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Housing demand is up and it’s time to track the spring housing data and see what the selling season will bring. As I always stress, we are working from the lowest bar ever with demand, so let’s add historical context to the data. But, even with mortgage rates higher this year than last year, demand is rising.
As we get closer to the end of the first month of 2024, forward-looking purchase application data looks good. Once I make some holiday adjustments, we have eight weeks of a positive trend since mortgage rates fell from the 8% high, and as of now, the slightly higher rates we’ve seen recently haven’t impacted the data just yet. Historically, higher rates negatively impact the weekly purchase application data, and I will look for this over the next few weeks . But it’s very early in the seasonal demand timeframe for housing, so we will take it one week at a time. Purchase apps were up 8% week to week and still down 18% year over year. Last year at this time we got a boost in demand with rates heading toward 6%.
Here is a look at last week:
Last week, we saw active inventory fall slightly week to week. This is common in January. We have had some positive purchase application data recently, and the pending home sales report came in as a beat last week. So, inventory falling looks normal. However, I would like to see the inventory bottom very soon and have a more traditional seasonal increase, rather than having a bottom in March or April.
One of the more positive stories about housing inventory recently is that we found a bottom in new listings data last year, and we have been starting to grow new listings data for some time now on a year-over-year basis. It isn’t anything significant, but I will take it after what we have been through the last few years. This is something I talked about on CNBC recently.
Weekly new listing data:
Every year, one-third of all homes take a price cut before selling — nothing abnormal about that. However, this data line accelerates higher when mortgage rates rise, and demand gets hit harder. A perfect example was in 2022: when housing inventory rose faster, the percentage of price cuts rose faster as home sales crashed. That increase matched the slope of the inventory increase, and people needed to cut prices to sell their homes.
Toward the end of 2022, that marketplace changed as home sales stopped crashing and the market stabilized. So far this year, the price cut percentage data is still on pace to break below the lows we saw in 2023 in the spring. This data line is very seasonal, so what is occurring now is very normal.
This is the price-cut percentage for the same week over the last few years:
The 10-year yield is the key for housing in 2024. In my 2024 forecast, I have the 10-year yield range between 3.21%-4.25%, with a critical line in the sand at 3.37%. If the economic data stays firm, we shouldn’t break below 3.21%, but if the labor data gets weaker, that line in the sand — which I call the Gandalf line, as in “you shall not pass” — will be tested.
This 10-year yield range means mortgage rates between 5.75%-7.25%, but this assumes spreads are still bad. The spreads have been improving this year so much that if we hit 4.25% on the 10-year yield, we won’t see 7.25% in mortgage rates.
Last week, we got great news on inflation data, and we have been saying the inflation growth rate has slowed. However, in the economic game of rock-paper-scissors, it’s labor over inflation data, and the jobless claims data are too low, so the Fed hasn’t pivoted yet. Monday’s podcast will go over this topic more clearly.
The 10-year yield started last week at 4.14% and ended the week there. Mortgage rates ranged between 6.875% and 6.95%, ending the week at 6.90%. There is not much movement with the 10-year yield and mortgage rates. It’s wild to think that three to six month PCE inflation data is running below 2%, and mortgage rates are still this high. Remember, the Fed hasn’t pivoted and is still very restrictive.
It’s jobs week! So we will get the four labor reports: Job openings, ADP, jobless claims and the BLS jobs report. The Federal Reserve meets this week: we won’t see a rate cut this time but the key is the language they use in this meeting after the recent inflation data we saw. Also, the question and answers should be very interesting. We also have some home price data, which of course is a bit lagging from what is happening currently, but we will get those reports as well.
Source: housingwire.com
Back in August 2020, the Aspen Institute analyzed U.S. Census data to calculate that without “swift intervention” there might be an estimated 30 to 40 million people in America at risk for eviction, with 29 to 43 percent of renter households at risk of eviction by the end of 2020.
Here we are in early 2021, and some “swift intervention” has arrived in the form of an extension of a Centers for Disease Control and Prevention nationwide ban on “certain residential evictions.” The CDC order, which defines a temporary halt to residential evictions to prevent the further spread of COVID-19, went into effect on Sept. 4 and was to end on Dec. 31, 2020. It’s now in effect until March 31.
Aside from any federal rules, many states have put their own eviction bans in place. The NOLO legal information website has a list of state eviction protections. Princeton University’s Eviction Lab monitors weekly reports through its Eviction Tracking System with nearly real-time updates on states’ moratoria. For more updates, check with a legal aid organization where you live.
All good news but cold comfort if you’re one of the people who has already been evicted. Although it’s never a good time to leave your place of residence, to have to do so during a global pandemic adds an extra layer of fear and uncertainty. Aside from health worries, how do you get an apartment with an eviction? What happens to your credit? Will you be able to rent again?
The following are some reasons you might face eviction:
Landlords have to follow a series of legal steps before they can put you out. They can’t just change the locks while you’re not home.
Usually, but depending on local laws, the landlord has 30 days to notify you in writing that they’re terminating your lease. They must attend a hearing and make a case for why you, the renter, need to leave. If the landlord wins the case, and you don’t leave or make changes — by paying the back rent, for example — they will then contact law enforcement and schedule an eviction date. A sheriff or marshal will give you notice that law enforcement will arrive a few days hence to escort you off the premises.
You can, of course, defend yourself against an eviction if you believe it’s wrongful — a landlord’s illegal activity, the property is uninhabitable, the landlord is retaliating against you for demanding repairs.
An eviction shows up on your legal record, which future landlords will be able to access, and remains there for seven years. The eviction will not show up on your credit report, but it may affect your credit in these ways:
You can petition the court to expunge the eviction from your legal record. You can then contact the credit reporting agencies to remove the civil judgment from your credit report. Getting rid of the collections agency from your credit report will be more difficult.
If unpaid rent was the reason for your eviction, do all you can to make amends with your previous landlord or the collections agency. That includes paying back what you owe.
You may have trouble finding apartments that accept evictions. For one thing, many property owners require a background check, but it’s possible to find some private owners who ask only for reference letters or apartments with eviction forgiveness. So, check upfront about how they will vet you.
