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How Credible mortgage rates are calculated
Changing economic conditions, central bank policy decisions, investor sentiment and other factors influence the movement of mortgage rates. Credible average mortgage rates and mortgage refinance rates reported in this article are calculated based on information provided by partner lenders who pay compensation to Credible.
The rates assume a borrower has a 700 credit score and is borrowing a conventional loan for a single-family home that will be their primary residence. The rates also assume no (or very low) discount points and a down payment of 20%.
Credible mortgage rates reported here will only give you an idea of current average rates. The rate you actually receive can vary based on a number of factors.
How do I get a mortgage?
When you’re ready to buy a home, you should lock down your mortgage options before you begin house hunting. Having your financing lined up can make the process go smoother, and give you a leg up on other buyers who’ve not yet been prequalified or pre-approved for a mortgage.
Here are the general steps to getting a mortgage:
- Get a handle on your finances and credit. Add up your total monthly expenses and subtract them from your total monthly income to see how much you may be able to spend on a monthly mortgage payment. Check your credit score and report to correct any errors on your report and take action if you need to improve your credit score.
- Get pre-approved for a mortgage. Although pre-approval doesn’t guarantee the lender will give you a mortgage, it’s a strong indication you’ll be able to qualify for one when the time comes. Having a pre-approval letter can make your offer more attractive to potential sellers.
- Comparison shop. Once you’ve had an offer accepted on the house of your dreams, it’s time to compare rates from multiple mortgage lenders. Be sure to compare all the costs of a mortgage, not just the interest rate.
- Complete the full application. You’ll need to provide detailed information about your income, savings, monthly expenses, and overall financial situation.
If you’re trying to find the right mortgage rate, consider using Credible. You can use Credible’s free online tool to easily compare multiple lenders and see prequalified rates in just a few minutes.
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Source: foxbusiness.com
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The largest institutional single-family rental (SFR) operator in the country, Invitation Homes, is in the hot seat over its alleged failure to comply with building-permit requirements for rental properties it owns in California.
Another larger player in the space, Progress Residential, recently postponed a securitization transaction due to difficult market conditions. And yet another big force in the market, FirstKey Homes, is pulling collateral out of a 2021 securitization deal.
These developments—and more—can be seen as cracks in the armor of a housing-industry sector that rose out of the ashes of the Great Recession and grew to become a thriving alternative for individuals locked out the home-purchase market by rapidly rising prices.
The market stresses facing the SFR sector now include decelerating rents, a rising cost of capital and a shortage of homes available to purchase — which has slowed property acquisitions and related securitization deals that help market players regenerate capital.
David Petrosinelli, a New York-based senior trader with InspereX, a tech-driven underwriter and distributor of securities that operates multiple trading desks around the country, said he expects the securitization market for institutional SFR players to “approximate a more normal market by summertime.”
“But the caveat, of course, is that all bets are off if there’s a more meaningful contraction in lending [in the wake of recent bank failures and other economic factors] because then you’re in serious trouble,” Petrosinelli added.
Inviting an SFR lawsuit
Invitation Homes earlier this year failed to convince a judge to dismiss a pending whistleblower lawsuit filed against the company in federal court in San Diego that alleges it made improvements at scores of properties in California without first securing required building permits.
The lawsuit claims further that the company “ignored permitting laws to avoid fees and increased taxes as well as to get renovated homes on the rental market as soon as possible.” The whistleblower litigation, known as a qui tam action — which allows private parties to sue on behalf of the United States — was filed under seal in state court in California in 2020 and moved last year to federal court — where the judge’s ruling denying dismissal of the case was handed down in January of this year.
The lawsuit is filed as a false-claims action on behalf of some 18 California cities by an entity called Blackbird Special Projects LLC, which discovered the alleged violations based on its examination of public records using artificial intelligence software. If successful in the litigation, Blackbird stands to get a cut of any recoveries for the local governments.
“To support these assertions, [Blackbird] used proprietary software to scour different rental listing websites such as Zillow.com and [Invitation Home’s] website to identify homes owned by defendant,” pleadings in federal court state. “[Blackbird] then used its proprietary ‘lookback’ technology to access pre-renovation images of the homes from a multiple listing service and compare them with post-renovation images from the rental advertisements.”
Invitation Homes declined to comment on specific allegations raised in the lawsuit, but a company spokesman did say the “allegations are without merit, and we intend to vigorously defend the company.”
“Invitation Homes is currently the largest owner of single-family, rental homes in the United States, with most of its homes located in California, Florida, Georgia, Texas and other Sun Belt states,” the federal lawsuit states. “In California, as of December 31, 2019, defendant [Invitation Homes] owned 12,461 single-family homes in over 100 cities.
“… By its failure to pay or remit inspection, permit fees, penalties and interest, Invitation Homes has defrauded cities and counties in California millions of dollars.”
By “renovating thousands of homes” absent obtaining building permits, pleadings in the case allege, Invitation Homes was able to “avoid revaluations that would have happened if permits were obtained, thus evading increased property taxes on improved properties.”
