Posts Tagged ‘prequalify’

Generation Z is Preparing to Buy Homes

December 13, 2018

A recent study by realtor.com shows that Generation Z (ages 18 – 24) members show their strong home ownership desire because they prepare financially for a home purchase.  The study reports that Gen Z-ers are twice as likely as the previous generations to be saving or plan to be saving for a home purchase by age 25.   The study also noted that 40% of Gen Z-ers plan to become home owners by age 25.  These young people desire to buy homes at rates similar to Millennials and Gen X-er’s, but Gen Z-er’s have started saving sooner than prior generations.

The study shows that 79 percent are certain that they want to own a home, a level similar to the preceding generations.  Only 4 percent of this young generation say they do not want to buy a home.  The striking difference lies in the fact that, by age twenty-five, 74 percent have either started saving or plan to start saving for a home purchase.  Only 33 percent of the prior generations matched this saving discipline.  Some economists speculate that their graduating into one of the best labor markets in decades has given Gen Z-er’s a savings boost.

Other interesting details reported include:

  • Gen Z shows the least home-buying desire for investment or tax savings purposes (29 percent and 16 percent, respectively).
  • The top two reason for Gen Z home purchases are:
    • Customizing their own living space at 61 percent.
    • Raising a family in a home they own at 55 percent.

Great loan programs exist that can help young home buyers (older buyers, too) buy houses for as little as 3 percent down, and with interest rate and mortgage insurance discounts.  And military veterans can obtain VA loans with no down payment.  So young buyers who have started saving may be able to buy a home sooner than they think.

Do you know a young professional who talks about buying a home – perhaps a coworker or a niece or nephew?  Or has a friend with an adult child mentioned their kid’s home buying plans?  If so, please refer them to me.  If they are ready to buy now, we at Dunwoody Mortgage will get them into a home with a great loan that fits their needs.  If they are not ready to buy right now, we will coach them and help them to best prepare for their home purchase.  We love working with young (and older) home buyers.


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Rents on the rise

December 11, 2018

Rents are still going up and just hit an all-time high, again. The U.S. Census Bureau reported that during the third quarter, the nationwide median asking rent topped $1,000 for the first time ever. According to the Census data, the median asking rent during the third quarter was $1,003, an increase of $52 over the second quarter and an increase of $91 over the same time period last year. That’s an increase of nearly 10% in just one year, when rents checked in at $912.

The increase has been dramatic over the last few years. Just three years ago, the asking rent was a full $200 less per month than it is right now.

Since we are a Georgia based company, I try and bring these topics back to the local area.

  • The Bad News: Rents are going up in Georgia.
  • The Not as Great News: So are home prices for buying.
  • The Good News: Metro Atlanta is a city where it is cheaper to own that rent.

A recent study by Trulia has Atlanta around the 60th cheapest metro area to rent (out of the top 100), and in the top 40 for cheapest metro area to own. While rents are going up, by living in the metro Atlanta area, you have the opportunity to own a home, build equity, and have your monthly housing payment go toward your financial goals (instead of your landlord’s).

Now here is the question – should I buy a home? To answer that question, ask yourself how long you plan to be in the home? Atlanta is a transient town, so maybe your time here is only for a year or two. In that case, renting could be the better option. If you plan to stay in a home for 3 years or more, that same Trulia article mentioned earlier says it is cheaper to buy than rent. Three years seems to be a good number for judging whether or not to consider buying a home or continuing to rent.

So… how long do you plan to stay in the home?

If you are looking to buy in the state of Georgia, contact me today! I can help get you prequalified for the home purchase. More importantly, we can discuss how much home you should buy versus how much home you qualify to buy. Often the amount one can qualify isn’t the amount one wants to pay each month as a mortgage payment. We’ll tackle those topics and more!

Conforming loan limits rise (again!)

December 4, 2018

For the third year in a row, conforming loan limits are increasing.

