Keeping Current Matters | Apr 16, 2024

If you’ve got a move on your mind, you may be wondering whether you should wait to sell until mortgage rates come down before you spring into action. Here’s some information that could help answer that question for you.

In the housing market, there’s a longstanding relationship between mortgage rates and buyer demand. Typically, the higher rates are, you’ll see lower buyer demand. That’s because some people who want to move will be hesitant to take on a higher mortgage rate for their next home. So, they decide to wait it out and put their plans on hold.

But when rates start to come down, things change. It goes from limited or weak demand to good or strong demand. That’s because a big portion of the buyers who sat on the sidelines when rates were higher are going to jump back in and make their moves happen. The graph below helps give you a visual of how this relationship works and where we are today:

No Caption Received

As Lisa Sturtevant, Chief Economist for Bright MLSexplains:

“The higher rates we’re seeing now [are likely] going to lead more prospective buyers to sit out the market and wait for rates to come down.”

Why You Might Not Want To Wait

If you’re asking yourself: what does this mean for my move? Here’s the golden nugget. According to experts, mortgage rates are still projected to come down this year, just a bit later than they originally thought.

When rates come down, more people are going to get back into the market. And that means you’ll have a lot more competition from other buyers when you go to purchase your next home. That may make your move more stressful if you wait because greater demand could lead to an increase in multiple offer scenarios and prices rising faster.

But if you’re ready and able to sell now, it may be worth it to get ahead of that. You have the chance to move before the competition increases.

Bottom Line

If you’re thinking about whether you should wait for rates to come down before you move, don’t forget to factor in buyer demand. Once rates decline, competition will go up even more. If you want to get ahead of that and sell now, talk to a CA Real Estate Agent.


Let’s connect and plan your next steps. Find out if we’re the right real estate team for you!

CA Real Estate Group | Caliber RE Group

👩🏻 Christine Almarines @carealestategroup
Realtor DRE# 01412944 | 714-476-4637

👩🏻 Anaid Bautista @wealthwithanaid
Realtor DRE# 02179675 | 949-391-8266
Hablo español

Maxwell 2023 Single Women Home Buyer Report

This report specifically benefits our Single Women Home Buyers to provide insight into the demographics, financial profiles, home buying motivations & lending experiences of women who purchase homes on their own.

We’d be happy to walk through this report with you.

Let’s connect and plan your next steps and find out if we’re the right real estate team for you!

CA Real Estate Group | Caliber Real Estate Group

👩🏻 Christine Almarines @carealestategroup
Realtor DRE# 01412944 | 714-476-4637
Tagalog speaking

👩🏻 Anaid Bautista @wealthwithanaid
Realtor DRE# 02179675 | 949-391-8266
Spanish speaking

By NerdWallet | Jan 30, 2024

Debt-to-income ratio shows how your debt stacks up against your income. Lenders use DTI to assess your ability to repay a loan.


Nerdy takeaways


Debt-to-income ratio divides your total monthly debt payments by your gross monthly income, giving you a percentage. Here’s what to know about DTI and how to calculate it.

How to calculate your debt-to-income ratio

To manually calculate DTI, divide your total monthly debt payments by your monthly income before taxes and deductions are taken out. Multiply that number by 100 to get your DTI expressed as a percentage.

Here’s an example: A borrower with rent of $1,200, a car payment of $400, a minimum credit card payment of $200, and a gross monthly income of $6,000 has a debt-to-income ratio of 30%. In this example, $1,800 is the sum of all debt payments. When you divide $1,800 by $6,000 and then multiply that answer by 100, you get 30.

To get the most accurate DTI ratio, make sure to include all your debt payments and income sources.

Debt payments can include:

Don’t include other monthly expenses, such as:

Include all sources of income, such as:

How lenders view your DTI ratio

Lenders look at debt-to-income ratios because research shows borrowers with high DTIs have more trouble making consistent payments.

Each lender sets its own DTI requirement, but not all creditors publish them. Generally, a personal loan can have a higher allowable maximum DTI than a mortgage.

You may find personal loan companies willing to lend money to consumers with debt-to-income ratios of 50% or more, and some exclude mortgage debt from the DTI calculation. That’s because one of the most common uses of personal loans is to consolidate credit card debt, which can help you pay off debt faster and lower your DTI.

Does your DTI affect your credit score?

Your debt-to-income ratio does not affect your credit scores; credit-reporting agencies may know your income, but they don’t include it in their calculations.

Credit utilization, or the amount of credit you’re using compared with your credit limits, does affect your credit scores. Credit reporting agencies know your available credit limits, both on individual loan accounts and in total. Most experts advise keeping the balances on your cards no higher than 30% of your credit limit, and lower is better.

How to understand DTI ratio

DTI can help you determine how to handle your debt and whether you have too much debt.