The Invitation Homes’ case is being watched closely by some players in the secondary market, where large SFR operators like Invitation Homes raise funds through securitization deals backed by their rental properties.
“The reason this matters is they [Invitation Homes] make representations and warranties into their securitization trusts that all work improvements are permitted,” explained Ben Hunsaker, a portfolio manager focused on securitized credit for California-based Beach Point Capital Management. “So, there are points where they may have to refinance securitization debt if this [litigation] goes sideways for them with unsecured corporate debt, and they go from 1% or 2% cost of capital to 7% or 8% cost of capital, and they also have to worry about their ratings then.”
Invitation Homes (IH) spent about $25,000 on renovations per home for its California SFR portfolio, pleadings in the lawsuit state.
“The vast majority of IH’s renovations required permits — including for demolishing and constructing sections of single-family homes, installing and demolishing pools, and significantly altering the electrical work— but permits were not obtained,” court pleadings allege. “Once the single-family homes were renovated without the required permits, IH rented them to tenants who were unaware of the unpermitted and potentially unsafe renovations.”
The federal judge now overseeing the case earlier this year denied a motion lodged by Invitation Homes seeking to have the case dismissed. As part of that ruling, the judge made clear that he wasn’t going to entertain any arguments by the defendant seeking to shift blame to contractors for failing to secure the building permits.
The judge states in his ruling, essentially, that even if independent contractors are responsible for the alleged failure to obtain building permits, that fact alone doesn’t absolve Invitation Homes of the responsibility to “do the investigating itself” to ensure permits were issued.
Industrywide turbulence
The lawsuit against Invitation Homes is not the only dark cloud hanging over the institutional SFR sector.
The securitization market for institutional SFR companies, which collectively represent some 5% of an SFR market composed of some 17 million properties, is currently in the doldrums. That’s largely due to a lack of housing available to purchase, and consequently a lack of new assets to securitize, according to market expert L.D. Salmanson.
Salmanson is CEO of Cherre, a data-integration and insights platform that works with major players in the real estate market, including insurers, asset managers, lenders and SFR operators. The company serves as a data warehouse and deep analytics platform that integrates client data with other public and private data sources to create powerful market assessment and forecasting tools.
“First of all, there’s been a massive slowdown in the purchase rate for the large [SFR] players,” Salmanson said. “What’s been causing the slowdown is not the [flat to decelerating] rental prices, although that is affecting it.
“Rather, it’s that there are a lot less people selling because they’re not getting the [higher] prices that they’re looking for [as home prices decelerate]. But that’s temporary. That’s not going to last.”
Last year, there were a total of 15 securitization deals involving large institutional SFR players valued in total at $10.3 billion, according to data tracked by Kroll Bond Rating Agency (KBRA). This year, so far, there has been one offering, a $343 million securitization deal by Progress Residential (Progress 2023-SFR1) that closed in late February, KBRA data show.
Yet even Progress, which has a portfolio of some 83,000 SFR properties, appears to be caught up in the SFR securitization stagnation. Hunsaker said one major SFR player a few weeks ago postponed a securitization deal, pulling it off the market prior to pricing due to market conditions.
That player, according to industry sources, was Pretium Partners-backed Progress Residential, and the deal was Progress 2023-SFR2.
Hunsaker added that another potential drag on the institutional SFR market is the fact that some single-family rental (SFR) operators are backed by investment firms that also invest in the commercial real estate market, which he said also is facing stiff headwinds now — particularly in the office and multifamily sectors.
For example, Bridge Investment Group Holdings early last year acquired Gorelick Brothers Capital’s estimated 2,700 SFR-property portfolio spread across 14 markets concentrated in the Sunbelt and Midwest. Bridge’s portfolio also includes investments in office and multifamily properties.
Likewise, SFR operator FirstKey Homes, with a portfolio of some 45,000 SFR properties under management, is an affiliate of Cerberus Capital Management, a global investment firm with approximately $60 billion in assets across credit, private equity as well as residential and commercial real estate interests.
KBRA reported last month that FirstKey Homes exercised a so-called “excess collateral release” [ECR] feature for a securitization deal dubbed FirstKey Homes 2021-SFR1. It was the first such ECR exercised across the 12 KBRA-rated securitization deals to date that have included such a provision.
“In connection with the subject transaction … the issuer requested release [via the ECR] of 729 properties from the collateral pool of 9,218 properties,” KBRA’s report notes. “Post release, the remaining 8,489 properties will collateralize the same debt of $2.06 billion [due to increased home values].
“…The analysis indicated that the [exercise of the] ECR, in and of itself, would not result in a downgrade.”
Hunsaker said for many SFR operators facing uncertainty now, the solution is to stop buying new properties if they believe their cost of capital is rising too much — absent home prices dropping enough in the future to make the numbers work.
“I think most of these [SFR operators] are capitalized for longer-term [property] holding incentives [and] … I don’t think these structures are set up to be forced sellers,” Hunsaker said.
He added that healthy home-price appreciation to date made it possible for FirstKey Homes to release the excess collateral from the 2021 securitization deal.
“But they weren’t releasing that excess collateral to sell the houses,” he stressed. “They’re releasing that excess collateral to put it on their balance sheet and reduce the amount of encumbered debt they have.”
