Mortgage rates are now at their highest level in four years and poised to move even higher. The timing couldn't be worse, as the usually busy spring housing market kicked into gear early this year amid higher home prices and strong competition for a record low supply of homes for sale. Mortgage rates have not been at 5 percent since 2011. Just 6 percent said they would drop their plans to buy altogether. About one-fifth of consumers said 5 percent rates would cause them to move with more urgency to purchase a home, fearing rates would rise even further. Another fifth said they would consider more affordable areas or just buy a smaller home. Specifically, the deduction on property taxes is now limited to $10,000. Some have claimed that higher rates and the new tax law will put downward pressure on home prices, alleviating some of the current sticker shock, but other factors are fighting that assertion. "There are still many more buyers than the current housing supply can support, with no major relief in sight." Higher mortgage rates may mean some borrowers on the margins will not qualify for the size of the loan they need or want.
While a second mortgage may not be a preferred financial option, unexpected expenses or other budget crunches may make it a requirement. Lesser loan. The second mortgage “must be subordinated to the VA-guaranteed loan,” per the handbook. In lender parlance, that makes it a “junior lien.” Put simply, you can’t borrow more on the second go-round than you did for in the first loan. The loan can be used for closing costs or other purposes related to the first mortgage. It can even be used for a down payment, but only as part of meeting “secondary market requirements of the lender,” not to cover down-payment dollars required by VA to make up for a home priced higher than the agency’s “reasonable value.” 3. No cash. While the rest of VA second-mortgage rules leave a bit of wiggle room (with words like “may” and “should”), those using the benefit are explicitly not allowed to get cash back as part of their borrowing. Second mortgages can come with a higher interest rate than the first mortgage, but should be within industry standards, per the guidance. That’s part of the requirement that whatever deal is made not limit the borrower’s ability to sell the house; it’s part of an “assumability” provision.
“The Consumer Financial Protection Bureau found that nearly half of home buyers do not look for mortgages with more favorable interest rates. Why?” Well, for one: It’s the Wild West out there. If you’ve gotten even a third of the way through the home-buying process, you know there’s enough paperwork to fill what was supposed to be the guest bedroom in your new place. The process is overwhelming—so much so that simply getting a preapproval from one lender feels like a win. But you shouldn’t stop there! While the market dictates where interest rates hover, different banks and lenders have different offers, so call around and get at least a handful of different quotes before settling. It’s often the case, too, that bigger lenders will match or beat better offers you get—but that’s not something they usually advertise. You have to get in there and play the game. In Worth It, Steinberg uses a $100,000 mortgage example: If you pay this off over 30 years, you’ll end up paying over $71,000 on top of the mortgage amount. Whatever you do: Shop around, and know that almost everything involved in buying a house is negotiable—the mortgage included.
A year into President Donald Trump’s term, the overall U.S. housing market remains strong. “It’s not so much what the event was, just that it’s over,” Mr. Miller said. “So it’s more a question of what the party will do, rather than put it all on Trump.” And it could be up to two years before the effects of any policy changes made during his administration will be manifest in the U.S. real estate market, Mr. Andres Carbacho-Burgos said. “What the housing market had been starved for under President Obama was inventory,” Ms. Richardson said. The overall market, however, was up 6.9% to $234,851. On the high-end of the market, Mr. Miller said there’s still too much “aspirational pricing,” which is one of the reasons sales are softer for luxury homes than lower-priced homes. This has more impact on the high end of the market, less impact on the lower end. “It took years to get there, and now we have to do it again.” The tax bill Although the tax law is now a done deal, it’s still unclear how far-reaching the ramifications will be. “It’s not so much what the event was, just that it’s over,” Mr. Miller said. “Once people can get their arms around it and make calculations, they can re-enter the market.” He added that was from his observations only, as the final numbers on sales are not yet available.
A gap in employment can be a tough thing to explain, especially on a mortgage application. How about that period you spent out of work while you were going back to school? According to the experts, that's a big, fat affirmative—mortgage lenders need to have your full financial story, warts and all. How detrimental is a gap in employment on a mortgage application? Employment history on a mortgage application is something lenders look at in order to decide if you're going to be able to make your monthly payments and eventually pay off your home loan. After all, if you default on a mortgage, a lender is left holding the bag. According to Huettner, there are a number of red flags that can be found in an employment history, and they may require a deeper look by a mortgage underwriter—or they may keep you from qualifying for a home mortgage entirely. The biggest employment history concerns for lenders on a mortgage application include the following: Gaps in employment Frequent job changes Having been employed for less than two years Large changes in income (both increases and decreases) What if your employment history has a red flag? If you're self-employed, lenders want to see at least two years of self-employment to verify that you can make it on your own and still pay your bills on time, says Huettner. The law serves to identify who can repay a mortgage.