  • In 2017, the limit increased from $417,000 to $424,100.
  • In 2018, the limit increased to $453,100.
  • In 2019, the new conforming loan limit will be $484,350.

Over three years, the max limit has increased by roughly 16%. This is quite a change as the limit stayed at 417,000 from 2006-2016. One thing though, I gotta say, what is the deal with no rounding up or down?!? I think it would be a lot easier to just say $453,000 or $484,000. Is the extra $350 going to make that big of a difference? Oh well…

Why the increase? Conforming loan limits are set by the Housing and Economic Recovery Act passed in 2008. This set the baseline loan limit of $417,000, and stated this baseline cannot increase until home prices return to pre-housing decline levels. With home prices still on the rise across the country, it is fitting the limit increased. Now a home buyer can purchase a $500,000 with roughly a 3% down payment. This opens up more homes for buyers who have stable jobs/strong income, but may be lacking in assets for a larger down payment. Congratulations!

We can also expect FHA mortgage limits to rise too. Currently for metro Atlanta, the limit is $359,950 (again, round up. Is $5 going to make that big of a difference :-). If we see a similar increase in 2019 as we did in 2018, expect the new FHA loan limit in metro Atlanta to be roughly $385,000. Expect a new blog post once FHA makes the official announcement.

Higher loan limits are great for consumers as housing prices continue to rise due to demand and low inventory levels. Looking to buy a new home in the new year? Is that home in Georgia? If yes, contact me today. I can get you prequalified in a matter of minutes and on your way to making an offer in no time!

Credit freezes are now free!

November 1, 2018

A new law recently took effect allowing consumers to freeze and unfreeze their credit with the three main credit bureaus – Equifax, Experian and TransUnion. The push for this changed started in 2017 with the the massive data breach at Equifax, which exposed the personal information of more than 145 million consumers to hackers.

What is a credit freeze? When a consumer “freezes” their credit, they have essentially locked their credit. No one (not a person, bank, car dealership, etc.) can access a consumer’s credit while frozen. This means new credit accounts cannot be opened, and is the surest way (not a 100% guarantee) to prevent fraud. Freezes can become problematic when a consumer needs to apply for credit as one has to go through the process of unfreezing their credit before applying.

The change was put in place by the Economic Growth, Regulatory Relief, and Consumer Protection Act signed into law earlier this year. Before the change, every state had their own rules about credit freezes. It could cost as much as $10 to freeze (and throw on another $10 to lift a freeze) one’s credit. The days of fees are gone. Some other highlights of the new law:

  • As discussed, consumers can now freeze and unfreeze their credit for free.
  • Parents can put a freeze on their children’s credit for free (applies to children under 16).
  • Guardians, conservators, and those with a valid power of attorney can also get a free freeze for their dependents.
  • Fraud alerts placed on a consumer’s credit file will be extended from 90 days to one year.

It hopefully just got a little more difficult for scammers to abuse someone’s credit information! How to put a freeze on your credit? Consumers must contact each of the three major credit agencies independently to place a credit freeze on their accounts.

Mortgage rates rise again

October 16, 2018

Mortgage rates are on the rise (from the dead?!? 🎃🎃🎃Happy Halloween! 🎃🎃🎃) again in the month of October. Mortgage rates jumped sharply to yearly highs and to levels not see in over seven years. Mortgage rates for a 30 year fixed loan are nearing 5%. What is going on!?!

Mortgage rates rising can be scary!

A year ago, mortgage rates were just under 4%… that is about a full point lower than they are today. I know what a lot of people think… “it is because of the Federal Reserve raising rates.” Not exactly.

The Federal Reserve raised rates three times so far this year at 0.250% each time. That means the Federal Funds Rate is up 0.750% on the year, but mortgage rates are up almost 1%. Why the difference?

  • the Federal Funds rate directly impacts the rate on second mortgages, car loans, credit card rates, etc.
  • bond values – specifically mortgage backed security bonds (or MBS bonds)- impact rates for first mortgages. As these bond values decrease, mortgage rates increase.