While you’re looking for an apartment that accepts evictions, spend time rebuilding your own personal portfolio to show future landlords you’re worth any perceived risk:
If you were delinquent in rent and got backed up on other bills, you’ll have dings on your credit report. You may want to engage a credit counselor to help in consolidating debt and creating a debt-management plan. (Check the Federal Trade Commission website for information on credit counselors.)
Ultimately, you’ll need to make a commitment — and stick to it — to pay all bills on time every time. Reduce your credit card balances and don’t apply for new credit cards. Keep in mind, rebuilding your credit will take time.
You’ve got to convince a new landlord that you’re creditworthy. Be transparent and honest about your credit history and let a prospective landlord know that you’ve learned from past mistakes and will move forward responsibly.
You can do this by phone or by writing a letter in which you explain your circumstances. Offer details about how those have changed, e.g. you now have a higher paying job and define how you’re working to rebuild your credit. Back up your claims with pay stubs and reference letters.
Perhaps you have previous rental experience in which you were never late on payments. Get that landlord to write a letter attesting to that. You can also get employers, business partners, family and friends to write letters on your behalf.
If you can afford it, offer to pay upfront more than what might be asked of you. Perhaps you can swing first and last month’s rent. Or, offer to pay a higher security deposit. Have a co-signer ready to help back your lease agreement. This makes you less of a risk.
You want to make a good impression when you meet a prospective landlord to make your case. Dress neatly, stay calm, be honest and focus on your positive attributes. Although it might seem like it, an eviction is not the end of the world. Stay positive and spend time researching and preparing for how to get an apartment with an eviction.
Source: rent.com
Data from research organizations and aging advocacy groups is clear: More older Americans want to age in place in their own homes, as opposed to living in dedicated care facilities.
To get a better grasp on this preference, Chicago-based National Public Radio (NPR) affiliate station WBEZ recently featured a dedicated aging-in-place segment. WBEZ spoke with experts and community members about why more older Americans are opting to remain in their homes as they grow older.
The preference to age in place is rooted in emotion and familiarity that’s likely to be lost by moving to another environment, according to Margaret LaRaviere, deputy commissioner of senior services with the Chicago Department of Family Support Services.
“Studies have found and supported that if you ask the senior where they would like to be, they want to age within [their homes and] communities,” she said. “[They want to be among] neighbors that they’ve known for years [and in] areas that are familiar to them. When you look at aging outside the home in a senior retirement facility, it can range anywhere from $4,000 to $12,000 [per month].”
These costs only increase if, for example, a resident of a senior housing facility needs memory care support to deal with cognitive challenges, like dementia or Alzheimer’s disease, LaRaviere said. This pushes dedicated care facilities out of financial reach for many American seniors and their families, she added.
Mary Mitchell, a columnist and the director of culture and community engagement for the Chicago Sun-Times, recently wrote a column about aging-in-place dynamics in the Chicago community. She described her own aging-in-place experience in a recent column as well as on the radio segment.
“I made the move because [a] three-story house was too much for me to handle,” she said. “[It was] a lot of house and a lot of stairs to climb from basement to attic, so that’s one reason I just needed to make a change. But the thing that was also on my mind when I moved out of that house was that this house is perfect for a young family.”
This made her believe that it was time to “move on,” but the journey was a very emotional one for her.
“I packed up knowing that I was putting stuff in storage, I was giving stuff away [and] I was moving into a smaller space,” she said. “And it was very important for me to really embrace this as my forever place, and I have no intention of moving from there to another place.”
But data can only go so far when taking stock of seniors’ preferences, and Mitchell explained the emotional dynamics of such a choice more deeply.
“I was sad; it was like a part of me,” she said. “This was my home for 30 years. I knew every nook and cranny and every window, [and it] was a lovely community. I knew my neighbors, I knew the people who work at the stores and all of that. It’s familiarity, and I think as I get older, I crave familiar places and familiar spaces.”
Source: housingwire.com
If you’re in search of a low-risk way to grow your money, a liquid certificate of deposit (CD) might be worth a closer look. A liquid CD gives you a fixed, guaranteed rate of interest for a specific term, but unlike standard CDs, you don’t pay a penalty if you withdraw the funds before the maturity date.
Granted, the returns you earn on a liquid CD may not compete with stock market investments, but knowing that your money is earning interest and likely won’t incur any losses can be powerful benefits.
Here, you’ll learn more about liquid CDs, including:
• What a liquid CD is
• How to withdraw money from a liquid CD
• The pros and cons of liquid CDs
• Alternatives to liquid CDs.
Before you think about investing in a CD, here’s a look at definitions:
• A certificate of deposit, or CD, is a savings vehicle that usually gives you a bit of interest with virtually no risk, provided you keep the money in place for a certain term. If, however, you withdraw funds before the CD matures (or reaches the end of its term), you are usually penalized. You will likely lose some or all of the interest earned and perhaps even a bit of the principal. In other words, are certificates of deposit liquid? Usually not.
• A liquid certificate of deposit, on the other hand, gives you flexibility. It allows the account holder to withdraw money from their account prior to the maturity date without incurring penalties. This means you can access funds in the CD should you need them without penalty. However, the rates for liquid CDs tend to be lower than other kinds of CDs.
💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.
You may be wondering, “What are liquid assets?” In the realm of finance, the concept of “liquid” means that an asset can quickly be converted to cash. A liquid CD is a time-bound deposit account where you can earn interest for a specific period of time. Compared to traditional CD’s however, liquid CDs will not charge you early withdrawal penalties. This means you can easily liquidate (turn into cash) your CD without taking a hit in terms of its value.
As noted above, there’s a “but” to this proposition, which you may hear referred to as no-penalty CDs: Liquid CDs typically pay less than traditional CDs. Depending on which financial institution you go to, these products can offer various terms, either as little as a few months or up to several years or longer. Your fixed interest rate will vary according to the length of the term you’ve chosen. Typically, the longer you hold your money in the liquid CD, the higher the rate of return.