FirstKey Homes does not share financial details about its operations for competitive reasons, a company spokesman said when asked to comment on the ECR transaction.
“What’s vital to remember is that across the SFR sector, investors are still active, albeit a bit more selective, with the belief SFR provides durable cash flows and stable occupancies,” the FirstKey spokesman added. “Additionally, with household formations significantly outpacing the decades-long low housing supply, it bodes well for continued strong demand for the high-quality single-family rental homes we provide our family of residents.”
Source: housingwire.com
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Looking to buy a condo but need an FHA loan to get the job done? In the past this may have presented some challenges, but today it just got a bit easier.
Nowadays, the FHA requires an entire building to be FHA-approved, not just single units (no spot approvals anymore). It’s an all or nothing approach to ensure FHA loans only finance units in quality projects, thereby avoiding unnecessary risk for the agency.
But many prospective homeowners can only get approved for FHA loans because conventional financing is often out of reach for one reason or another. Additionally, many of these folks can only afford condos because homes are too expensive.
This also presents challenges to condo sellers who are limited to unloading their properties to those able to obtain a conventional loan. Obviously this can reduce demand and force the seller to take a lower price for their condo.
Apparently the Department of Housing and Urban Development (HUD) understood this was a problem and subsequently released temporary guidelines today aimed at easing condominium requirements so more borrowers can get FHA loans on such dwellings.
They’ve basically made three changes, effective immediately, which they believe will increase affordable housing options for both first-time home buyers and those with low- to moderate-income.
Streamlined Condo Recertification
- If a condo is already FHA-approved
- Recertification will be streamlined
- Assuming there haven’t been any substantive changes since prior approval
- Making it less of a burden to keep a building in the FHA’s good graces
First, they’re making it easier to recertify a condominium project that is already FHA-approved.
Existing guidelines require condos to get recertified after two years to ensure the project is still in compliance with FHA eligibility rules.
And the process needs to start six months before expiration, so it’s a constant bureaucratic nightmare.
It used to involve a lot of paperwork, including annual budgets, balance sheets, income and expense statements, occupancy review, and so on.
Going forward, the FHA will only require applicants to submit documents if there are “any substantive changes since the project’s prior approval.”
I’m not exactly sure what that means, but HUD refers to it as a streamlined process, so it should be easier for projects to maintain their eligibility.
Lots of building used to be FHA approved – hopefully now they’ll maintain that approval.
Eased Occupancy Requirements
- The FHA requires 50% of units in a building to be owner-occupied
- They have since lowered this requirement to 35% if some conditions are met
- They’re also expanding the definition of owner-occupied
- To include vacation homes (secondary properties)
Additionally, the FHA will also be modifying its calculation of owner-occupancy concentration, which should boost the number of units available for FHA financing.
At least 50% (half) of the units in a condominium project must be owner-occupied in order for borrowers to obtain FHA financing.
The FHA will now consider a condominium owner-occupied provided they are not:
• Tenant occupied;
• Vacant and listed for rent;
• Vacant and listed for sale; or
• Under contract to a purchaser who does not intend to occupy the unit as a primary or secondary residence
So it looks like condos that are secondary residences (not vacation homes) will count toward owner occupancy. HUD refers to a secondary residence as a dwelling the owner occupies in addition to their principal residence, but for less than the majority of the calendar year.
Ideally, this will make the 50% concentration rule easier to meet and boost the number of projects available for FHA financing.
This has since been lowered to 35% if certain conditions are met, making it that much easier to finance a condo with an FHA loan.
Lastly, HUD will now accept an expanded array of master policy insurance coverage options for the entire project.
HOAs are required to maintain coverage in an amount equal to 100% of the current replacement cost of the building.
Now they’ll be able to utilize insurance that consists of pooled policies for affiliated projects, state-run plans, or coinsurance obligations.
Per NAR, less than 20% of condominium complexes nationwide have FHA approval, and condos are 27% less expensive than single-family homes.
The Realtors’ group had been pushing for changes at the FHA for a while now, and all that advocating looks to have worked.
Still, a lot of condos aren’t approved for FHA financing and probably won’t be even with these changes, so it’s best to ensure you can get approved for all types of mortgages when it comes time to buy a condo.
Read more: Are mortgage rates higher on condos?
Source: thetruthaboutmortgage.com
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For many individuals and families, owning a home is a lifelong dream. However, with rising real estate prices, some may find themselves seeking financing beyond the conforming loan limit. This is where jumbo loans come into play.
What is a jumbo loan?
A jumbo loan in Utah is a type of mortgage that is used to finance homes that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Oftentimes, this type of loan is necessary for high-end, luxury homes or homes located in expensive housing markets, like Salt Lake City or Park City.
If you find yourself in a situation where the home you wish to purchase requires borrowing beyond the conforming loan limit (CLL), then you’ll need to pursue a jumbo loan. It’s important for homebuyers to understand the requirements and implications of obtaining a jumbo loan in Utah. For instance, borrowers typically need a higher credit score and a larger down payment to qualify for a jumbo loan.