That is what we’ve seen this year. Stocks are up on the year, the economy is better, and MBS bond values are down… meaning, higher mortgage rates. Remember the reason we saw all time historic lows for mortgage rates was two-fold.

First, the economy went through the Great Recession. In this environment, investors move money out of stocks and into bonds. The more money into bonds mean those values go up, and mortgage rates go down. As the economy improved, more money is going into stocks and out of bonds (bond values drop and mortgage rates rise).

Second, the Federal Reserve purchased bonds (quantitative easing or QE) to help push rates down to stimulate the housing market. The economy is now doing well, the Federal Reserve ended QE, and the Feds are now selling off some of the bonds they bought during QE. All of the factors pushing rates to historic lows are gone, and the current environment on rates is pushing them up. This trend doesn’t look like it will change anytime soon.

What can we expect? Earlier this year, mortgage rates jumped 0.75%, but recovered about half of those losses. We can expect to see some market fluctuations, and possibly some positive improvements in mortgage rates. Those looking for rates to get below 4% again? Those days are long behind us now, and probably not returning anytime soon.

Worried about rates going up even more? Considering buying a home but waiting for the right time? If you are buying in Georgia, contact me today. Let’s talk about what buying a home would look like for you, and see how the current dynamics in play will impact your next home purchase.

The end of the seller’s market

October 2, 2018

I know it seems we are stuck in a seller’s market. It feels like an eternity at this point! I’ll be back to that theme in a moment, but right now… If you have been putting off buying a home because of fierce competition, now is a good time to look at the market again. Homes are staying on the market longer now than they have all year. There are fewer buyers out looking to purchase a home. This is the best opportunity for buyers so far in 2018!

Regarding 2018 as a whole though, and back to the theme of this post, there are too few homes on the market for the number of buyers wanting to own a home. Sellers tend to receive multiple offers, and can be picky when it comes to whom they choose to sell their home. According to a recent study by Zillow, the market will balance out in the near future.

Zillow’s study says there are signs that the inventory levels are beginning to get better (as I mentioned above), but the country is still dealing with the fallout of limited new construction over several years during the Great Recession. Expect to see conditions continue improving over the next year, and around 2020, Zillow expects the market to become a buyer’s market again. By then, Zillow expects new construction will have caught up to demand. As people move from their existing homes into the new construction, it will put more homes on the market for other people to buy/enter the home ownership market.

It is coming… not as quick as we may like it, but a more balanced market is on its way. In the meantime:

  • Remember there are a lot of myths out there when it comes to buying a home. For example, you do NOT need 20% down to purchase a home. For more on this, check out my previous post.
  • There are things buyers can do to make their offers more competitive. For more on this, check out Rodney Shaffer’s recent post.

Better days are coming, but that doesn’t mean you have to wait another year. If you are buying in the state of Georgia, contact me today. I can help you get prequalified to purchase your home, and we can discuss the variety of options to make your offer more competitive in this market.

 

Atlanta Home Market Update

September 26, 2018


A new report on the Atlanta housing market shows a significant decline in home sales, year over year, along with a much greater decline in Atlanta home sales as compared to the national housing market.  The number of August Atlanta home sales declined 7.1% from 2017 to 2018.  The national decline in home sales was only 1.1% for the same period.  The data shows varying results for different parts of the metro area:

  • Cobb County sales declined 9%
  • DeKalb County sales declined 8%
  • Clayton sales declined 17%
  • Gwinnett County reported a more than 10% sales decline
  • On the other hand, Fulton County sales increased 14%

Atlanta home prices continue to increase, even while the number of sales decrease.  One example of this is the Old Fourth Ward section of Atlanta.  From 2017 to 2018, the number of home sales declined 19%.  But at the same time, average prices in the Old Fourth Ward have risen by about 35%.

