Welcome everyone! Today we are covering the most recent topics. You may have hear about a 40-year mortgage, interest rates increasing for those that have good credit scores (what?!), and projections on whether or not the rates will go down and the market will cool down. Tune in as we cover it all!
Are interest rates for buyers with high credit scores going up?
This was an ugly surprise for sure. As part of the Federal Housing Finance Agency’s push for affordable housing, homebuyers with good credit will soon have to pay higher mortgage rates and fees to subsidize people with riskier credit ratings. This goes into effect on May 1st.
How much is this costing you on your monthly payment? If you have a score 680 or more, you’ll pay about $40 more per month on a loan at $400,000.
40-year FHA mortgages, what is the deal with that?
As of today, there is no plan or announcement to extend 40-year mortgage loans for new purchases. Instead, what FHA has done is open up this option for borrowers that already own a home and perhaps are struggling with their mortgage payments allowing them to in essence refinance their existing 30-year loan into a 40-year loan to lower their monthly payments.
Will mortgage rates go down this spring/summer season?
Short answer is yes. We expect them to drop as new inflation reports are released. You have to keep in mind that interest rates are notoriously volatile and could change on any given week based on what happens with mortgage back securities, the federal government employment and inflation reports and the stock market.
We started the year at 7%, decreased to 6% in February and beginning in March and are now ranging between the 6.875 to 7.25 percent depending on the type of loan, type of property, credit score, loan amount, loan to value and city/state.
Returning to mortgage rates of 3% or 4% is not going to happen – historically, rates have been higher. The low rates of 2020 and 2021 were “unique”.
What should buyers expect from now through November?
We are entering the busy season, spring and summer is when more homes are listed for sale, buyers are looking to relocate, they may be changing jobs, families growing or looking for new schools. We are already seeing multiple offer situations, less closing costs contributions, homes in the market for less time and a lot of buyer activity. We get anywhere from one to three applications daily.
So, what do we recommend potential buyers start doing?
Get fully approved for a loan. Not just an overlook of your documents but a full credit approval. Be ready to submit a strong and competitive offer and don’t forget to utilize the down payment assistance programs available for first time buyers. Once approved, pair up with a strong agent that will negotiate on your behalf, do their best to obtain closing costs paid, and will make sure you are not overpaying for a home.
Should I wait to buy a home until 2024?
While it might be tempting to hold off on buying a property until a better deal arrives, there’s no guarantee that mortgage rates will drop or that homes will become more affordable in 2024.
If you are ready to buy a home (have a steady employment, savings, are paying high rents, not planning on relocating to another state, can afford the monthly payment), then it’s a smart investment. Real estate has proven itself a worthy investment that provides cash flow and appreciation over time. Whether you’re an aggressive or conservative investor, it’s a great way to diversify your portfolio and can pay off in the short-term and long-term.
What are we seeing in the las Vegas market? 4/24/23
There are about 5765 homes for sale, the median home price is at about 425,000, about 528 homes closed in the last week with an average of 50 days in the market and we currently have a 10-week supply of homes.
Want to learn more? Reach out to us!