What is the jumbo loan limit in Utah?
In 2023, the conforming loan limit for a single-family home in most U.S. markets is $726,200. However, this limit can be higher in areas where the median home price is significantly above the national average.
- $726,200 is the conforming loan limit in most Utah counties
- $1,089,300 is the maximum limit in higher-cost counties
Keep in mind that the amount being borrowed is what determines whether or not you’ll need a jumbo loan, not the price of the home. So, if you were to put $100,000 down on a $780,000 home in Emery County, the mortgage would be $680,000, which is under the CLL for this area. In this case, your loan wouldn’t be considered a jumbo loan.
The following counties in Utah have a conforming loan limit beyond $726,200 for 2023:
County | FHFA Conforming Loan Limit |
Box Elder County | $744,050 |
Davis County | $744,050 |
Morgan County | $744,050 |
Summit County | $1,089,300 |
Wasatch County | $1,089,300 |
Weber County | $744,050 |
For more information on the conforming loan limit in your county, use the FHFA map.
What are the requirements for a jumbo loan in Utah?
Borrowers must meet stricter requirements to qualify for a jumbo loan than they would for a conforming loan. The specific requirements can vary from lender to lender, but below are the typical requirements for borrowers seeking a jumbo loan in Utah.
Higher credit score: In order to have your loan application approved for a jumbo loan, most lenders will require a credit score of 720 or higher. While some lenders may be more lenient and accept a score as low as 660, a score below this is generally not accepted. In contrast, a credit score as low as 620 could suffice for a conforming loan with some lenders.
Larger down payment: When applying for a Utah jumbo loan, keep in mind that down payment requirements are generally more substantial than for conforming loans. While the specific amount will depend on the lender and the borrower’s financial situation, many jumbo loan lenders require a down payment of at least 10%, and some require as much as 20% or more.
More assets: Jumbo loan borrowers are typically required to have more assets than those seeking conventional loans. Lenders will review a borrower’s assets to ensure they have enough liquid assets or savings to cover at least one year of loan payments. This requirement is in place to mitigate the increased risk associated with larger loan amounts.
Lower debt-to-income ratio (DTI): For Utah jumbo loans, lenders typically look for a borrower with a debt-to-income ratio (DTI) below 43%. Ideally, a DTI closer to 36% or lower is preferred. The DTI is calculated by dividing the sum of all monthly debt payments by gross monthly income. A lower DTI signifies a borrower’s ability to manage their current debt load while taking on additional mortgage payments. It also indicates greater financial stability and the ability to make on-time payments towards their jumbo loan.
Additional home appraisals: For a jumbo loan, lenders may require an additional home appraisal as a second opinion, especially if the property is located in an area with few comparable sales. This is to ensure that the home is worth the loan amount or more and to mitigate the lender’s risk. The cost of the appraisal may also be higher in housing markets with limited property sales.
Source: redfin.com
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On Monday, Washington state Gov. Jay Inslee (D) signed a series of bills into law that are designed to address the state’s housing issues, relating particularly to supply and housing affordability.
Included in the package is a bill that lifts the zoning restrictions on certain types of multifamily properties, called “middle housing,” in areas zoned for single-family housing. Another allows for easier accessory dwelling unit (ADU) permitting and construction within the state.
“This is one way we can expand a large amount of affordable housing,” Inslee said. “We need to house our growing population.”
An additional bill, House Bill 1474, is intended to “help people who were affected by racist housing covenants designed to keep ethnic and religious minorities out of certain neighborhoods, as well as their descendants, with down payments and closing costs,” according to the Seattle Times. Sponsors say it’s the first statewide bill of its kind.
The governor also signed House Bill 1074 into law, which requires landlords in the state to show documentation of damages when they withhold part of a renter’s security deposit after the tenant moves out.
“This session, our Legislature needed to go big so people can go home,” Inslee said. “And our Legislature, I’m happy to say, has gone big this year so people can go home. Congratulations to the state of Washington. I’m signing some great bills here today.”
But while Gov. Inslee is singing the bills’ praises, some housing advocates have expressed disappointment, stating some of the measures do not go far enough to address the root issues behind the affordability crisis.
“The Legislature had opportunities to do something about the massively unaffordable rents that are driving housing insecurity for so many people across the state,” Michele Thomas, director of policy and advocacy for the Washington Low Income Housing Alliance, told the Seattle Times. “They completely turned their back on that.”
Other measures that were debated but that did not make it to a vote included a cap on rent increases and a requirement that landlords provide six months of notice to tenants before increasing rent by a certain percentage.
Rent stabilization also continues to remain at the forefront for some state legislators. Democratic Sen. Patty Kuderer, the chair of the Senate Housing Committee, told the Times that the slate of bills signed into law could increase the housing supply and lower costs. In the meantime, a program to limit rent increases should be considered, she said.
“I’m not talking about them not ever being able to increase the rent,” Kuderer said. “What I’m talking about is that it would be on a temporary, time-limited basis and tied to the housing inventory.”