Atlanta’s housing challenge is an inventory shortage, especially at the lower end of the home price spectrum.  ReMax reported that the supply of homes listed for sale in metro Atlanta was down 13% in August as compared to August 2017.  Ultimately, buyers compete against each other for desirable homes and this forces prices up.

From my experience, it seems that homes priced under $300,000 have seen strong competition this year.  One client found a home priced around $260,000 in an attractive Gwinnett neighborhood.  My client’s offer was one of about 20 offers on this one house.  Some Realtor friends have told me about making offers on Atlanta condos where the listing agent received 12 – 15 other offers.

It is very tough for buyers to compete in this market.  I have several clients who have decided to put home ownership on hold until 2019.  It takes patience and persistence to keep going.

For pointers on how a lender can help a buyer compete, see this prior Mortgage Blog post:  https://wp.me/p1Gub-YJ.  Buyers should talk with Realtors about other ways to make their offers more attractive.  Effective ideas include:

  1. If cash is available, the buyer can offer to pay the purchase price regardless of the property’s appraised value.
  2. The buyer must have a flexible schedule to visit homes and make offers right when they hit the market.
  3. The buyer can consider writing a personal note to the seller explaining why the house is perfect.  (I’ve seen this work before.)

Experienced Realtors can offer more effective tips for winning the contract.  If you have a friend or coworker wanting to buy a home in Atlanta, ask if they want their lender to help them beyond financing a house by helping win the contract.  Then refer them to me.  We at Dunwoody Mortgage will do all in our power to help them win the contract and close on the purchase, and we will do it quickly too.


How the Lender Can Help Win the Contract

August 14, 2018


The last post covered reasons why we have such a sellers’ market in Atlanta real estate.  Now let’s cover how a lender can help win a contract.  We lenders have a few ways to help strengthen our buyers’ offers relative to competitors.

Firstly, many listing agents prefer to work with local lenders rather than the national and online lenders.  The Realtors also like the ability to communicate with local lenders – they can call us with any issues or questions and often get a faster response than with a national lender.  I once had a Realtor who was listing a home tell me, “We chose your client’s offer because they had a letter from you, and we know that you would make the closing happen on time.”  Trust is important and we local lenders work hard to build that trust in our markets.

Secondly, when my clients make an offer, sometimes the listing agent will call me to verify the information provided in the prequalification letter.  I’m always happy to talk with the agents, and I use this as a chance to actively promote my client’s strengths.  I once took a call from a Realtor on the Saturday of a holiday weekend.  When I answered she immediately responded, “Oh thank goodness!  A lender who works Realtor hours not bankers hours.”  We can be available on weekends and in the evenings to help our buyers.  I have volunteered to proactively call listing agents on my client’s behalf.  It helps to promote my client’s strengths.

The most powerful way a lender can help a buyer win a contract is to underwrite the buyer with a “to be determined” property — before the buyer actually makes an offer.  We fully underwrite the buyer, but without the property-specific details.  So there’s no appraisal, no title work, etc. (until a house is under contract).  This gives the ability to provide a letter stating that underwriting has already approved the borrower.  It also allows us to shorten the closing timeframe (since we don’t have to underwrite the buyer again) and potentially eliminate the financing contingency, which is standard on most home purchase contracts.  Having underwriting approval positions the buyer strongly relative to other offers with only prequalification letters.  The only offer stronger is a cash offer.  In competitive markets expecting multiple offers on listed homes, this approach can position the buyer to better win.

If you have a friend or family member who has been making home purchase offers and is frustrated about not winning, have them contact me.  We at Dunwoody Mortgage will do everything possible (from a lender perspective) to help them win.

 

Government impact on housing

August 7, 2018

Sometimes the government gets involved in areas, and things get worse. Here is one area where inaction would be really bad – flood insurance.

On the last possible day, Congress avoided a lapse in the federal flood insurance program when the Senate voted to extend the program through the end of November. The National Flood Insurance Program would have expired July 31 without this action. So the program has been extended, but still doesn’t include any reforms to the program. Despite years of debate and proposals to reform the program, reforms have stalled. In lieu of any changes, Congress has kicked the can down the road another few months. We’ll get to do all of this again in a few months.