While the uptick in homeownership is nowhere near pre-recession levels, it marks a significant shift from a decade ago, when an unstable job market kept most consumers from even contemplating the purchase of a home. Rates have remained reasonably low, so affordability is possible as well.” “If you look at some of the fintech companies using data science to underwrite people, they are finding people who are very good risks to lend to that they’re starting to bring into the market.”–Richard K. Green Buying Becomes More Attractive as Rents Rise As the saying goes in real estate, it’s all about location. Rising rents, especially along the coasts, “is really shifting the trade-off between owning versus renting,” Keys said. After watching your rent go up and up and up, and potentially bouncing around to look for more affordable rental units, at some point you realize it actually makes sense to buy.” But Sussman points out that money is still a barrier to home buying. It’s likely to remain low as we look forward in the next decade or two.” “After watching your rent go up and up and up, and potentially bouncing around to look for more affordable rental units, at some point you realize it actually makes sense to buy.”–Benjamin Keys It All Comes Back to Supply and Demand Supply and demand is driving up the prices for both renting and purchasing homes. That generation has a homeownership rate of 80%, and they are staying in place as they age. These older Americans are renting out their homes or passing them along to the next generations while they move into apartments. “The biggest change, in many ways, has been toward carefully underwriting the ability to repay. “It’s possible we’ll have a whole new platform that will allow less traditional kinds of borrowers to get approved for loans,” he said. “If the marriage rate stays depressed, then I think the homeownership rate will stay depressed.
At that time, landlords raced to buy in a bid to avoid the 3 per cent surcharge being introduced on all new buy-to-let and second home purchases from April that year. If you borrowed close to the maximum loan-to-value two years ago, then you are going to face much stricter lending criteria, which includes greater affordability tests. He suggested that many of the landlords who bought new properties in March 2016 and rushed to beat the deadline will have taken out popular two-year fixed rate deals. And in the same year, the Bank of England introduced new rules meaning landlords need more rental income to cover their mortgage costs. It equates to almost 80,000 properties being bought in that month, with Mr Boulger suggesting that around 70,000 would have been bought as buy-to-let properties due to the approaching stamp duty changes deadline. He explained that a significant of buy-to-let properties were bought with cash two years ago to meet the stamp duty deadline. Why landlords raced to beat the stamp duty deadline Landlords took such extreme measures as it meant they could save significant amounts of money. He said: 'Although some of the increase in the number of properties purchased was due to cash buyers, the huge increase in mortgage completions was mainly due to buy-to-let and a good proportion - more than 50 per cent - of these purchases were on two year fixed rates.' Many landlords will have no other option than to stick with their existing lender as they fail to meet the stricter lending criteria imposed on potentially better deals elsewhere. Mr Boulger said: 'Many landlords who had a loan-to-value in excess of 60 per cent will struggle to remortgage but they will be able to get another deal with their existing lender.'
In a conversation with HousingWire's Sarah Wheeler, Hoffman discussed blockchain technology in relation to the mortgage industry. "We’re still in early stages of this, so I equate it to an automobile on a dirt road behind a horse and buggy. Our infrastructure is not there yet, but it is being developed.” Hoffman said. It will not take away jobs but it will change how we do things.” Hoffman explained to conference attendees the originations of blockchain and stressed the differences between it and bitcoin, which is commonly confused with blockchain. "They’re not the same thing," Hoffman explained. "Blockchain is the technology behind digital currencies, such as bitcoin or others," Hoffman said. "Whatever comes of bitcoin or others, the technology still remains." In an interview with HousingWire, Hoffman explained her goal in the mortgage space is to help people understand the importance and the uses of blockchain technology. "Without any discussions, your executive leaders are not going to push the technology forward," she said. "Yes, it’s technology, but so was the Internet and you don’t need to understand all the inner-workings of the Internet, but you need to understand how you can power it to help your business move forward.”
At one family gathering, a cousin began talking about how he bought a brand new home and sold his own home all without a real estate agent on a site called Homie. Johnny Hanna, who had previously developed the successful real estate lead-gen software Entrata, started the agent-less real estate site with a few friends in hopes of taking some of the frustration out of the process of buying and selling a home. He tells TechCrunch Homie has taken over the millennial market along the Wasatch Front, the area linking a mountainous region from Provo to Ogden, Utah, since launching 18 months ago, and it now plans to do the same in Phoenix, Arizona. Hanna also mentioned he could possibly expand Homie to Vegas, Dallas, Denver and about five to 10 metro areas in the next year. But so far, the startup has only sold about 1,700 homes on the platform — all in the aforementioned Wasatch Front region. “We looked at a lot of different markets in the U.S. and identified the ones that make the most sense,” Hanna said. You don’t need a human to show you the same house over and over when one is like the next and it’s more about negotiating price. So far, the startup has raised about $9 million in seed funding and is currently seeking another $10 to $15 million in Series A financing to help it scale in the next year. Hanna, a realtor himself, is okay with that bit. Even if that means one more human job will be taken over by a bot.
A tweet by Mike Rosenberg, a business reporter at the Seattle Times, offers a link to an interesting document released by the Association of Foreign Investors in Real Estate (AFIRE). The document the organization dropped is called "London Edges Out NY as Top City Among Foreign RE Investors." It mainly concerns the global investor class's renewed interest in London's real estate market after a period of uncertainly caused by the 2016 passing of Brexit. As a consequence, London's real estate market is once again the top target for what I call global surplus capital. Interesting enough, AFIRE rates Seattle as the third-best city in the US. The former condition has meant slow growth and few investment opportunities for the latter; yet it is the owners of the latter who place great political pressure on advanced capitalist states to keep wages low or stagnant. It appears to investors around the world like a Mount Rainier on a prairie. They soon send their capital in that direction, and this capital almost immediately inflates already inflated values in that sector or that region. Seattle is not like Dubai, a global city that has no illusions about the investor class and what it can do to a city's economy. This is yet another contradiction of capitalism.