Source: housingwire.com
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“New home construction is taking on an increased role in the marketplace because many home owners with loans well below current mortgage rates are electing to stay put, and this is keeping the supply of existing homes at a very low level,” Alicia Huey, the NAHB chair, said in a statement. “While this is fueling cautious optimism among builders, they continue to face ongoing challenges to meet a growing demand for new construction. These include shortages of transformers and other building materials and tightening credit conditions for residential real estate development and construction brought on by the actions of the Federal Reserve to raise interest rates.”
Although interest rates have more than doubled since 2021, home builders are still cautiously optimistic about business, something the NAHB attributes to builders’ usage of buyer incentives. However, as sales have picked up this spring and existing home sales remain at record lows, the use of sales inducements from homebuilders has slowed.
In May, the share of homebuilders reducing home prices dropped to 27%, down from 30% in April and 36% in November 2022, with the average price reduction hovering at 6%, unchanged for the past four months. Additionally, the share of homebuilders offering some type of incentive dropped to 54% in May, compared to 59% in April and 62% last December.
“Lack of existing inventory continues to drive buyers to new construction,” Robert Dietz, the NAHB’s chief economist, said in a statement. “In March, 33% of homes listed for sale were new homes in various stages of construction. That share from 2000-2019 was a 12.7% average. With limited available housing inventory, new construction will continue to be a significant part of prospective buyers’ search in the quarters ahead.”
The three other indices monitored by the NAHB rose in May. The gauge measuring current sales conditions rose to 56, up five points month over month. The component analyzing sales expectations for the next six months rose seven points to a reading of 57. Compared to a month prior, the gauge measuring traffic of prospective buyers rose two points to 33.
Regionally, the three-month moving averages for HMI rose in three out of the four regions, with the West gaining three points to a reading of 41, the South increasing three points to 52, and the Midwest rising two points to a reading of 39. The Northeast held steady month over month at a reading of 45.
Another survey, the BTIG/HomeSphere State of the Industry Report, also reported an improvement in homebuilder outlook.
According to the survey, nearly twice as many builders reported sales that were better than expected (38%), than those who report sales that were worse than expected (20%) in April. In addition, nearly three times as many builders saw traffic as better than expected (42%) versus worse than expected (15%). The share of builders reporting a year over year decrease in sales also shrank to 34% in April, compared to 40% in March.
The BTIG/HomeSphere study is an electronic survey of approximately 75-125 small- to mid-sized homebuilders that sell, on average, 50-100 homes per year throughout the nation. In April, the survey had 124 respondents.
Like the homebuilder confidence survey, the BTIG survey also found that homebuilders are easing up on buyer incentives. Of the 124 respondents, 17% cut some, most of all prices versus 22% last month, while just 22% of surveyed builders reported increasing some, most or all incentives compared to 27% a month prior. In addition, 30% of homebuilders reported raising some, most or all base prices in April, up from 21% in March.
“New home demand momentum has continued to accelerate throughout the spring season, which is in-line with anecdotal public builder commentary,” Carl Reichardt, a BTIG analyst, said in a statement. “With comparisons for both sales and traffic beginning to ease meaningfully, we expect results should become stronger on a year/year basis next month.”
Source: housingwire.com
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After extraordinary home value growth characterized a frenzied housing market in 2017 and 2018, this year’s slowdown felt like a welcome return to normalcy for many in the industry. And Zillow is predicting more of the same in 2020, with the market set to stabilize near historic norms.
Changing
tastes as millennials make up a growing share of home buyers will
impact the market. Homes will get smaller, bold colors and prints
will return to home designs and demand will stay high as more and
more people reach typical home buying age.
Here’s Zillow’s predictions for housing in 2020:
Homes will continue to shrink
The sprawling, suburban homes that Baby Boomers coveted will increasingly become a relic of the past in 2020 and into the next decade as the median square footage of newly built, single-family homes will fall for the fourth time in five years. The typical U.S. home has shrunk by more than 80 square feet since 2015i. Millennials, the largest group of buyers in 2020, are proving to be have much different tastes and lifestyles than their parents’ generation. Many prefer homes in urban areas with an abundance of amenities within walking distance over the mansions in the exurbs that boomers are vacating.
The U.S. will not enter a recession in 2020
As recently as July, half of experts surveyed by Zillow predicted a recession would begin in 2020. However, the U.S. economy has remained resilient to expected headwinds like ongoing trade volatility and the possibility of a stock market retreat. Consumer spending has picked back up – reflecting healthy consumer confidence – job creation is on a steady path and annual wage growth has stayed at or above 3% since October 2018. Economic and home value growth should continue into 2021, although perhaps at a slower pace than in recent years.
Home value and rent growth will be slower and steadier
Home value growth is expected to grow 2.8% from December 2019 to December 2020, according to a survey of more than 100 housing experts and economistsii. That’s down from 4.7% annual growth in October, the latest month for which data is available. Zillow expects rent growth to continue accelerating into the spring, before dipping below 2% by the end of 2020.
