Keeping Current Matters | Feb 8, 2024

Are you on the fence about selling your house? While affordability is improving this year, it’s still tight. And that may be on your mind. But understanding your home equity could be the key to making your decision easier. An article from Bankrate explains:

Home equity is the difference between your home’s value and the amount you still owe on your mortgage. It represents the paid-off portion of your home.

You’ll start off with a certain level of equity when you make your down payment to buy the home, then continue to build equity as you pay down your mortgage. You’ll also build equity over time as your home’s value increases.”

Think of equity as a simple math equation. It’s the value of your home now minus what you owe on your mortgage. And guess what? Recently, your equity has probably grown more than you think.

In the past few years, home prices skyrocketed, which means your home’s value – and your equity – likely shot up, too. So, you may have more equity than you realize.

How To Make the Most of Your Home Equity Right Now

If you’re thinking about moving, the equity you have in your home could be a big help. According to CoreLogic:

“. . . the average U.S. homeowner with a mortgage still has more than $300,000 in equity . . .”

Clearly, homeowners have a lot of equity right now. And the latest data from the Census and ATTOM shows over two-thirds of homeowners have either completely paid off their mortgages (shown in green in the chart below) or have at least 50% equity (shown in blue in the chart below):

That means roughly 70% have a tremendous amount of equity right now.

After you sell your house, you can use your equity to help you buy your next home. Here’s how:

“You may want to pay cash for your home if you’re shopping in a competitive housing market, or if you’d like to save money on mortgage interest. It could help you close a deal and beat out other buyers.

Borrowers who put down more money typically receive better interest rates from lenders. This is due to the fact that a larger down payment lowers the lender’s risk because the borrower has more equity in the home from the beginning.”

The Easy Way To Find Out How Much Equity You Have

To find out how much equity you have in your home, ask a real estate agent you trust for a Professional Equity Assessment Report (PEAR).

Bottom Line

Planning a move? Your home equity can really help you out. Let’s connect to see how much equity you have and how it can help with your next home.

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

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

 

 

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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