And so it begins…

I’m not sure if it should be “So it begins” or if it should state “The end is near”.

Mortgage rates are now the highest they have been in 4 years. It marks the end of the 3% mortgage interest rates until we don’t know when… The changes in the real estate market begin which we will have to see how it plays out. Will this mark the end of a sellers’ market? Will it shift home prices? This is similar to predicting a hurricane path. We know some facts but there are variables that determine the end result. What we do know is that mortgage rates are rising and home sales are declining nationwide.

Let’s put this into numbers terms (its easier to follow than percentages). DISCLOSURE: The numbers were provided to me by a lender. I didn’t just come up with this on my own.

  30 Year Fixed Rate Mortgage
Interest Rate 4.5% 5.5%
Loan Amount $350,000 $350,000
Monthly Payment $1773 $1987

When I received the email from my lender I wanted to know what that means for my clients which are mostly buying in the $200,000 range. Buyers with a max loan amount of $200,000 (4.5%) with a 1% rate increase will then be looking at a max loan amount of $182,000. When looking at the current homes on the market that have 3 bedrooms, 2 baths, 2 car garage, there are only 1000 homes under $200k in the DFW area which goes from Corsicana to Sherman, Fort Worth to Dallas and their surroundings. If your loan amount drops to $182k your options decrease to 664 available homes. If you want to break it down even more, in Collin County there are only 2 homes under $182k and in Dallas County there are 82 homes.

I constantly hear clients say they want to wait so they can save more money.  There are down payment assistant programs to help you purchase your home and they aren’t just for 1st time home buyers.

TSAHC (http://www.tsahc.org/homebuyers-renters/loans-down-payment-assistance)

TSAHC provides mortgage loans and down payment assistance grants to eligible home buyers through the following programs:

  • Homes for Texas HeroesHome Loan Program: for teachers, fire fighters and EMS personnel, police and correctional officers, and veterans.
  • Homes Sweet Texas Home Loan Program: for Texas home buyers with low and moderate incomes.

SETH (http://www.sethfc.com/texas-5-star)

  • The program provides down payment and closing cost assistance in the form of a Grant, with no repayment or recapture of the assistance provided. This program is available in Texas excluding Travis County and the city limits of El Paso and Grand Prairie.

HOMEREADY https://www.fanniemae.com/singlefamily/homeready

 

If you are wanting to buy or sell do your research first which means find out what your options are even if you are not planning on buying/selling for a couple of months. If you are buying, find out if in your current situation you qualify for a home, will increasing your credit score improve your rate, what can you do to improve it and what programs exist to help you purchase a home. For sellers, find out what your current home value is, home much do you owe on your current loan, fees associated with selling your home and create a timeline as to when you need to sell by and purchase your new home if applicable.


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