Mortgage rates will stay low, keeping housing demand high
Mortgage rates fell markedly in 2019 and are expected to remain low for the bulk of 2020. That will keep demand strong and continue to fuel decent price growth in the nation’s most broadly affordable markets. But low rates don’t help overcome the upfront hurdle of high down payment requirements, pushing buyers in expensive areas to fan out in search of areas they can better afford.
Sales will climb again after a downturn in 2018
For-sale inventory is near historic lows, but that doesn’t mean a dearth of sales. In fact, the low inventory is largely a result of high demand from buyers that snatch up homes as soon as they hit the market. There are more and more potential buyers as the large Millennial generation is reaching peak homebuying age in greater numbers each year, and they are benefiting from low mortgage rates, an increase in new construction permits and technology – such as Zillow Offers and other iBuyers – that is reducing friction in the market.
Color will make a comeback
Goodbye, Hygge. Hello, color! Fun will return to home design in the form of bold prints, lively wallpaper and brightly hued walls. After a decade of Scandinavian modern design that dominated retail and social media feeds as Americans embraced neutrals, minimalism and clutter-free living, expect a shift toward playful, creative design. Look for color to be injected in unexpected ways in kitchen cabinetry and appliances, in lighting fixtures and on interior doors and moldings.
“With the housing market stabilizing from the drama of the price recovery and the slowdown during 2019’s home shopping season, we have a rare moment of calm to reflect on what housing might look like in the year to come,” Zillow’s Director of Economic Research Skylar Olsen said in a statememt. “If current trends hold, then slower means healthier and smaller means more affordable. Yes, we expect a slower market than we’ve become accustomed to the last few years, but don’t mistake this for a buyer-friendly environment – consumers will continue to absorb available inventory and the market will remain competitive in much of the country. But while the national story is a confident one, housing in some manufacturing-heavy markets may see adversity. The struggle could be even more stark, since similarly affordable housing markets with a more balanced job profile may be 2020’s rising stars.”
Source: realtybiznews.com
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In a bid to strengthen its position in the Gulf Coast market, has acquired Truland Homes, the largest private homebuilder along the Gulf Coast, according to an announcement issued Thursday.
The purchase deal includes Truland’s homebuilding assets, which consist of approximately 263 lots, 155 homes in inventory, and 55 homes in the sales order backlog.
“We are excited for the Truland team to join the D.R. Horton family,” Donald R. Horton, chairman of the board, said. “Their quality building operations and strong presence across the Gulf Coast make Truland a great addition to D.R. Horton’s already strong local market operations.”
D.R. Horton plans to pay approximately $100 million in cash to complete the purchase. After the acquisition deal is complete, the company intends to merge Truland’s operations with its existing D.R. Horton platforms in Baldwin County, Alabama, and Northwest Florida.
In addition to the Truland acquisition, D.R. Horton also announced the acquisition of 156 lots and control of around 400 lots through option contracts from Truland affiliates, as well as 201 lots and control of approximately 260 lots through option contracts from third parties.
These strategic acquisitions will allow D.R. Horton to expand its reach and offerings in the region, according to a statement from the company.
Truland Homes had an impressive performance in calendar year 2022, closing 512 homes with a total revenue of $244 million. The average size of these homes was approximately 2,340 square feet, with an average sales price of $477,000.
“Leading Truland Homes over the last 13 years has been the most rewarding experience of my professional career. The amazing team members that took us from our first home to over a billion dollars in total sales are the ones that deserve all the credit,” Nathan Cox, founder of Truland Homes, said. “No matter what, they always came through. In conjunction with growing Truland Homes over the last decade plus, D.R. Horton has afforded us the honor and privilege of becoming the largest lot supplier within their Gulf Coast region. We look forward to continuing as a key lot development partner for D.R. Horton.”
D.R. Horton has been the largest homebuilder by volume in the United States since 2002. With operations in 110 markets across 33 states, the company closed 83,119 homes in its homebuilding and single-family rental operations during the twelve-month period ending March 31, 2023.
The company builds and sells homes in the price range of $200,000 to over $1,000,000. The company also offers mortgage financing, title services, and insurance agency services through its subsidiaries. In addition, D.R. Horton is involved in the construction and sale of both single-family and multi-family rental properties and holds a majority stake in Forestar Group Inc., a national residential lot development company.
This content was generated using AI and was edited by HousingWire’s editors.
Source: housingwire.com
Apache is functioning normally
In our latest real estate tech entrepreneur interview, we’re speaking with Jesse DePinto from Frontdesk.
Without further ado…
Who are you and what do you do?
I’m Jesse DePinto, Co-Founder and Chief Product Officer at Frontdesk.
Today, I lead our talented product and sales teams at Frontdesk.
What problem does your product/service solve?
Short-term rental marketplaces like Airbnb have been proven to help real estate owners generate more income. But generating maximum revenue and ensuring the most protection for your property requires time, technology, and experience. Our new full-spectrum management platform, Frontdesk Flex, provides everything you need to earn more money and save more time, with solutions ranging from software-only to full-service, including cleaning and other on-site services. Here is a fun video we made to show you how it works.
What are you most excited about right now?
