Florida Mortgage | Why higher rates shouldn’t dissuade buyers
Florida Mortgage | Why higher rates shouldn’t dissuade buyers NMLS ID 1834853 #floridamortgage #floridamortgagerates #floridamortgagecompany
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History Proves Recession Doesn’t Equal a Housing Crisis [INFOGRAPHIC]
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Some Highlights
- It’s important to understand history proves an economic slowdown does not equal a housing crisis.
- In 4 of the last 6 recessions, home prices actually appreciated. Home prices only fell twice – minimally in the early 90s and then by nearly 20% during the housing crash in 2008.
- If you have questions, let’s connect to discuss why today’s housing market is nothing like 2008.
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Florida Mortgage | Understanding Housing Inventory And What It Means For People
Florida Mortgage | Understanding Housing Inventory And What It Means For People NMLS ID 1834853 #floridamortgage #floridamortgagerates #floridamortgagecompany
How Homeownership Impacts You
June is National Homeownership Month, and it’s the perfect time to reflect on how impactful owning a home can truly be. When you purchase a house, it becomes more than just a space you occupy. It’s your stake in the community, an investment, and a place you can put your stamp on.
If you’re thinking about buying a home this year, here are some of the benefits you’ll experience when you do.
The Emotional Benefits of Homeownership
Because it’s a place that’s uniquely yours, owning a home can give you a sense of pride and happiness in several ways.
Your Home Can Reflect Your Tastes and Personality
Investopedia puts it like this:
“One often-cited benefit of homeownership is the knowledge that you own your little corner of the world.”
That knowledge can lead to a powerful, emotional connection to the place where you live. But so can the realization that your home will grow with you. Because it’s yours, you have the freedom to make updates to it as your needs and tastes change. As Logan Mohtashami, Lead Analyst for HousingWire, says:
“The psychology is that this is yours and you’re going to make it as good as possible because you’re in for a long time, . . . “
And that can create a greater sense of ownership, pride, and connection with your home and your community.
It Can Enhance Your Neighborhood and Civic Engagement
Homeownership can lead you to get even more involved with your local area. After all, you’re putting your roots down in a location and will want to do what you can to help improve it, much like your home. In a recent report, the National Association of Realtors (NAR) says:
“Living in one place for a longer amount of time creates and [sic] obvious sense of community pride, which may lead to more investment in said community.”
The Financial Benefits of Homeownership
When you choose to become a homeowner, you’re making a financial decision as well. That’s because your home is also an investment.
It Can Help You Feel Financially Stable
Homeownership is truly one of the best ways to improve your long-term financial position. Not only will you have a predictable monthly housing expense that can benefit your budget in the short term, but you’ll also gain equity as your home appreciates in value and you make your monthly mortgage payment. As Freddie Mac says:
“Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”
It Can Grow Your Wealth
Because of your growing equity, you can build your net worth as a homeowner. And when you compare the difference in net worth between a renter and a homeowner, it’s clear that owning a home truly offers a great way to build your long-term financial position.
According to the latest data from NAR, the median household net worth of a homeowner is roughly $300,000, while the median net worth of renters is only about $8,000. That means a homeowner’s net worth is nearly 40 times that of a renter.
Bottom Line
Homeownership is truly a way to find greater satisfaction and happiness and to build financial freedom. If National Homeownership Month has you dreaming about purchasing a home, then let’s connect to begin the process today.
Content previously posted on Keeping Current Matters#fidelityhomegroup, #floridamortgage, #floridamortgagerates, #mortgageflorida
Florida Mortgage | Florida Market Update April 2022
Florida Mortgage | Florida Market Update April 2022 NMLS ID 1834853 #floridamortgage #floridamortgagerates #floridamortgagecompany #floridarealestatemarketupdate
Why Home Loans Today Aren’t What They Were in the Past
In today’s housing market, many are beginning to wonder if we’re returning to the riskier lending habits and borrowing options that led to the housing crash 15 years ago. Let’s ease those concerns.
Several times a year, the Mortgage Bankers Association (MBA) releases an index titled the Mortgage Credit Availability Index (MCAI). According to their website:
“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is . . . a summary measure which indicates the availability of mortgage credit at a point in time.”
Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available mortgage credit becomes. Here’s a graph of the MCAI dating back to 2004, when the data first became available:
As the graph shows, the index stood at about 400 in 2004. Mortgage credit became more available as the housing market heated up, and then the index passed 850 in 2006. When the real estate market crashed, so did the MCAI as mortgage money became almost impossible to secure. Thankfully, lending standards have eased somewhat since then, but the index is still low. In April, the index was at 121, which is about one-seventh of what it was in 2006.
Why Did the Index Get out of Control During the Housing Bubble?
