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      Blog :: 01-2016

      No Rate Hikes Now, Maybe March?

      The volatility seen so far this year continued over the past week. Economic news provided few reasons for investors to alter their outlook, however, and mortgage rates ended the week with little change.

      Heading into the January 27 meeting, expectations were for the Fed not to hike the federal funds rate and for their statement to reflect the economic troubles around the world. Perhaps the biggest open question was whether the Fed would rule out a rate hike at the next meeting in March. On this front, the statement kept open the possibility of a rate hike. Beyond that, Fed officials said that they are keeping a close eye on the effects of slowing global economic growth on the U.S. economy, and they modestly downgraded their assessment of the U.S. economy's performance. Fed officials also expressed less confidence that inflation was gradually rising toward their 2% target.

      The most recent housing market data showed nice improvement. Outstanding contracts to buy new homes rose 11% in December, near the best level of the year. Unusually warm weather contributed to the improvement. While existing homes sold in December showed similar improvement, the readings for November and December likely were affected by recently implemented closing disclosure requirements. Since the number of existing homes sold in a month is based on actual closings, delays due to the new requirements pushed some November closings into December. 

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      Existing Home Sales Rebound in December

      The National Association of Realtors (NAR) just released their latest Existing Home Sales Report on Friday. Sales of existing homes rose by the largest increase ever recorded as they rebounded 14.7% over November's numbers and now stand at 7.7% higher than a year ago.

      While this is great news for the housing market, let's take a look at one of the main reasons why there was such a large increase in sales.

      As we explained last month, the implementation of the "Know Before You Owe" (TRID) initiative delayed some closings, pushing a portion of November's would-be transactions to close in December.

      "December's rebound in sales is reason for cautious optimism that the work to prepare for 'Know Before You Owe' is paying off," says NAR PresidentTom Salomone.

      Lawrence Yun, NAR's Chief Economist, had this to say about the surge in December sales:

      "While the carryover of November's delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015. Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year."

      The most important realization to come out of the report is the fact that inventory of existing homes for sale dropped dramatically from a 5.1-month supply in November to the lowest figure since January 2005, at a 3.9-month supply.

      A normal market, where prices rise with inflation, is defined as having a 6-7-month supply of homes for sale. As you can see in the chart below, inventory levels in 2015 were at or below a 5.2-month supply for the entire year.

      2015 Months Inventory of Homes For Sale | Keeping Current Matters

      If inventory levels do not recover, this could be a challenge for sales moving forward as buyer demand remains strong and competition for the homes that are on the market continues to rise.

      Bottom Line

      If you are considering listing your home for sale in 2016, now is the time! With inventory levels at their lowest mark in over 10 years, listing your home for sale before the busy spring buying season will give you the most exposure to buyers and allow you to get the best price for your home.

      What Do You Actually Need to Get a Mortgage

      What Do You Actually Need to Get a Mortgage? | Keeping Current Matters

      Fannie Mae recently released their "What do consumers know about the Mortgage Qualification Criteria?" Study. The study revealed that Americans are misinformed about what is required to qualify for a mortgage when purchasing a home. Here are three takeaways:

      • 59% of Americans either don't know (54%) or are misinformed (5%) about what FICO score is necessary
      • 86% of Americans either don't know (59%) or are misinformed (25%) about what an appropriate Back End Debt-to-Income (DTI) ratios is
      • 76% of Americans either don't know (40%) or are misinformed (36%) about the minimum down payment required

      To help correct these misunderstandings, let's take a look at the latest Ellie MaeOrigination Insight Reportwhich focuses on recently closed (approved) loans.

      FICO SCORES

      Average FICO Score | Keeping Current Matters

      BACK END DTI

      Average Back End DTI | Keeping Current Matters

      DOWN PAYMENTS

      Average Down Payments | Keeping Current Matters

      Bottom Line

      Whether buying your first home or moving up to your dream home, knowing your options will definitely make the mortgage process easier. Your dream home may already be within your reach.

      Are You Wondering What it Takes to Buy Your First Home?

      Are You Wondering What It Takes To Buy Your First Home? | Keeping Current Matters

      There are many people sitting on the sidelines trying to decide if they should purchase a home or sign a rental lease. Some might wonder if it makes sense to purchase a house before they are married and have a family. Others may think they are too young. And still others might think their current income would never enable them to qualify for a mortgage.

      We want to share what the typical first time homebuyer actually looks like based on theNational Association of REALTORS most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first time buyer:

      First-Time Homebuyer Statistics | Keeping Current Matters

      Bottom Line

      You may not be much different than many people who have already purchased their first home. Meet with a local real estate professional today who can help determine if your dream home is within your grasp.

      The Most Appealing Aspects of Homeownership

      The Most Appealing Aspects of Homeownership | Keeping Current Matters

      The National Association of Realtors (NAR) just released their first issue of the Housing Opportunities & Market Experience Survey (HOME). In the report, NAR revealed what Americans believe to be the most appealing aspects of homeownership.

      Here is a graph showing the results:

      The Most Appealing Aspects of Homeownership | Keeping Current Matters

      It is interesting to see that the two most appealing aspects had nothing to do with money, but instead, addressed the non-financial benefits of homeownership.

      Thinking of Buying a Home? 3 Questions Every Buyer Should Answer First.

      If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

      Answering the following 3 questions will help you determine if now is actually a good time for you to buy in today's market.

      1. Why am I buying a home in the first place?

      This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.

      A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home have nothing to do with money. They are:

      • A good place to raise children and for them to get a good education
      • A place where you and your family feel safe
      • More space for you and your family
      • Control of that space

      What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

      2. Where are home values headed?

      According to the latest Home Price Index from CoreLogic, home values are projected to increase by 5.3% over the next 12 months.

      What does that mean to you?

      Simply put, if you are planning on buying a home that costs $250,000 today, that same home will cost you an additional $13,250 if you wait till next year. Your down payment will need to be higher as well to account for the higher home price.

      3. Where are mortgage interest rates headed?

      A buyer must be concerned about more than just prices. The 'long term cost' of a home can be dramatically impacted by even a small increase in mortgage rates.

      The Mortgage Bankers Association (MBA), the National Association of Realtors and Freddie Mac have all projected that mortgage interest rates will increase by approximately three-quarters of a percent over the next twelve months as you can see in the chart below:

      Mortgage Rate Projections | Keeping Current Matters

      Bottom Line

      Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

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