Despite the travel industry struggles in 2020, it’s been a year of transformative change. Consumers are favoring short-term rentals over hotels this year, and we believe those habits will stick. Believe it or not, short-term rental revenue expectations have already rebounded in most geographies; meanwhile, hotels are struggling to fill their rooms. Airbnb’s IPO on the horizon demonstrates that short-term rentals are the new-normal in this post-COVID world. There has never been a better opportunity for single-family and multifamily real estate professionals to leverage this seismic shift in consumer demand to be successful.
What’s next for you?
Now that we have launched our flagship technology platform, Flex, and closed our Series A financing, we’re ready to scale! Personally, I’m moving my focus away from product and sales and more toward leadership. Our product-obsessed focus served us well to build the best product on the market, but it will be our teammates and their leaders who take us to the next level. With the vision set, I’m here to first and foremost to support our team with these ambitious growth plans and then get out of their way.
What’s a cause you’re passionate about and why?
I’m passionate about fighting poverty. Until our basic physiological
needs are met (food, water rest … think Maslow’s Hierarchy of
Needs), we will continue seeing suffering by so many in the world. The
Riverwest Food Pantry and Pathfinders are my favorite local charities in Milwaukee. They are doing incredible work for our community.
Thanks to Jesse for sharing his story. If you’d like to connect, find him on LinkedIn here.
We’re constantly looking for great real estate tech entrepreneurs to feature. If that’s you, please read this post — then drop me a line (drew @ geekestatelabs dot com).
Source: geekestateblog.com
Apache is functioning normally
For many people, that monthly mortgage payment can be their biggest recurring bill. It may be the main expense that guides the development and management of their monthly budget, because that is an important bill to pay on time.
Prevailing wisdom says that your mortgage payment shouldn’t be more than 28% of your gross (pre-tax) monthly pay. But whatever that sum actually is, you may be wondering how to shave down the amount. Think about it: A lower mortgage payment could reduce your financial stress. And it can also open up room in your budget to allocate more money towards shrinking other debt, pumping up your emergency fund, and saving for retirement or other goals.
Here, you’ll learn more about your mortgage payment and possible ways to lower it.
What Is a Mortgage Payment?
A mortgage payment is a sum you typically pay every month, but it’s more than just a bill. It reflects an agreement between you and your lender that you have borrowed money to buy or refinance a home, and in exchange, you’ve agreed to pay back the sum with interest over time. If you fail to keep up with your payments, the lender may have the right to take your property.
There are typically four parts of your monthly payment: the loan principal, the loan interest (which is how the lender makes money), taxes, and insurance fees.
A mortgage payment may be a fixed rate, meaning your payment stays the same, month after month, year after year. Or it might be an adjustable rate, meaning the interest and therefore the payment can change at regular intervals.
Pros and Cons of Lowering Your Mortgage Payments
There are upsides and downsides to lowering your mortgage payments.
On the plus side, lowering your mortgage means you likely have more money to apply elsewhere. You might apply the freed-up funds to:
• Pay down other debt
• Build up your emergency fund
• Put more money towards retirement savings
• Use the cash for discretionary spending.
On the other hand, there are downsides to consider too:
• You might wind up paying a lower amount over a longer period of time, meaning your debt lasts longer
• You could pay more in interest over the life of the loan
• If a lower monthly payment means you are not paying your full share of interest due, you could wind up in a negative amortization situation, in which the amount you owe is going up instead of down.
6 Ways to Lower Your Mortgage Payments
Now that you know a bit about how mortgage payments work and the pros and cons of lowering your mortgage payments, consider these ways you could minimize your monthly amount due.
Recommended: How to Pay Off a 30-Year Mortgage in 15 Years
1. Give Your Mortgage a Bonus
If you get a bonus or a windfall, consider throwing some of that money at your mortgage. If you are in a position to make a major lump-sum payment on your home loan, you may benefit from mortgage recasting.
With recasting, your lender will re-amortize the mortgage but retain the interest rate and term. The new, smaller balance equates to lower monthly payments. Worth noting: Many lenders charge a servicing fee and have equity requirements to recast a mortgage.
Other similar options:
• Make a lump-sum payment toward the mortgage principal (say, if you inherit some money or get a large bonus at work)
• Make extra payments on a schedule or whenever you can.
It’s a good idea to tell your lender that you want to put the extra money toward the principal and not the interest. Paying extra toward the principal provides two benefits: It will slowly reduce your monthly payment, and it will pare the total interest paid over the life of the loan.
Refinance your mortgage and save–
without the hassle.
2. Reap Rental Income at Home
You could lower how much you pay out-of-pocket for your mortgage by bringing in rental income and putting it towards that monthly bill. You’re not lowering how much you owe, but you are using your home to bring in another income stream.
There are two common methods: “house hacking” (generating income from your property) and adding an accessory dwelling unit (ADU).
• House hacking can mean buying a two- to four-unit multifamily building for little money down and living in one of the units. Multi-family homes with up to four units are considered residential when it comes to financing. Owner-occupants may qualify for and opt for Federal Housing Administration (FHA) loans, Veterans Affairs (VA) loans, or conventional financing.
Some people house-hack a single-family home, which just translates to having housemates or short-term rental guests.