What can be a big plus about CD rates is that they are locked in during the full term. This means even if interest rates decrease, your rate would not change. Some financial institutions may require a minimum deposit for these CDs, and they can be significantly higher than traditional CDs; some are at the $10,000 and up level. What’s more, the minimum deposit may go up if you are seeking a higher interest rate, while others don’t have a minimum deposit requirement at all.
If you have decided that you need to withdraw from your liquid CD, here’s what usually happens:
• Check with your bank about how long it will take to process a withdrawal and whether you need to withdraw a certain percentage at a time. (Some banks may require you to close the account entirely.)
• When ready, notify your bank of your withdrawal.
• You will likely have to wait about a week after opening the liquid CD before you can start withdrawing.
• Wait for your funds. Withdrawal is likely not as quick as withdrawing funds from a checking or savings account; your financial institution might require anywhere from a week to a month to process the transaction.
Recommended: What Happens If a Direct Deposit Goes to a Closed Account?
Once you have decided a no-penalty CD is right for you, you will need to go to a bank or credit union that offers this account. Once you’ve opened an account, you have to fund it.
How it grows will depend on the principal, your APY (annual percentage yield), and how often the CD compounds the interest, which could be, say, daily or monthly.
• If you invested $10,000 in a liquid CD with a three-year at a rate of 5.30%, at the end of the three-year period with interest compounded monthly, you will have a total balance of about $11,719.28.
When evaluating liquid CDs, it’s worthwhile to review the benefits of these accounts. Some of the key upsides are:
• Liquidity. You can access and withdraw your funds prior to the term’s end. Perhaps you’re having an emergency that requires cash, or you decide to move around your money to better meet your financial goals. It’s possible!
• No penalties. If you dip into the account before it matures, you won’t be assessed a fee.
• Security. Liquid CDs are safe investments. These accounts are federally insured up to $250,000 per depositor, per account ownership category, per insured institution. You’ll know your money is protected when you open a liquid CD with a bank or credit union. Even in the very rare situation of a bank failure, you’re covered as noted.
• Guaranteed returns. When you start a liquid CD account, you usually know the interest rate upfront. It may not be stratospheric, but it’s a sure thing.
Now that we’ve explored the good things about a liquid CD, we need to give equal time to the potential downsides:
• Lower rate of return. The interest rates are significantly lower compared to certificate of deposit rates.
• Withdrawal rules. Yes, these accounts are more accessible, but after your deposit has been in place for a week, your withdrawal guidelines may be quite specific. For instance, you may have to remove all your funds if you want to make a withdrawal, or the amount might be limited to a certain percentage that doesn’t suit your needs. Check before starting a liquid CD investment.
• Tax implications. Earnings on your liquid CD will be taxed at your federal rate, which is something to keep in mind as that will take your return down a notch.
Recommended: How to Automate Your Personal Finances
If the idea of a liquid CD doesn’t sound like an appealing low-risk investment option, there are alternatives to also consider.
Traditional certificates of deposit require you to stow your money away for a certain period of time. In exchange, you receive a return at the end of that period. The catch is, you are not able to withdraw your funds during this holding period. If you have a financial emergency, for example, and need the money from your CD, you will receive penalties for withdrawing your cash before the period of maturity.
However, this might be a gamble you are willing to take, especially if you have a nice, healthy emergency fund set aside. You’ll earn a better rate of return than with a liquid CD.
CD laddering usually involves opening CDs of different term lengths. This strategy allows you to invest long-term CDs which provide higher rates of return, while having the ability to access your funds through a shorter-term CD maturing.
Another CD alternative is a money market account, which is similar to a savings account with some added benefits. Money market accounts typically require minimum balances and offer rates comparable to savings accounts, which can change over time. While the rates may be lower than a CD, money market accounts typically allow you to withdraw and transfer your money six times per month or more.
An emergency fund, or a rainy-day fund, is a savings account that should only be used in times of financial emergencies or unexpected expenses. Depending on your financial position, you can have an emergency fund in a regular savings account, money market account, CD, or liquid CD. It depends on how much you plan to access your emergency fund and how much interest you want to earn in the account.
A high-yield savings account can offer a competitive rate of interest, depending on the financial institution offering it (online banks tend to pay more than traditional ones). And you’ll have more liquidity than a CD because you can deposit and withdraw from the account more frequently, though the specifics may vary with each bank. If you want easy access to your funds plus interest, a high-yield bank account may be a good option.
Liquid CDs are a financial product that offers the safety and guaranteed return of a traditional CD with the bonus of not being penalized if you make an early withdrawal. For those who are comfortable locking their money into a CD but worry an emergency or other need might pop up, this accessibility can be very attractive. Worth noting: Expect lower interest rates from a liquid CD than a standard one. Alternatives to a liquid CD can include a high-yield savings account.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with up to 4.60% APY on SoFi Checking and Savings.
Traditional CDs are not liquid investments. Funds held in a CD cannot be accessed until the account term is reached. If you need to withdraw money from your CD prior to its maturity date, you will have to pay a penalty. A liquid CD, however, offers flexibility to withdraw money from your account prior to its term date without the usual fees.
A non-penalty CD, also known as a liquid CD, is a time deposit that offers interest on your money. However, the rate is usually somewhat lower than the rate for a typical CD (the kind with penalties). The longer the term you choose for your liquid CD, the more you usually can earn.
Each financial institution has its own way of calculating this, but it usually involves losing some of all of the interest you have accrued. If you have a two-year traditional CD and withdraw funds early, the fee could vary considerably; a recent search found anywhere from two months’ to a year’s’ worth of interest. If you have a liquid or no-penalty CD, you will of course avoid these fees.
Photo credit: iStock/champc
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
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Source: sofi.com
A strong U.S. economy will be a boon for the housing market, Mortgage Bankers Association’s (MBA) chief economist said on Thursday, as it will buoy demand and as inflation continues to fall, mortgage rates will decline as well making home loans more affordable for buyers.
The U.S. economy accelerated at a faster-than-expected clip in the fourth quarter of 2023 at 3.3 percent, the Commerce Department’s Bureau of Economic Analysis revealed on Thursday.