The main reason was the availability of loans with extremely weak lending standards. To keep up with demand in 2006, many mortgage lenders offered loans that put little emphasis on the eligibility of the borrower. Lenders were approving loans without always going through a verification process to confirm if the borrower would likely be able to repay the loan.
An example of the relaxed lending standards leading up to the housing crash is the FICO® credit score associated with a loan. What’s a FICO® score? The website myFICO explains:
“A credit score tells lenders about your creditworthiness (how likely you are to pay back a loan based on your credit history). It is calculated using the information in your credit reports. FICO® Scores are the standard for credit scores—used by 90% of top lenders.”
During the housing boom, many mortgages were written for borrowers with a FICO score under 620. While there are still some loan programs that allow for a 620 score, today’s lending standards are much tighter. Lending institutions overall are much more attentive about measuring risk when approving loans. According to the latest Household Debt and Credit Report from the New York Federal Reserve, the median credit score on all mortgage loans originated in the first quarter of 2022 was 776.
The graph below shows the billions of dollars in mortgage money given annually to borrowers with a credit score under 620.
In 2006, buyers with a score under 620 received $376 billion dollars in loans. In 2021, that number was only $80 billion, and it’s only $20 billion in the first quarter of 2022.
Bottom Line
In 2006, lending standards were much more relaxed with little evaluation done to measure a borrower’s potential to repay their loan. Today, standards are tighter, and the risk is reduced for both lenders and borrowers. These are two very different housing markets, and today is nothing like the last time.
Content previously posted on Keeping Current Matters#fidelityhomegroup, #floridamortgage, #floridamortgagerates, #mortgageflorida
What Does the Rest of the Year Hold for the Housing Market?
If you’re thinking of buying or selling a house, you’re at an exciting decision point. And anytime you make a big decision like that, one thing you should always consider is timing. So, what does the rest of the year hold for the housing market? Here’s what experts have to say.
The Number of Homes Available for Sale Is Likely To Grow
There are early signs housing inventory is starting to grow and experts say that should continue in the months ahead. According to Danielle Hale, Chief Economist at realtor.com:
“The gap between this year’s homes for sale and last year’s is one-fifth the size that it was at the beginning of the year. The catch up is likely to continue, . . . This growth will mean more options for shoppers than they’ve had in a while, even though inventory continues to lag pre-pandemic normal.”
- As a buyer, having more options is welcome news. Just remember, housing supply is still low, so be ready to act fast and put in your best offer up front.
- As a seller, your house may soon face more competition when other sellers list their homes. But the good news is, if you’re also buying your next home, having more options to choose from should make that move-up process easier.
Mortgage Rates Will Likely Continue To Respond to Inflationary Pressures
Experts also agree inflation should continue to drive up mortgage rates, albeit more moderately. Odeta Kushi, Deputy Chief Economist at First American, says:
“… ongoing inflationary pressure remains likely to push mortgage rates even higher in the months to come.”
- As a buyer, work with trusted real estate professionals, including your lender, so you can learn how rising mortgage rate environments impact your purchasing power. It may make sense to buy now before it costs more to do so, if you’re ready.
- As a seller, rising mortgage rates are motivating some homeowners to make a move up sooner rather than later. If you’re planning to buy your next home, talk to a trusted real estate advisor to decide how to time your move.
Home Prices Are Projected To Continue To Climb
Home prices are forecast to keep appreciating because there are still fewer homes for sale than there are buyers in the market. That said, experts agree the pace of that appreciation should moderate – but home prices won’t fall. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:
“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022. . . Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.”
- As a buyer, continued home price appreciation means it’ll cost you more to buy the longer you wait. But it also gives you peace of mind that, once you do buy a home, it will likely grow in value. That makes it historically a good investment and a strong hedge against inflation.
- As a seller, price appreciation is great news for the value of your home. Again, lean on a professional to strike the right balance of the best conditions possible for both selling your house and buying your next one.
Bottom Line
Whether you’re a homebuyer or seller, you need to know what’s happening in the housing market, so you can make the most informed decision possible. Let’s connect to discuss your goals and what lies ahead, so you can pick your best time to make a move.
Content previously posted on Keeping Current Matters#fidelityhomegroup, #floridamortgage, #floridamortgagerates, #mortgageflorida
Remember and Honor Those Who Gave All
We remember and honor those who gave all.
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Honoring our nation’s heroes on Memorial Day #memorialday #supportourtroops #supportourveterans
Honoring our nation’s heroes on Memorial Day
Florida Mortgage | Thinking of Moving Up This Summer?
Florida Mortgage | Thinking of Moving Up This Summer? NMLS ID 1834853 #floridamortgage #floridamortgagerates #floridamortgagecompany #movingup