• An ADU is another option for bringing in rental money to use towards your mortgage. This secondary dwelling unit on the same lot as a primary single-family home could be a detached cottage, a garage or basement conversion (that is, an in-law apartment or similar), or an attached unit.
With any planned addition or renovation to create an ADU, you might want to estimate return on investment — how much you’d charge and how long it would take to recoup the cash you put in before turning a profit.
3. Extend the Term of Your Mortgage
If your goal is to reduce your monthly payment — though not necessarily the overall cost of your mortgage — you may consider extending your mortgage term. For example, if you refinanced a 15-year mortgage into a 30-year mortgage, you would amortize your payments over a longer term, thereby reducing your monthly payment.
This technique could lower your monthly payment but will likely cost you more in interest in the long run.
(That said, just because you have a new 30-year mortgage doesn’t mean you have to take 30 years to pay it off. You’re often allowed to pay off your mortgage early without a prepayment penalty by paying more toward the principal.)
4. Get Rid of Mortgage Insurance
Mortgage insurance, which is needed for some loans, can add a significant amount to your monthly payments. Luckily, there are ways to eliminate these payments, depending on which type of mortgage loan you have.
• Getting rid of the FHA mortgage insurance premium (MIP). Consider your loan origination date that impacts when you can get rid of the extra expense of mortgage insurance:
• July 1991 to December 2000: If your loan originated between these dates, you can’t cancel your MIP.
• January 2001 to June 3, 2013: Your MIP can be canceled once you have 22% equity in your home.
• June 3, 2013, and later: If you made a down payment of at least 10% percent, MIP will be canceled after 11 years. Otherwise, MIP will last for the life of the loan.
Another way to shed MIP is to refinance to a conventional loan with a private lender. Many FHA homeowners may have enough equity to refinance.
• Getting rid of private mortgage insurance (PMI) If you took out a conventional mortgage with less than 20% down, you’re likely paying PMI. Ditching your PMI is an excellent way to reduce your monthly bill.
To request that your PMI be eliminated, you’ll want to have 20% equity in your home, whether through your own payments or through home appreciation.
Thinking about starting a new home renovation project? Use this Home Improvement Cost Calculator to get an idea of what your project will cost.
Your lender must automatically terminate PMI on the date when your principal balance reaches 78% of the original value of your home. Check with your lender or loan program to see when and if you can get rid of your PMI.
5. Appeal Your Property Taxes
Here’s another way to lower your mortgage payments: Take a closer look at your property taxes. Your property taxes are based on an assessment of your house and land conducted by your county’s tax assessor. The higher they value your property, the more taxes you’ll pay.
If you think you’re paying too much in taxes, you can appeal the assessment. If you do, be prepared with examples of comparable properties in your area valued at less than your home. Or you may also show a professional appraisal.
To challenge an assessment, you can call your local tax assessor and ask about the appeals process.
6. Refinance Your Mortgage
One of the best ways to reduce monthly mortgage payments is to refinance your mortgage. Refinancing (not to be confused with a reverse mortgage) means replacing your current mortgage with a new one, with terms that better suit your current needs.
There are a number of signs that a mortgage refinance makes sense, such as lower interest rates being offered or the desire to secure a fixed rate when you have an adjustable rate mortgage.
Refinancing can result in a more favorable interest rate, a change in loan length, a reduced monthly payment, and a substantial reduction in the amount you owe over the life of your mortgage. Do note, however, that there are often fees for refinancing your mortgage.
Tips on Lowering Your Mortgage Payment
If you’re serious about lowering your mortgage payments, consider these methods:
• Refinance to get a lower rate or other changes in your mortgage’s terms
• Apply a windfall (a tax refund, say, or a bonus) to your mortgage’s principal
• Reach enough equity in your home to drop mortgage insurance
• Make extra mortgage payments or higher mortgage payments (this can build equity or pay off the loan sooner, saving you interest)
• Ask about loan modification or forbearance programs if you are struggling to make payments.
Recommended: First-time Homebuyer Programs
The Takeaway
How to lower your mortgage payment? There are several possible ways. And who wouldn’t love to shrink their house payment? You might look at strategies to build equity and ditch mortgage insurance, extend the terms of your loan, or refinance to reduce your monthly payment.
If refinancing could help, see what SoFi offers. Both refinancing and cash-out refinancing are possible. And SoFi also offers a range of flexible home mortgage loans with competitive rates to help you make homeownership that much more affordable. Plus, our online process is fast and simple.
Ready to see how much simpler a SoFi Home Mortgage Loan can be?
FAQ
How can I make my mortgage payment go down?
There are several ways to lower your monthly mortgage payment. A few options: You could refinance at a lower rate or longer term, or you could build enough equity to forgo mortgage insurance.
How can I lower my house payment without refinancing?
To lower your house payment without refinancing, you could appeal to lower your property taxes; you might apply a windfall to lower your principal; or you could rent out part of your property to bring in more income.
What is the average mortgage payment?
According to the C2ER’s 2022 Annual Cost of Living index, the average monthly mortgage payment in the U.S. is $1,768.
SoFi Mortgages
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com