Meanwhile, the personal consumption expenditures (PCE) price index—the Federal Reserve’s preferred measurement of inflation’s progress—jumped by 1.7 percent during the quarter. Core PCE, which excludes the often volatile food and energy prices, increased by 2 percent.
These dynamics bode well for the housing market that has been struggling under the weight of record-high mortgage rates, sparked in part by the Fed’s hiking of rate at the most aggressive clip since the 1980s to fight soaring inflation.
The Fed’s funds rate currently sits at 5.25 to 5.5 percent—the highest they have been in two decades—and policymakers have signaled that they will slash rates should inflation come down to their 2 percent target.
But an economy that may avoid a recession as inflation moderates without the Fed’s tight monetary policy doing too much damage to the jobs market would help the housing sector.
“Stronger economic growth will benefit the housing market, keeping demand robust,” Mike Fratantoni, MBA’s chief economist, said in a statement shared with Newsweek. “Moreover, today’s report also showed further reductions in inflation, which will enable the Federal Reserve to cut rates later this year—as they have been hinting.”
Mortgage rates ticked up slightly for the week ending January 25, Freddie Mac said on Thursday, with the 30-year fixed rate averaging 6.69 percent.
“The 30-year fixed-rate has remained within a very narrow range over the last month, settling in at 6.69% this week,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Rates look to have stabilized, Khater suggested, encouraging buyers to jump off the fence.
“Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace,” he said.
A slowdown in rates could have a negative impact on home buyers, some analysts say.
A decline in the cost of home loans would encourage more purchases, and this increase in demand will spark competition at a time when there is a limited supply of homes for sale.
More buyers who can afford mortgages entering the market will push up prices, analysts from Goldman Sachs said this week.
The investment bank’s experts project prices to soar by 5 percent in 2024, a marked revision from their earlier expectation of a 2 percent jump. That trend will continue through next year when prices are forecast to increase by nearly 4 percent, which is also a change from a previously estimated increase of close to 3 percent.
Amid the price increases, Goldman Sachs analysts anticipate that rates will fall to 6.63 percent for the year. This drop in rates from the near 8 percent highs of November 2023, will make house loans more affordable, sparking more demand for properties.
“We have very low inventory of houses for sale, which is generally supportive of prices, along with generally stable demand that is coming from things like household formation,” Roger Ashworth, senior strategist on the structured credit team at Goldman Sachs, said this week.
On Thursday, new home sales climbed up by 8 percent in December, according to government data, while prices declined to two-year lows. The fall in prices and a rise in sales was partly due to builders offering inducements to buyers, according to Yelena Maleyev, a senior economist at KPMG.
“Builders have pivoted to building smaller homes and offering more discounts and concessions, such as mortgage rate buydowns, to bring in buyers sidelined by rising mortgage rates,” she said in a note shared with Newsweek.
But the data from the U.S. Census Bureau also showed that inventory of newly built homes fell last month after going up the previous months. There were 453,000 houses available for sale at the end of December, which accounts for 8.2 months’ worth of supply.
This constituted a 3.5 percent decline from the same time a year ago, Maleyev pointed out.
The lack of inventory also comes at a time when the used homes market has struggled. Sales are down in that segment amid a lack of supply of homes as sellers are reluctant to give up their low rates for new home loans hovering in the mid-6 percent.
This lack of supply will be key to how prices shake out and the outlook for the year is not encouraging.
“If mortgage rates fall below 6 [percent] in 2024, more owners will feel comfortable listing their homes for sale, alleviating some of the shortages, but not enough to close the supply gap,” Maleyev said.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
A variety of notable mortgage rates slumped over the last seven days. While 15-year fixed mortgage rates moved higher, interest rates on 30-year fixed mortgages shrank. For variable rates, the 5/1 adjustable-rate mortgage sunk lower.
In November, the average rate for a 30-year fixed mortgage started making sustained drops from its earlier peak of 8%. The most common home loans are now in the 6% to 7% range. Yet the mortgage market always has some level of volatility, and rates have already started inching back up at the start of this year.
“It’s not uncommon to see a shift in the pattern for interest rates in January, sometimes positive, sometimes not,” said Keith Gumbinger, vice president of mortgage site HSH.com.
The current housing market is difficult. High mortgage rates, expensive home prices and tight inventory are keeping homebuying out of reach for many. If you’re looking to buy a home, don’t try to time the market. Instead, experts recommend patience and preparation: Figure out what you can afford and take steps to improve your financial situation.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
If you’re in the market for a home, check out how today’s mortgage rates compare to last week’s. We use rates collected by Bankrate to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the country:
Loan term | Today’s Rate | Last week | Change |
---|---|---|---|
30-year mortgage rate | 6.99% | 7.00% | -0.01 |
15-year fixed rate | 6.47% | 6.46% | +0.01 |
30-year jumbo mortgage rate | 7.02% | 7.05% | -0.03 |
30-year mortgage refinance rate | 7.19% | 7.21% | -0.02 |
Rates as of Jan. 26, 2024
When picking a mortgage, consider the loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. You’ll also need to choose between a fixed-rate mortgage, where the interest rate is set for the duration of the loan, and an adjustable-rate mortgage. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market’s current interest rate. Fixed-rate mortgages offer more stability and are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
The 30-year fixed-mortgage rate average is 6.99%, which is a decline of 1 basis point from seven days ago. (A basis point is equivalent to 0.01%.) A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
The average rate for a 15-year, fixed mortgage is 6.47%, which is an increase of 1 basis point from the same time last week. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
A 5/1 adjustable-rate mortgage has an average rate of 6.12%, a fall of 25 basis points compared to last week. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
Mortgage rates were near record lows, around 3%, at the start of the pandemic. That changed as inflation surged and the Federal Reserve kicked off a series of aggressive interest rate hikes, which indirectly drove up mortgage rates. Now, mortgage rates are still more than double what they were just a few years ago.