Here’s a general breakdown:

Ways to lower your DTI ratio

Reduce your debt-to-income ratio to improve your chances of qualifying for future credit.

Keeping Current Matters | Feb 26, 2024

If you’re planning to buy your first home, saving up for all the costs involved can feel daunting, especially when it comes to the down payment. That might be because you’ve heard you need to save 20% of the home’s price to put down. Well, that isn’t necessarily the case.

Unless specified by your loan type or lender, it’s typically not required to put 20% down. That means you could be closer to your homebuying dream than you realize.

As The Mortgage Reports says:

“Although putting down 20% to avoid mortgage insurance is wise if affordable, it’s a myth that this is always necessary. In fact, most people opt for a much lower down payment.

According to the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. In fact, for all homebuyers today it’s only 15%. And it’s even lower for first-time homebuyers at just 8% (see graph below):

a graph of a number of blue squares

The big takeaway? You may not need to save as much as you originally thought.

Learn About Resources That Can Help You Toward Your Goal

According to Down Payment Resource, there are also over 2,000 homebuyer assistance programs in the U.S., and many of them are intended to help with down payments.

Plus, there are loan options that can help too. For example, FHA loans offer down payments as low as 3.5%, while VA and USDA loans have no down payment requirements for qualified applicants.

With so many resources available to help with your down payment, the best way to find what you qualify for is by consulting with your loan officer or broker. They know about local grants and loan programs that may help you out.

Don’t let the misconception that you have to have 20% saved up hold you back. If you’re ready to become a homeowner, lean on the professionals to find resources that can help you make your dreams a reality. If you put your plans on hold until you’ve saved up 20%, it may actually cost you in the long run. According to U.S. Bank:

“. . . there are plenty of reasons why it might not be possible. For some, waiting to save up 20% for a down payment may “cost” too much time. While you’re saving for your down payment and paying rent, the price of your future home may go up.”

Home prices are expected to keep appreciating over the next 5 years – meaning your future home will likely go up in price the longer you wait. If you’re able to use these resources to buy now, that future price growth will help you build equity, rather than cost you more.

Bottom Line

Keep in mind that you don’t always need a 20% down payment to buy a home. If you’re looking to make a move this year, reach out to a trusted real estate professional to start the conversation about your homebuying goals.

 

Keeping Current Matters | Jan 17, 2024

If you’ve been holding off on selling your house to make a move because you felt mortgage rates were too high, their recent downward trend is exciting news for you. Mortgage rates have descended since last October when they hit 7.79%. In fact, they’ve been below 7% for over a month now (see graph below):

And while they’re not going back to the 3% we saw during the ‘unicorn’ years, they are expected to continue to go down from where they are now in the near future. As Dean Baker, Senior Economist at the Center for Economic Researchexplains:

“It also appears that mortgage rates are now falling again. They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.”

Here are two reasons why this recent trend, and the expectation it’ll continue, is such good news for you.

You May Not Feel as Locked-In to Your Current Mortgage Rate

With mortgage rates already significantly lower than they were just a few months ago, you may feel less locked-in to the current mortgage rate you have on your house. When mortgage rates were higher, moving to a new home meant possibly trading in a low rate for one up near 8%.

However, with rates dropping, the difference between your current mortgage rate and the new rate you’d be taking on isn’t as big as it was. That makes moving more affordable than it was just a few months ago. As Lance Lambert, Founder of ResiClubexplains:

We might be at peak “lock-in effect.” Some move-up or lifestyle sellers might be coming to terms with the fact 3% and 4% mortgage rates aren’t returning anytime soon.”

More Buyers Will Be Coming to the Market

According to data from Bright MLS, the top reason buyers have been waiting to take the plunge into homeownership is high mortgage rates (see graph below):

Lower mortgage rates mean buyers can potentially save money on their home loans, making the prospect of purchasing a home more attractive and affordable. Now that rates are easing, more buyers are likely to feel they’re ready to jump back into the market and make their move. And more buyers mean more demand for your house.

Bottom Line

If you’ve been waiting to sell because you didn’t want to take on a larger mortgage rate or you thought buyers weren’t out there, the recent decline in mortgage rates may be your sign it’s time to move. When you’re ready, let’s connect.


👩🏻 Christine Almarines @christine_almarines
Realtor DRE# 01412944 | 714-476-4637
Tagalog speaking

👩🏻 Michelle Kim @michellejeankim_homes
Realtor DRE# 01885912 | 714-253-7531
Korean speaking

👩🏻 Anaid Bautista @singlemomrealtor
Realtor DRE# 02179675 | 949-391-8266
Spanish speaking

Keeping Current Matters | Jan 8, 2024

If you want to buy a home, it’s important to know how mortgage rates impact what you can afford and how much you’ll pay each month. Fortunately, rates for 30-year fixed mortgages have come down significantly since the end of October and are currently under 7%, according to Freddie Mac (see graph below):

This recent trend is great news for buyers. As a recent article from Bankrate says:

“The rate cool-off somewhat eases the housing affordability squeeze.”