This isn’t a case of “they’ll do anything to prevent a lapse of flood insurance coverage.” Congress has let the national flood insurance program lapse some in the past few years. Here is hoping the next change/extension/reform won’t be at the very last minute, but something tells me it will be.

In other mortgage news from the government, it appears the current set up for FHA mortgage insurance will remain the same. There will be no decrease in the monthly premium AND the insurance will still be permanent for the life of the loan.  FHA’s insurance program works differently from private mortgage insurance, which typically falls off after a certain amount of time.

The FHA’s policy wasn’t always this way. The FHA’s previous policy required borrowers to pay mortgage insurance premiums until the outstanding principal balance reaches 78% of the original home value, but the FHA instituted the life of loan policy back in 2013. This action was part of the effort to improve the status of their mortgage insurance fund. While there were some good years of rebuilding the fund, the decline of the funds balance in 2017 caused FHA to pause in potential changes to mortgage insurance.

Currently, the mortgage insurance is so high on FHA loans that it rarely makes sense for a borrower to consider using an FHA loan unless they have really low credit and/or a very high debt threshold. Good credit, low debt, but short on the down payment? Conventional loans allow only a 3% down payment (compared to FHA’s 3.5% down payment). Hopefully FHA can update their mortgage insurance policy in the near future to provide more options for well qualified borrowers.

Looking to buy a home before the end of the year? Ready to have a new home for the holidays?!? If you are purchasing in Georgia, contact me today. I’ll get you ready to make an offer in one quick phone call.

A Seller’s Market – Thoughts on Why

July 26, 2018


The seller’s market continues on in the Atlanta area.  I have recently heard Realtors talking about their clients making offers on homes that have 12 – 15 competing offers.  One Realtor friend told me about a home that he listed last December.  The Realtor did painstaking research on the neighborhood and comparable properties.  The analysis said a fair price was $299,000.  The winning offer was $355,000!  That’s about 18% over the asking price.

So how did we get to this point?  According to a recent Wall Street Journal article, one key factor is that for over 10 years now, home construction has not kept pace with US population growth.  The article stated that current home construction per household is close to its lowest level in 60 years – since the late 1950’s.  In years past, this lower construction level was somewhat offset by the number of foreclosed homes available for purchase.  But that is no longer the case as foreclosure rates have decreased dramatically since the Great Recession.

In the Atlanta metro area, this housing “shortage” is compounded by population growth.  The Atlanta Journal Constitution reported in June that the metro area’s recent annual population growth of 1.5% exceeds the rates for eight of the top ten US metro areas.  With this growth rate, Atlanta is on pace to surpass the population of Philadelphia by 2022, becoming the eight most populous city in the country.

See the source image

All of this affects the mentality of a big group of potential home buyers.  They currently own a home, and they want to move to meet the needs of a growing family or shorten their commute.  But their income level will not support two mortgages, so their offers must be contingent on selling their current home.  That creates two problems.  The first is that sellers can choose from multiple offers and they are much more likely to choose a non-contingent offer than a contingent one.  Secondly, these would-be home buyers are very reluctant to list their current home without having a new home under contract.  And it makes sense – they don’t want to sell their current house and not be able to buy a new one.  Let’s face it…moving stinks, and having to move twice stinks twice as much.  So many would-be home buyers are “sitting on the sidelines,” waiting for the market to get less competitive before they seriously look for homes.

Dunwoody Mortgage can actually help our clients better position themselves to win competitive home purchase situations.  You ask, “How can the lender help the buyer win a contract?”  I’ll tell you…in the next blog post.  If you or someone you know wants to buy a house and doesn’t have time to wait for the next post, call me.  I would love to tell you how Dunwoody Mortgage can help home buyers win in this sellers market.