However, with the central bank keeping interest rates steady since late July, mortgage rates finally saw some sustained decreases in the fall. With the Fed planning to announce its next policy move in late January (and again in mid-March), experts are waiting for the first interest rate cut. It may be months before that happens, but mortgage rates could stabilize and start inching even lower in the coming months.
““The history of economic cycles has taught us that when the markets believe the Fed is done hiking rates, [mortgage rates] make a big move lower before rate cuts happen,” said Logan Mohtashami, lead analyst at HousingWire.
While mortgage forecasters base their projections on different data, most predict rates will remain near or above 7% for the rest of 2023. Here’s a look at where some of the major housing authorities expect average mortgage rates to land at the end of the year.
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Source: cnet.com
If someone has access to both your bank account and routing number, they could make fraudulent ACH transfers and payments out of your account. In other words, you could wind up being scammed.
That’s why it’s so important to understand this aspect of your personal finances and protect your money. Read on to learn what happens if someone has your bank account number and routing number, what the risks are, and how to protect yourself.
Many of us wonder, “What can someone do with my bank account number?” The good news is, if someone has only your bank account number, that won’t give them enough intel to do any damage. It’s not the same as a scammer obtaining your credit card digits. No one will be able to withdraw money from your personal bank account if all they have is your account number.
For those who may not know the difference between a bank account vs. a routing number, here’s the scoop:
• Your bank account number is the unique string of digits that identifies your particular account at a financial institution. Even if you have, say, multiple accounts at a bank, each will have its own distinct account number.
• Your routing number is the series of numerals that identifies your financial institution, or where the account is held.
Just because your bank account number alone doesn’t make you vulnerable doesn’t mean that you shouldn’t protect it. You should. If a scammer had your account number and other info — perhaps your driver’s license number and/or your home address — they might be able to make illegal purchases online. So it pays to be vigilant.
Routinely monitoring your account activity — say, once a week — is a smart move that allows you to quickly detect if anything is awry.
💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.
The short answer: Real damage. The combination of a bank account and routing number is a dangerous combo that scammers want. And those two numbers are fairly accessible. Think about how often these numbers get circulated: every time a check is written, cashed, signed over to someone else.
Here’s what can happen if they fall into the wrong hands.
With both those precious numbers, crooks could commit fraudulent automated clearing house (or ACH) transfers and payments. You’re probably used to seeing those ACH letters on your banking details when you set up automatic monthly payments and the like. When a scammer has your bank account and routing numbers, they could set up bill payments for services you’re not using or transfer money out of your bank account.
It’s tough to protect these details because your account number and routing number are printed right at the bottom of your checks. But do your best. Some pointers:
• Don’t leave your checkbook lying around.
• If you are mailing a check, wrap it in a sheet of blank paper so the numbers don’t show as it’s in transit.
• Pay attention to bank statements. Review them often to see if there are any fishy transactions happening.
• Protect yourself when online banking by using strong passwords. That password is a primary defense. If a thief has your bank and routing numbers and somehow manages to get access to your login name and password, big trouble may be on the horizon.
• Don’t make your password something obvious like your name, pass1234, or numbers that may be circulating in cyberspace, like your birthday which can be seen on Facebook.
Know that all online retailers aren’t equal in terms of security measures. Some will allow people to make a purchase with bank account information alone, while others will also ask for a driver’s license or other state identification to add an additional layer of protection.
So what can a scammer do with your bank account number and routing number? They can find sites that let them shop with only that information. and could run up a tab.
While it might seem like a dream come true if a mysterious sum of money appeared in your bank account, you should be more alarmed than overjoyed. Somebody who has your account and routing number may be using your digits to facilitate their illegal shenanigans (such as the kind of bank fraud known as money laundering). Report unusual deposits immediately.
Unfortunately, scammers can create fake checks using your checking numbers, and then those fake checks to pay for purchases (not every payee will verify a check) — or simply cashing them. Know, too, that with technology scammers could digitally scan the check and deposit the amount into their bank account.
As careful as you try to be, stuff happens. What if someone has your bank account number and routing number? What if you see signs that they are using it for fraudulent transactions? Knowing how to report identity theft can help mitigate a bad situation. Have a strategy in place, just in case. Here’s some advice.
If you have the misfortune of being victimized, here’s what to do:
• Contact your bank the minute you realize it. You need to notify your bank within 60 days of your statement to avoid paying for unauthorized ACH transactions. The bank’s fraud department will work to help you get unauthorized charges reversed.
• Report the fraud to the fraud department of all three credit reporting bureaus, Equifax®, Experian®, and TransUnion®.
• File a report with your local police department.
• Also file a report with the Federal Trade Commission’s department that deals with identity theft.
Your to-do list doesn’t end there. You’ll want to be a stickler about monitoring your bank account to look for any signs that someone else is abusing your account. Be proactive and ask your bank about setting up text messages or push notifications every time a transaction is posted. This will help you keep track of what’s going on with your money.
Much as you may not be a paper person, when you’re a victim of bank fraud, documentation matters. You want copies of bank statements, a copy of the police report, your credit report, and any other relevant materials.
As much as it’s a hassle, you need to get a new account number to replace the compromised one. Call your bank’s customer service number, contact a rep by chat, or, if you use a traditional vs. online bank, go to your local branch. Explain your situation, and take steps to get your assets transferred to a new bank account, get new checks printed, and get a new debit card if needed to safeguard your cash.
There are no absolutes in life, but there are steps you can take to protect yourself as much as possible.
• You can get an identity theft protection service to monitor your bank accounts and alert you to any funny business, be it suspicious withdrawals or information changes.
• When shopping online, use a credit card (it offers more protection than say a debit card), prepaid card, or a money transfer app instead of typing in your account and routing numbers.
• Be stingy with your banking information to avoid bank scams. Know that less is best when it comes to sharing info.
• Go for multi-factor authentication when banking online. If you have linked bank accounts and credit or debit cards to online platforms, absolutely sign up for additional verification in order for purchases to go through. It’s like a forcefield around your account.
• It can be wise to limit your use of paper checks to only those things where an alternate form of payment is a hassle. Remember your checks are a gold mine of personal information, with your address, account and routing numbers.