And according to Edward Seiler, AVP of Housing Economics and Executive Director of the Research Institute for Housing America at the Mortgage Bankers Association (MBA):

“MBA expects that affordability conditions will continue to improve as mortgage rates decline . . .”

Here’s a bit more context on how this could help with your plans to buy a home.

How Mortgage Rates Affect Your Search for a Home

Understanding the connection between mortgage rates and your monthly home payment is crucial for your plans to become a homeowner. The chart below illustrates how your ability to afford a home changes when mortgage rates shift. Imagine your budget allows for a monthly payment between $2,400 and $2,500. The green part in the chart shows payments in that range or lower (see chart below):

As you can see, even small changes in rates can affect your budget and the loan amount you can afford.

Get Help from Reliable Experts To Understand Your Budget and Plan Ahead

When you’re looking to buy a home, it’s important to get guidance from a local real estate agent and a trusted lender. They can help you explore different mortgage options, understand what makes mortgage rates go up or down, and how those changes impact you.

By looking at the numbers and the latest data together, then adjusting your strategy based on today’s rates, you’ll be better prepared and ready to buy a home.

Bottom Line

If you’re looking to buy a home, you should know the recent downward trend in mortgage rates is good news for your move. Let’s connect and plan your next steps.


👩🏻 Christine Almarines @christine_almarines
Realtor DRE# 01412944 | 714-476-4637
Tagalog speaking

👩🏻 Michelle Kim @michellejeankim_homes
Realtor DRE# 01885912 | 714-253-7531
Korean speaking

👩🏻 Anaid Bautista @singlemomrealtor
Realtor DRE# 02179675 | 949-391-8266
Spanish speaking

Realtor.com | Jan 8, 2024
 
Homebuyers received an unexpected gift around the holidays as mortgage rates dropped rapidly late last year.

They fell from a peak of about 8% in the fall to the mid-6% range in late December, a level many economists and forecasters hadn’t anticipated until the end of 2024if they were being optimistic. Now with the U.S. Federal Reserve poised to cut its own rates this year, the question on the minds of many aspiring homebuyers is just how low mortgage rates will drop this year.

Most of the real estate experts who spoke with Realtor.com® say they expect rates will stay in the 6% range this year, but some believe rates could slip into the 5% range by year’s end.

“The direction we’re headed is down this year,” says Claudia Sahm, founder of Sahm Consulting and a former economist for the Federal Reserve. “But how far down … is a big question mark.”

Higher mortgage rates had effectively frozen the housing market last year. But they fell in mid-December after the Fed indicated that its campaign of raising interest rates to tame inflation was over—and the Fed could cut rates three times next year if inflation continues to moderate.

Mortgage rates are separate but directly influenced by the Fed’s short-term interest rates. So when the Fed reduces its rates, mortgage rates are likely to decrease.

“We expect a gradual reduction in mortgage rates, but it’s going to play out in fits and starts,” says Realtor.com® Chief Economist Danielle Hale. “We could see rates tick a little higher before they continue to fall.”

Mortgage rates have, in fact, climbed a bit recently.

They averaged 6.75% for 30-year fixed-rate loans on Friday, up from a low of 6.61% in late December, according to Mortgage News Daily. The rise is a result of new unemployment data released last week that shows the economy is stronger than the Fed would prefer as it continues to fight inflation.

Many investors had expected the Fed to begin slashing its rates as early as March, which would likely have resulted in mortgage rates falling. But the Fed might keep rates high for longer as it considers the strong jobs data along with how much inflation is coming down. The more the economy cools, the quicker the Fed could cut rates.

“We will see some bumpiness and mild volatility as we go through January and February, but mortgage rates will keep heading modestly lower,” says David Stevens, CEO of Mountain Lake Consulting, which services the mortgage industry. “We could see mortgage rates by year end at the bottom of the 6% range, and we could potentially go into the [5% range] if we see softening in the economy.”

How low will mortgage rates go?

While real estate experts are divided on just how much mortgage rates will fall, most expect they will stay in the 6% range. However, some believe they can dip into the high 5% by the end of 2024.

“There’s every reason to believe that we continue to move in the right direction unless there’s something that comes out of nowhere, which has been the story of the last couple of years,” says Sahm.

A rate in the 5% range could provide buyers struggling with the worst housing affordability in decades with substantial savings. Buyers who purchased a median-priced home with a 5.5% mortgage rate would pay about $216 less a month for their mortgage than those who locked in a 6.5% rate. And they would save roughly $442 a month compared with buyers with a 7.5% rate. (This assumes buyers put down 20% on a $420,000 home.)

