- December 18, 2023
- Posted by: Dre B.
- Categories: Property Records, Property Records Search, Public Property Records, Real Estate Post, Title Companies, Title Reports
Mortgage rates have been “high” since 2021, when rates started to climb there was a lot of concern regarding buying a house. During these times mortgage rates passed 6.5% and above. Now that homebuyers are realizing these rates will be around for a while. Several studies predict rates starting to fall at the end of 2025 or even 2026. Homebuyers are realizing it is going to take about three or more years for rates to fall. This means a lot more homebuyers are ironically considering buying real estate despite it being a seller’s market. According to several studies including a report from Bank of America, sky-high mortgage rates are scaring fewer homebuyers than in recent months. The bank surveyed 500 homeowners and 500 renters and found that fewer of them, about 62%, are willing to hold off on purchasing a home until mortgage rates fall.
The survey also found generational differences among prospective buyers as far as giving up specific home features to buy a property. Baby boomers are also more likely than younger generations to give up space, for example, they are less likely to compromise on location. The findings come as existing home sales are at their lowest since 2010, and even though availability is better in the new-home market, it may not last, as Kiplinger recently reported.
In a video accompanying the Bank of America study, Matt Vernon, head of consumer lending, said that if buying a home is your goal and within your budget, “the best time to buy is when you’re ready financially and you can find a home that fits your needs.”
As for what would motivate homeowners to sell, the survey found that 50% of current owners would be willing if their “dream home” became available. Some 54% said they would buy if they found a place in a more affordable area, regardless of whether rates moved higher.
According to the survey, other factors that would influence homeowners to sell include:
A job opportunity or relocation (40%)
Nicer neighborhood amenities (40%)
The need for a larger home or more rooms (38%)
A social community to be a part of (32%)
A desire to be adventurous and move on (28%)
A home with rental potential (21%)
Interest rates for about 80% of outstanding mortgages nationwide are below 5%, Bank of America said referring to a Zillow report. Given that, this group may be far less inclined to leave and purchase a new home, the bank said.
Another factor is that home buyers are getting older and may be best able to swoop up the available inventory with all-cash offers, according to a November 13 Washington Post report. “A new picture is emerging of the buyers who still find a way to get a house,” the article noted. “They’re older, and because many of them sold a home before buying, they’re also wealthier.”
Meanwhile, there is contradicting advice about whether renting or buying is the right move at present, based on the landscape of the real estate market. In a December 1 New York Times piece, Mark Zandi, chief economics of Moody’s Analytics, said that this is not a good time for most people to buy a home. He pointed to high prices and mortgage rates and low inventory as reasons to choose renting right now.
“If you find the perfect place, then by all means buy it,” Zandi told the NYT. “But most people are not going to find it.”
Hacks to Get Around Sky-High Mortgage Rates
If you find yourself longing for the days of historically low-interest rates, you’re not alone.
This year, the average rate on 30-year mortgages has more than doubled, climbing from around 3% to around 6.6%, according to Freddie Mac. As a result, average monthly payments have soared, jumping 50% in as little time.
Fortunately, mortgage rates — and payments — aren’t set in stone. In fact, several strategies can reduce your rate and make buying a home more affordable, even in today’s challenging market.
Are you looking to become a homeowner despite rising interest rates? Try one of these lesser-known mortgage rate hacks for help.
1. Ask the seller (or builder) for help
It sounds counterintuitive, but sellers often pitch in to reduce a buyer’s interest rate — at least in high-rate markets like today.
“Rate buydowns that are paid for by sellers and builders are becoming fairly common to help drive home sales,” says Amit Patel, senior product manager for consumer lending at BMO Financial Group.
Here’s how those buydowns work: The seller agrees to what’s called a “concession,” essentially contributing a portion of their sale proceeds to the transaction. Those funds are paid to the lender in exchange for a lower mortgage rate.
These reductions can be either permanent, giving the buyer a lower rate and payment for the entire loan term, or temporary, resulting in lower costs for the first few years. A 2/1 buydown, for example, would offer a 2% lower rate on year one, a 1% lower rate on year two, and, by year three, it would revert to the originally quoted rate and payment.
Just be careful with temporary buydowns if you choose this route. Mortgage lenders will require you to qualify for the loan at the final interest rate — not the reduced one, so make sure you’re able to afford the higher payments.
2. Buy points
You can also purchase a lower mortgage rate yourself. This is known as “buying points.”
“At any given time, there are multiple interest rates you can choose from,” says Ashwin Dayal, general manager of mortgage at real estate platform Orchard. “If you wish to get the lower rates, you can pay the lender a fee known as discount points. This rate would be lower for the life of the loan.”
While this requires some cash upfront (up to 1% of your loan amount for a 0.125 to 0.50 percentage point drop in rate), it can reduce your payments quite a bit.
Buying a median-priced home ($454,900) at a 7% rate with a 6% down payment (the average for first-time buyers) would come with a $2,844 monthly payment. If you could buy down your rate to 6%, though, you’d shave more than $300 off that amount.
If you’re thinking about buying points, make sure you plan to stay in your home long enough to reap the benefit. You can gauge this by calculating your breakeven point — or the month in which the buydown has saved you more than it cost. If buying points saves you $300 per month and costs you $9,000 upfront, then your breakeven point would be 30 months (9,000 divided by 300). If you don’t plan to stay in the home that long, it’s probably not worth it.
Every mortgage lender has its own overhead costs, staffing limitations, margins, and appetite for risk, so the rate you’re offered by one company? It probably won’t be the same as what another quotes you. That means considering multiple lenders is critical to getting the lowest rate.
“The most important thing a borrower can do to obtain a lower mortgage rate is to do their homework — and shop around,” says Al Murad, executive vice president at AmeriSave Mortgage. “Rates can vary by several percentage points from lender to lender.”
When choosing which lenders to get quotes from, focus on variety — maybe an online lender, a bank, or a credit union. Since credit unions are nonprofit (and typically don’t sell their loans to investors), they can often offer more competitive terms.
Using your own bank or moving money to a new bank may also help. These are often called “relationship” or “loyalty” perks and typically only apply if you have a significant amount of money in checking, savings, or investment accounts somewhere. Chase, for example, offers a 0.125% rate reduction if you have $500,000 to $999,999 in deposits and investments or a 0.25% reduction for $1 million or more.
“We’ve seen a borrower’s bank offer amazing terms to individuals that have significant assets under management to retain their business,” says Jim Roberts, a mortgage broker at True North Mortgage Company.
Once you have some quotes in hand, compare your options and negotiate. Lenders may try to match or even beat other companies to win your loan.
U.S. Title Records POSTING PAGE – ABOUT US BELOW!
U.S. Title Records is a company that provides various real estate-related services, including property title search and document retrieval services. They specialize in obtaining property records, deeds, and other related documents to help individuals and businesses with their real estate transactions.
To place an order with U.S. Title Records, follow the steps below.
Go to the Property Records page here.
Step 1: Select the service/report that suits your needs.
Step 2: Choose the checkout option, and enter the property address and any other details requested for the information you want obtained.
Step 3: Finalize checkout and your order will be processed and delivered to the email provided in the order form, same-day service.