In today’s world, it pays to keep close tabs on your bank accounts and related numbers. Having your bank account and routing number can allow scammers to do damage in a variety of ways, from unauthorized ACH payments to fake checks. By protecting these digits and setting up other safeguards, you’ll minimize the odds of your falling victim to these wily thieves.
While on the topic of banking, it’s wise to make sure your financial institution is a good fit and offers the services and perks that suit you best.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with up to 4.60% APY on SoFi Checking and Savings.
Protect your bank account and routing numbers to avoid having scammers siphon money away from you. Setting up two-factor authentication for online transactions can help protect you, too. It goes without saying that no one except you should know your username, password, and security questions. Also shred financial documents that you don’t need.
Share your banking information sparingly, especially online. At most, share a few key points with a trusted friend or family member, and only punch your details into secure websites (look for the “https” at the beginning of the url and the padlock symbol) — though even those aren’t 100% scam-proof.
A bank routing number in and of itself reveals very little. After all, it’s a nine-digit code used by financial institutions to identify other financial institutions. It’s very much public information and only becomes a risk factor when paired with other personal details.
Typically, a scammer would need more than just a bank account number to steal your money, but routing numbers are easily found. With those two pieces of information, a crook could use those numbers for online purchases or to otherwise defraud you.
Photo credit: iStock/AJ_Watt
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SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
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Source: sofi.com
“OMG I missed it. I should’ve bought two years ago.”
“Am I too late? Are all the good deals gone?”
“Look at how much cheaper it used to be. I’m priced out now.”
“Isn’t my best bet to wait for a crash?”
Oh my dear friend.
Those sound like remarks made today … right?
Well, they’re not.
Those are the remarks I heard in 2015, even everyone was lamenting how much real estate prices had climbed, relative to 2012.
“Damn I should’ve bought back then! It’s too late now. Everything’s expensive again. I’ll just wait for prices to come down.”
I know, that seems silly in hindsight.
But put yourself in the shoes of an aspiring real estate investor in the year 2015. They had been thinking about buying a rental property for a year or two. But they hadn’t. And while they sat on the sidelines, prices skyrocketed.
The chart above covers January 2010 to December 2015.
In 2015, this was a prospective investors’ experience of the last 5 years. They saw home prices dip slightly from 2010 to 2012, and it scared them — “maybe there will be another crash!!” — so they sat on the sidelines.
Then the market boomed from 2012 to 2015, and by the end of that three-year period, they were kicking themselves to “waiting too long.”
“It’s too late!!!!!”
“The good deals are gone!!”
With the Great Recession in such recent memory, they comforted themselves with the idea that they could just kick back and wait for the next housing crash.
Nearly nine years later, they’re still waiting. And missing out on gains.
Here’s what the market did from January 2016 through May 2023:
Up, up, up, up, up.
Sliiiight dip for a few months in late 2022. Then up again.
The people who lamented that they’d “waited too long” and “it’s too late” psyched themselves out. They sidelined themselves. They missed those returns.
You see, pessimists get to make excuses. Pessimists get to validate themselves.
Pessimists get to be right.
Optimists get to be rich.
“The irony is that by trying to avoid the price, investors end up paying double,” Morgan Housel writes in his book, The Psychology of Money.
In that passage, he’s discussing stock investing, but the principle applies to real estate as well. Those who lament that real estate is too expensive, relative to its previous values, are the same people who eagerly buy an index fund without complaining that it, too, is substantially more expensive than it was a few years ago.
I’ve never heard anyone say: “VTSAX is 50 percent more expensive than it was five years ago! It’s too late to buy. The good deals are gone. I’ll wait for the next crash.”
Yet they’ll say that about real estate.
Sure, people might debate whether the stock market is overvalued. But if you’re a long-term investor, you dollar-cost average into the market.
You understand that a share of VTSAX will cost significantly more today than it did five years ago, because, well, assets appreciate over the long-term. That’s the point.
Ideally, real estate investors would be best-off viewing their properties through the same lens through which an index fund investor views their holdings.
Sometimes you’ll buy high. Other times, you might hold through a decline. But over the long-term, based on historic trends, both asset classes (real estate and index funds) significantly rise in value.
Yet often, would-be real estate investors seem to forget historical trends.
When the topic turns to rental properties, many would-be investors sideline themselves because they’re convinced that “I’m too late” and “the good deals are gone.”
Sure, you can’t blindfold yourself, throw a dart at a list of houses, and find one with an amazing cap rate, like you could in 2012.
Sure, you have to actually, erm, what’s that word … WORK.
Good deals are available for those willing to find them.
Back in 2015, I often heard people lament that they were “too late” because real estate prices had risen so much in the past three years. “I should’ve invested in 2012! The run-up has already happened. I’m too late. I’ll wait for the next crash.”
Nearly nine years later, they’re still waiting.
The question is: are you going to be one of those people who says “it’s too late! the good deals are gone!” and then sit on the sidelines for the next 30+ years? Or are you going to train and compete?
If you choose to leave the sidelines and get into the game —
The first step is to understand: It’s not too late.
The prices that existed five years ago are irrelevant.
The only question that matters: “Is this a good deal today?”
It’s easy to substantiate the belief that you’ve missed out on all the good returns — you can see how much home prices have appreciated over the past three years. You can see all the capital appreciation you could have had, if only you’d gotten started sooner.
Just like if you’d bought a ton of index funds in 2018. Or better yet, March 2009.
Assets appreciate.
Sometimes there’s volatility, and they drop a little bit. But historically, in the U.S., major asset classes — including stocks and real estate — have always risen over time.
We seem to have accepted this reality in the world of stock investing. We don’t reflexively lament *not* buying more index funds at 2012 prices.
We might occasionally joke about it — “awww man I shoulda bought Amazon in 1997!” — but we know that when we buy a stock, we’ve evaluating today’s fundamentals. Past is prologue.
When we evaluate stocks, we ask: “Is this stock a wise purchase at today’s price?” But we forget to ask this question when we’re dealing with a tangible asset class like real estate.
Real estate often fills people with fear:
Real estate’s tangibility also makes it an inherently emotionally-charged asset class. We can touch it, smell it, see it, hear its creaks and noises.
