat of a surprise. If you have considered the idea of buying a forever home (or if you’re already there!) and want to be amongst the almost 40 percent of owners living mortgage free, there are some tips that can help you move toward that zero balance.

Switch to biweekly payments

Say your mortgage payment is $2,000. Pay it once per month, and you’re paying $24,000 per year. Switch to biweekly payments of $1,000 every two weeks, and you end up paying $26,000 for the year. That adds up.

Say your mortgage payment is $2,000. Pay it once per month, and you’re paying $24,000 per year. Switch to biweekly payments of $1,000 every two weeks, and you end up paying $26,000 for the year. That adds up.

“This will have the nearly the same impact on your budget as one monthly payment, but because there are 52 weeks in a year, a biweekly payment schedule will result in 13 full-sized payments a year instead of the normal 12,” said The Motley Fool. You'll be making an entire extra payment every year without having to scrounge around for the extra money. To look at some real-life numbers, if you have a 30-year $200,000 mortgage at an interest rate of 5%, making biweekly instead of monthly payments would save you $34,328 in interest and allow you to pay off the loan almost five years early.”

Make extra principal payments

Especially in the early years of your mortgage, your payments are likely to be mostly interest. But you can eat away at your principal by making an extra "principal only" payment. “The benefit of paying additional principal on a mortgage isn’t just in reducing the monthly interest expense a tiny bit at a time,” said Bankrate. “It comes from paying down your outstanding loan balance with additional mortgage principal payments, which slashes the total interest you’ll owe over the life of the loan.”

Let’s use their example of a $120,000 mortgage at a 4.5 percent interest rate, with monthly principal and interest of $608.02. Pay an extra $25 principal payment every month and you can save more than $9,000 in interest over the life of the loan.

You’ll want to make sure you’re allowed to make these extra principal payments per the terms of your loan, however. “Check with your mortgage company first,” said Dave Ramsey. “Some companies only accept extra payments at specific times or may charge prepayment penalties.”

Refinance into a shorter-term loan

Can you swing a higher monthly payment? Refinancing out of a 30-year mortgage to a 15-term can save you an enormous amount of money. “A mortgage amount of $250,000 over 30 years at a rate of 4% would cost $429,674 in principal and interest payments by the end of the term,” said Investopedia. “The total interest would be $179,674 for borrowing for 30 years. The same loan amount and interest rate over 15 years would cost $332,860 by the end of the term. Total interest would be $82,860 for borrowing for 15 years. At 4%, you'd pay only about 46% of the total interest for a 15-year than you'd pay for the 30-year.”

There is a secondary benefit to refinancing to a shorter term; these rates are typically lower. At press time, Wells Fargo’s 30-year fixed mortgage rate was 3.875%, while the 15-year fixed rate was 3.125%.

Make small sacrifices

“Other small sacrifices can go a long way to help pay off your mortgage early,” said Dave Ramsey. “How much could you save if you took your Starbucks money and added it to your mortgage payment each month? According to the Acorns Money Matters Report, the average American spends $3 per day on their coffee. That’s around $90 a month added to your mortgage payments—which will save you $25,000 in interest and four years on the life of your loan!”

Be careful about refinancing

The idea of a lower interest rate is what largely drives refinances. But refinancing to a lower rate may not be the best move if it means you’re paying a bunch of fees and/or taking out cash that eats away at your available equity. If your goal is to get your mortgage paid off as quickly as possible, you may want to just leave your loan alone.

WRITTEN BY JAYMI NACIRI

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