Posts Tagged ‘seller’s market’

Taking on the spring market

April 16, 2019

It is definitely spring, and the housing market is heating up. It is time to take advantage of new homes on the market. What am I seeing this year that is different from last year:

  1. Mortgage rates are lower this year than they were last year at this time. Right now, they are lower by roughly a half point!
  2. The rise in home values has slowed each month for the past 10 months. The combination of slowing home values and a drop in mortgage rates gives buyers roughly 6% more buying power today than they had this time last year.
  3. I am seeing sellers begin to give money toward closing costs. Don’t read this statement as sellers are paying ALL closing costs again. What I mean is instead of every purchase contract I see where the seller is giving $0 to the buyer for closing costs, now I am seeing contracts with the seller giving a few thousand to the buyer.
  4. Homes sitting on the market for sale for too long are now getting price reductions. Last year, homes weren’t sitting that long and few were getting price reductions.

What to make of all this information? While still a seller’s market, the market is softening and buyers have more purchasing power. Now is the time to act!

I know what you may be thinking…

  • I don’t have enough money to put 20% down…  Not a problem. Did you know a $500,000 home can be purchased with about a 3% down payment. While one’s target may not be $500,000, 3% is all it takes to get into a home.
  • My credit isn’t perfect… Again, not a problem. You don’t need perfect credit to purchase a home. Conventional and FHA loans allow for credit scores down to 620, which is below average credit.
  • I just started a new job, so I can’t buy a home… Not necessarily. A new job doesn’t mean someone lost their chance at buying a home. Being able to qualify for a home depends more on how they are paid (W2, hourly, salary, 1099) versus how much they are paid.

Don’t let what you’ve read on the internet get you down. Just because you read it online, or someone in the office break room told you something doesn’t make it true. It is easier to buy a home than many people think. If you are looking to buy a home in Georgia, contact me  today. Let’s get the process started. In just a few minutes, we’ll be well on our way to getting you into a new home.

Recasting a mortgage

February 25, 2019

My recent post discussed ways in which a buyer can make a non-contingent offer on a home in this competitive seller’s market. I mentioned recasting as an option to consider if a buyer could only make a minimum down payment on the new home if they don’t sell their current home. Having the mortgage recast later is a good way to get around not making a large down payment when going through the buying/selling process in reverse order (buying the new home and then selling the current home instead of selling then buying). What does recast mean?

A recast is a feature most loan servicers allow where remaining payments are recalculated based on the new principal balance. This is often done after a significant principal reduction takes place on the loan. A recast is a cheaper alternative than simply refinancing. If today’s mortgage rates are higher than the rate on the home owners current mortgage, then a recast would be a very good option should one make a large principal reduction and want to lower the monthly payment.

Here is an example of recasting. My client wants to purchase a new home without selling her current home. This way she makes a non-contingent offer to buy her new home. Ideally, my client would love to make a 20% down payment, but the money for the down payment is tied up as equity in her current home. All she could afford to do right now is 5% down. The purchase price is $400,000 with 5% down, so the loan amount is $380,000. This makes a monthly mortgage payment of $1,870 (not including taxes/insurance/PMI). My client buys the new home, then sells the current home. She now has an extra $100,000 to pay down the mortgage balance on her new home.

The new loan amount is $280,000, which is great! But… since this is a fixed rate loan, the monthly payment is still $1,870. Now she contacts her loan servicer and requests a recast of mortgage. The rate is the same, but the principal balance is much lower. When the loan is recast, now the payment drops to $1,377. This is how my client can purchase her new home without selling her current home first AND eventually get the payment to reflect the new loan amount.

Looking to buy a home in the state of Georgia, want to make a non-contingent offer, and recast later, contact me today. In just a few minutes, I can have you well on your way to make an offer on a home.

Also, a note to existing home owners who want to recast their loan. Be sure to contact your loan servicer before making the large principal reduction. You want to make sure the loan servicer will allow a recast. You also want to know the steps they want you to take to complete it. Perhaps they want you to complete a form and start the recast request prior to making the large principal reduction. Every loan servicer is different, so be sure to contact them to know exactly how they want you to go about it.

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.