And when emotions are involved, we rationalize rather than reason.
“Assuming that something ugly will stay ugly is an easy forecast to make,” Housel writes. “And it’s persuasive, because it doesn’t require imagining the world changing.”
Pessimism is tempting, but it’s also limiting — and its intellectually lazy.
It keeps you broke and uncreative.
Optimism, by contrast, keeps you asking “how can I?” — it keeps you solving problems, rather than lamenting them.
Ask “How can I?” rather than lamenting “I can’t because …” and you’ll find your world switch.
And if you want answers to the above questions, you’ll find them in Your First Rental Property, our flagship course.
— Paula
Source: affordanything.com
Columbus’s housing market is a dynamic landscape with various trends and factors influencing residents’ choices. From affordable neighborhoods to luxury living options, this article delves into the overall market trends, neighborhood insights, market dynamics and renting scenarios in the Arch City.
The Columbus, Ohio, housing market exhibits a diverse range of trends, catering to individuals with varying preferences and budget constraints. Let’s take a deeper dive into Columbus real estate.
Columbus’s real estate market is categorized as “somewhat competitive”. On average, homes typically sell close to the listed price and enter pending status within approximately 39 days. Alternatively, certain homes may sell for approximately 2% above the list price and enter pending status in around 26 days.
In December 2023, Columbus witnessed a 6.0% increase in home prices compared to the previous year, with a median selling price of $265K. The average time homes spent on the market in Columbus was 43 days, slightly less than the 46 days recorded last year. The number of homes sold in December this year was 731, a decrease from the 820 sold in the same period last year.
The dynamics of the Columbus housing market are influenced by many factors, including economic conditions, job opportunities and urban development initiatives. These factors fluctuate between the varying Columbus neighborhoods. Home prices, buyer demand and overall Columbus housing market trends are dependent on the individual neighborhoods.
The rental market in Columbus offers a diverse array of options, featuring varying prices and living experiences depending on the specific neighborhood. Let’s delve into the current status of the rental market in Columbus.
Columbus has experienced fluctuating rent prices, just as other large US cities have as well. Fifth by Northwest stands out with an average 1-bedroom apartment rent of $1,772, which is a 79% rise in rent YoY.
Areas like Northwest Columbus and Northern Lights saw a small change of 4-5%, raising their one-bedroom options to $1,427 and $965, respectively. Conversely, affordable options are available in Easton and Northeast Columbus, where average 1-bedroom rents are down 3%, bringing rent to $1,511.
In Columbus, the most affordable neighborhoods for renting a one-bedroom apartment include Forest Park East, with an average rent of $720, and Hyde Park, where the average rent is $749. Old North Columbus also offers competitive rental prices at around $750 on average.
For those searching for similarly priced options, North Linden and Indianola Terrace are worth considering, with one-bedroom apartments typically renting for $750 and $800 respectively. These neighborhoods provide more economical living options compared to the Columbus city average of $1,410 for a one-bedroom apartment, catering to budget-conscious renters seeking value and convenience.
Whether individuals are arriving in search of new opportunities or departing for different horizons, tracking these migration patterns contributes to a comprehensive understanding of the Columbus housing dynamics. According to Redfin market data gathered Oct 2023 – Dec 2023, 23% of Columbus homebuyers searched to move out of Columbus, while 77% looked to stay within the metropolitan area.
In Columbus, some of the more luxurious neighborhoods include Weinland Park, where the average rent for a one-bedroom apartment is approximately $1,802, and Dennison Place, with an average rent of $1,790.
For those looking for slightly less expensive options, Tuttle West and the Brewery District are attractive, with average rents for one-bedroom apartments at $1,740 and $1,695, respectively. These neighborhoods offer rental prices that are above the city average of $1,410 for a one-bedroom apartment in Columbus, yet they are known for their unique amenities and desirable locations.
Taxes play a significant role in the overall cost of living in any city. Columbus, Ohio’s minimum combined sales tax rate is 7.5%. This is the total of state and county sales tax rates.
Columbus’ housing market is full of diverse options, catering to a wide range of preferences and budgets. Whether you’re drawn to the affordability of specific neighborhoods or the luxury living options in the city’s busy and popular districts, this guide will assist you in making informed decisions in the pursuit of a home in the Arch City.
With a focused and persistent approach in your hunt for your perfect place, you’ll undoubtedly discover the right one in a remarkably short time.
Source: rent.com
Your first home has served you well, but now you’re ready to move on. What can you expect as a second-time homebuyer? Whether it’s been years or decades since you bought your home, you’ll find some aspects of the home buying process similar and others quite different.
With this guide, you’ll dive into the world of second-time home buying so you can feel confident taking the next step in your homeownership journey.
So, who exactly is a second-time homebuyer? A second-time homebuyer is someone who has previously owned a home and is purchasing another one. They may be moving with the desire to upsize, downsize, relocate or enhance their lifestyle. Or they may be interested in buying an investment property or vacation home.
Second-time homebuyers enjoy several advantages, including the following:
It’s important to note that not all previous homeowners are considered second-time homebuyers. If you’re applying for a conventional loan, you could qualify as a first-time homebuyer if you meet the following criteria:
First-time homebuyer status could give you access to certain programs that offer closing cost aid, down payment assistance, tax benefits and other types of support.
If you currently have a Federal Housing Administration (FHA) loan, you may be able to take out another FHA loan for a new primary residence.
The mortgage process for a second-time homebuyer generally follows the same steps as a first-time homebuyer. As with your first mortgage, a lender will evaluate the following during the underwriting process:
However, if you haven’t applied for a mortgage within the last 15 years, you may notice some differences:
While most mortgages require a down payment, you may qualify for a zero-down payment VA loan if you’re a veteran, service member or military family. With a VA loan, there are:
Already have a VA loan for your first home? As long as your new home will be your primary residence, you may be eligible for another VA purchase loan.
Keep in mind that the less you put down, the greater your monthly mortgage payment will be, and you’ll be paying more in interest over the long term.