However, the days of the 2% and 3% rates offered during the COVID-19 pandemic aren’t likely to return.

“I don’t think we’ll ever see them again at those levels,” says Stevens.

The Fed wouldn’t reduce its rates by enough to bring mortgage rates down to those lows unless the U.S. economy was in dire straits.

“If we ended up back there, we’d be in a very bad recession,” says Sahm.

How lower mortgage rates will affect the housing market

Lower mortgage rates are already having an impact on the housing market.

When rates went down at the end of last year, New Jersey–based mortgage lender Shmuel Shayowitz saw more first-time homebuyers get pre-approved for loans. Even more encouraging were the conversations he began having with homeowners about how they would consider selling and moving into new homes when rates went down into the 5% range.

“Because the thought is rates will be lower, more people are comfortable jumping back into the market,” says Shayowitz, president of Approved Funding in River Edge, NJ.

Two years ago, mortgage rates in the mid-6% would have scared off (or priced out) many would-be buyers. By now, though, buyers have had time to get used to them. They might even seem like a bargain compared with the roughly 8% rates seen in October.

However, reduced rates might be a double-edged sword as more would-be buyers enter the market. The nation is still struggling with an extreme housing shortage. Additional competition for a limited number of homes for sale could usher in the return of bidding wars and push home prices even higher.

“It will cause a noteworthy amount of pickup in the market,” says Jacob Channel, the senior economist at LendingTree, an online financial services marketplace.

Many homeowners who snagged ultralow rates during the pandemic will remain reluctant to move and give up those savings. And mortgage rates and prices will still remain high. This will make purchasing a home a significant financial challenge for many buyers.

“The housing market’s not going to go crazy,” says Channel. “It’s not going to be as active as it was or as frenzied as it was when rates were record lows in 2020 and 2021.”


Clare Trapasso is the executive news editor of Realtor.com. She was previously a reporter for the Associated Press, the New York Daily News, and a Financial Times publication. She also taught journalism courses at several New York City colleges. Email clare.trapasso@realtor.com or follow @claretrap on X (formerly Twitter).
TwitterFollow @claretrap
 

Keeping Current Matters | Jan 1, 2024

If buying or selling a home is your goal for 2024, it’s important to understand today’s housing market, know your why, and work with industry experts to bring your homeownership vision for the new year into focus.

Over the last year, the economy had a big impact on the housing market, and likely on your wallet too. That’s why it’s critical to have a clear picture of not just the market today, but also on what you want out of it when you buy or sell a home. Danielle Hale, Chief Economist at Realtor.comexplains:

The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, so that you can stay in your home long enough that buying is a sound financial decision.

Here are a few things to think through as you define your goals for 2024.

1. Know Your Why

You’re dreaming about making a move for a reason – what is it? No matter what’s happening in the market, there are still many compelling reasons to buy a home today. Your needs may have changed in a way your current house can’t address, or you could be ready to step into homeownership for the first time. Use your why and your motivation as a guidepost in partnership with an expert advisor to make sure your move gives you a lasting sense of accomplishment.

2. Figure Out What Your Next Home Needs To Look Like

You know you want to move, but how would you describe your dream home? The number of homes for sale has grown recently, and that could mean more options to choose from when you buy. But overall housing supply is still lower than more normal years in the market, so you’ll have to work closely with a pro to find what you’re looking for. Just be sure to keep your budget in mind as you balance your wants and needs. The better you understand what’s essential and where you can be flexible, the easier it will be to find a home that’s right for you.

3. Determine if You’re Ready To Buy

Getting clear on your budget and available savings is essential before you get too far into the process. Partnering with a local agent and a lender early is the best way to make sure you’re in a good position to buy. This could include planning how much to save for a down payment, getting pre-approved for a home loan, and assessing your current home equity if you’re selling your existing house.

A Professional Will Guide You Through Every Step of the Process

Buying or selling a home takes expertise to navigate. If that feels a bit overwhelming, that’s normal. Don’t let uncertainty hold you back from your goals this year. A trusted expert will help you bridge that gap and give you the facts and advice you need about today’s housing market.

Bottom Line

Let’s connect to plan how to make your homeownership dreams a reality in 2024.


CA Real Estate Group | KW Realty

Christine Almarines @christine_almarines
Realtor DRE# 01412944 | 714-476-4637
Tagalog speaking

Michelle Kim @michellejeankim_homes
Realtor DRE# 01885912 | 714-253-7531
Korean speaking

Anaid Bautista @singlemomrealtor
Realtor DRE# 02179675 | 949-391-8266
Spanish speaking

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