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 | 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

 

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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 | Dec 27, 2023

If you’re thinking about retirement or have already retired this year, it’s a good time to consider if your current house is still a good fit for the next chapter in your life.

Fortunately, you may be in a better position to make a move than you realize. Here are a few things to think about as you decide whether or not to sell and make a move.

How Long You’ve Been in Your Home

From 1985 to 2008, the average length of time homeowners typically stayed in their homes was only six years. But according to the National Association of Realtors (NAR), that number is rising today, meaning many homeowners are living in their houses even longer (see graph below):

When you live in a home for a significant period of time, it’s natural for you to experience a number of changes in your life while you’re in that house. As those life changes and milestones happen, your needs may change. And if your current home no longer meets them, you may have better options waiting for you.

How Much Equity You’ve Gained

Additionally, if you’ve been in your house for more than a few years, you’ve likely built-up significant equity that can fuel your next move. That’s because the longer you’ve been in your house, the more likely it’s grown in value due to home price appreciation. Data from the Federal Housing Finance Agency (FHFA) illustrates that point (see graph below):

While home price growth varies by state and local area, the national average shows the typical homeowner who’s been in their house for five years saw it increase in value by nearly 60%. And the average homeowner who’s owned their home since 1991 saw it more than triple in value over that time.

Consider Your Retirement Goals

Whether you’re looking to downsize, relocate to a dream destination, or simply be closer to loved ones, your home equity can be a key to realizing your homeownership goals. NAR shares that for recent home sellers, the primary reason to move was to be closer to loved ones.

Whatever your home goals are, a trusted real estate agent can work with you to find the best option. They’ll help you sell your current house and guide you through buying the home that’s right for your lifestyle today.

Bottom Line

Retirement can bring about major changes in your life, including what you need from your home. Let’s connect to explore the available homes in our area.

CA Real Estate Group | Keller Williams 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

Keeping Current Matters | Dec 20, 2023

When you read about the housing market, you’ll probably come across some information about inflation or recent decisions made by the Federal Reserve (the Fed). But how do those two things impact you and your homebuying plans? Here’s what you need to know.

The Federal Funds Rate Hikes Have Stalled

One of the Fed’s primary goals is to lower inflation. In order to do that, they started raising the Federal Funds Rate to slow down the economy. Even though this doesn’t directly dictate what happens with mortgage rates, it does have an impact.

Recently inflation has started to cool, a signal those increases worked and are bringing inflation back down. As a result, the Fed’s hikes have gotten smaller and less frequent. In fact, there haven’t been any increases since July (see graph below):

And not only has the Fed decided not to raise the Federal Funds Rate the last three times the committee met, they’ve signaled there may actually be rate cuts coming in 2024. According to the New York Times (NYT):

“Federal Reserve officials left interest rates unchanged in their final policy decision of 2023 and forecast that they will cut borrowing costs three times in the coming year, a sign that the central bank is shifting toward the next phase in its fight against rapid inflation.”

This indicates the Fed thinks the economy and inflation are improving. Why does that matter to you and your plans to buy a home? It could end up leading to lower mortgage rates and improved affordability.

Mortgage Rates Are Coming Down

Mortgage rates are influenced by a wide variety of factors, and inflation and the Fed’s actions (or as has been the case recently, inaction) play a big role. Now that the Fed has paused the increases, it looks more likely mortgage rates will continue their downward trend (see graph below):

Although mortgage rates may remain volatile, their recent trend combined with expert forecasts indicate they could continue to go down in 2024. That would improve affordability for buyers and make it easier for sellers to move since they won’t feel as locked-in to their current, low mortgage rate.

Bottom Line

The Fed’s decisions have an indirect impact on mortgage rates. By not raising the Federal Funds Rate, mortgage rates are likely to continue declining. Rely on a trustworthy real estate expert to give you expert advice about changes in the housing market and how they affect you.

Keeping Current Matters | Dec 13, 2023

If you’re thinking about moving, it’s important to know what’s happening in the housing market. Here’s an update on the supply of homes currently for sale. Whether you’re buying or selling, the number of homes in your area is something you should pay attention to.

In the housing market, there are regular patterns that happen every year, called seasonality. Spring is the peak homebuying season and also when the most homes are typically listed for sale (homes coming onto the market are known in the industry as new listings). In the second half of each year, the number of new listings typically decreases as the pace of sales slows down.

The graph below uses data from Realtor.com to provide a visual of this seasonality. It shows how this year (the black line) is breaking from the norm (see graph below):

Looking at this graph, three things become clear:

What Does This Mean for You?

Bottom Line

Whether you’re on the hunt for your next home or thinking of selling, now might just be the perfect time to make your move. If you have questions or concerns about the availability of homes in your local area, connect with a real estate agent.

Keeping Current Matters | Nov 28, 2023

When it comes to what’s happening in the housing market, there’s a lot of confusion going around right now. You may hear one thing in conversation with your friends, see something totally different on the news, and read something on social media that contradicts both of those thoughts. And, if you’re thinking about making a move, that can leave you with a lot of lingering questions. That’s where a trusted local real estate agent comes in.

Here are the top 3 questions people are asking about today’s housing market, and the data to help answer them.

1. What’s Next for Mortgage Rates?

Mortgage rates are higher than they’ve been in recent years. And, if you’re looking to buy a home, that impacts how much you can afford. That’s why so many buyers want to know what’s ahead for mortgage rates. The answer to that question is: no one can say for certain, but here’s what we know based on historical trends.

There’s a long-standing relationship between mortgage rates and inflation. Basically, when inflation is high, mortgage rates tend to follow suit. Over the past year, inflation was up, so mortgage rates were as well. But inflation is easing now. And this is why the Federal Reserve has recently paused their federal funds rate hikes, which means many experts believe mortgage rates will begin to come down.

And in some ways, we’ve started to see hints of slightly lower mortgage rates in recent weeks. But it’s certainly been volatile and will likely continue to be that way going into next year. Some ongoing variation is to be expected, but the anticipation is, that in 2024, we’ll see a downward trend. As Aziz Sunderji, Strategist at Home Economics, says:

“The bottom line is that interest rates are likely to be lower-perhaps even lower than many optimists think – in the weeks and months to come.”

2. Where Are Home Prices Headed?

While there’s been a lot of concern prices would come crashing down this year, data shows that didn’t happen. In fact, home prices are rising in most of the nation. Experts say that trend will continue, just at a slower pace that’s much more normal for the housing market – and that’s a good thing.

To help show just how confident experts are in this continued appreciation, take a look at the Home Price Expectation Survey from Pulsenomics. It’s a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. As the graph below shows, the consensus is, that prices will keep climbing next year, and in the years to come.

3. Is a Recession Around the Corner?

While recession talk has been a common thing over the past few years, there’s good news on that front.

The Wall Street Journal (WSJ) polls experts on this topic regularly. And last year at this time, most of them thought a recession would have happened by now. But as experts look at all the leading indicators today, they’re changing their minds and saying a recession is getting less and less likely. The latest results show that more experts now think we’re not headed for another recession (see chart below):

This is big news for the housing market. And while the 48% to 52% split may seem close to half and half, the key thing to focus on is that the majority of these experts think we’ve avoided a recession already.

Bottom Line

The big takeaway? The data shows there isn’t cause for concern – there are actually more signs of hope. Let’s connect to talk more about the housing market questions on your mind as we head into the new year.

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