While it is common to sell your current home and buy your new one simultaneously, you may choose to do one transaction before the other.
Most people choose to sell before buying, which offers the following benefits:
There are a few drawbacks to be aware of, including:
If you choose to buy your new home before selling your current one, you will:
Some of the disadvantages of taking this route include:
Whether you sell or buy first, you’ll need to get your current home market-ready. Here are some best practices and tips for home-selling success.
Research the housing market. The housing market plays a significant role in the home-selling process. It impacts your pricing strategy, potential time on the market, competition and negotiating power.
For example, in a buyer’s market, homes tend to remain listed for longer and may sell at a lower price. This is great for you as a buyer but not as a seller. You’ll want to price your house competitively, make necessary repairs and stage your home to attract buyers. You may also need to offer buyer incentives, such as paying for some closing costs.
On the other hand, during a seller’s market, strong demand for homes can create bidding-war conditions. You may attract eager buyers willing to pay a premium for your home. Plus, you may sell quickly, providing the down payment funds to purchase your new home soon.
Find a reputable and licensed real estate agent. While you may have used a real estate agent to find your first home, hiring one to sell your current house is a good idea. Selling a home involves many moving parts, and a real estate agent can guide you through the process. They are knowledgeable about market conditions, marketing, negotiating and the steps required to achieve a positive outcome.
Locate a lender. Secure an experienced lender that can help you with your mortgage once you’re ready to purchase a new home. You’ll want to find one that offers a range of loans and competitive rates, as well as a written commitment to lend you a specific amount of money, subject to certain conditions. This type of certification, such as a Pennymac BuyerReady Certification,* demonstrates that you are a serious buyer and can give you the confidence that you’ll be able to obtain the funding you need.
Deep clean, declutter and stage your home. Present your home in its best light by deep cleaning, decluttering and staging. These three steps enhance the visual appeal of your home, create a welcoming atmosphere and allow buyers to envision their belongings in the space.
Make repairs and updates. Potential buyers will be looking for a home in good condition. Make sure your exterior and landscaping are well maintained. Fix broken fixtures, give walls a fresh coat of paint and verify your plumbing, HVAC and electrical systems are all working properly. Consider getting a home inspection before putting your home on the market to identify priority projects. Your real estate agent is also an excellent resource for determining which repairs and updates you should focus on.
The second-time home buying and mortgage process is similar to that of a first-time homebuyer. You’ll need to:
But while the process is basically the same, some other factors, such as those below, may have changed and will influence your next home purchase.
As you navigate the second-time buying process, take into account the following financial considerations:
Shifted market conditions. The real estate market might have changed dramatically since your first home purchase. For example, if you purchased your current home in a buyer’s market, you perhaps had a lot of options and negotiating power. If it’s a seller’s market now, you might encounter tight inventory. Listed homes will sell rapidly, and you may need to be prepared to pay more and forego contingencies to get the home you want.
Your financial situation. How has your financial status evolved over the years? Has your income increased? What expenses do you have now that you didn’t have when you bought your home? Your current financial health will play a role in what loans you will qualify for.
Mortgage underwriting changes. Over the past 15 years, mortgage qualifications have become more stringent and interest rates may have changed significantly. However, if your financial circumstances have improved, you may have increased financing opportunities.
As a second-time homebuyer, you can take advantage of all that equity you have built over the years and put it toward your new home. After closing, you’ll receive the proceeds from your home sale minus any outstanding mortgage balances and transaction costs. You can use those proceeds, as well as any additional savings, for a down payment.
While there are many programs to help first-time homebuyers, there are some that assist individuals in purchasing their second home. Visit the U.S. Department of Housing and Urban Development (HUD) or a local government website to explore options in your area. And remember, if you meet first-time homebuyer criteria, don’t rule out first-time homebuyer programs.
In terms of mortgages, second-time homebuyers have numerous options, including conventional, FHA and VA loans. A Pennymac Loan Expert can help you compare loans and work with you to find the one that best fits your needs.
The main differences between first-time and second-time home buying are typically related to mortgage considerations, market conditions and experience.
As a second-time homebuyer, you will not be eligible for grants and other initiatives that aim to assist first-time buyers in obtaining down payment funds. This means that you will likely need some down payment. If you are selling your home, you can use the sale proceeds for your down payment.
Today’s stricter underwriting practices, including more stringent credit standards, are aimed at protecting consumers and the housing market. However, individuals with credit challenges may find it more difficult to qualify for a favorable home loan.
You can leverage your prior experience as a second-time homebuyer. You’ve been through the home buying and mortgage process and may be familiar with the documentation required and the timeline involved. And while the process and market have evolved over the years, your knowledge can equip you with valuable insights and confidence throughout the journey.
Check out these FAQs for answers to some of the most common questions that second-time homebuyers have about mortgages.
Yes, Federal Housing Administration (FHA) loans are available to qualified homebuyers who wish to put less than 20% down on their home purchase. Income, debt and credit history requirements are more flexible than conventional mortgages.
FHA loans are also a great option for borrowers who may want to put more than 20% down. They allow for a 580 credit score, whereas conventional loan pricing gets expensive the lower the credit score is.
Common requirements for second-time homebuyers depend on the type of loan, but a lender will consider your credit score, income, debt and down payment when evaluating your mortgage application.
Yes, Federal Housing Administration (FHA) loans and VA loans are available to second-time buyers. States and local governments may also offer programs to help second-time homebuyers. Check the U.S. Department of Housing and Urban Development website or your local government website to explore available options in your area.
Moving to your next home is exciting, but being prepared before diving into the home-selling and buying process is essential. Reach out to a Pennymac Loan Expert who will help guide you through the mortgage process, answer your questions and discuss a variety of competitive rates and loan options.
*As long as the sales price does not exceed the appraised home value.
**Customers with a Pennymac BuyerReady Certification prior to locking any Pennymac purchase loan get $1,000 applied as a discount off total closing costs and/or principal curtailment, subject to investor guidelines. Excludes Jumbo, refinance, third-party and in-process loans. Offer subject to change or cancellation without notice.
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Source: pennymac.com