Homebuyer's Guide from the Goldberg Mortgage Team - Spring 2024

ThingsToConsiderWhen BuyingaHome

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What’sHappeninginthe HousingMarketToday?

Youmightbethinkingabouthowthelatesthousingmarketnewswillaffectyour planstobuyahomethisspring.Herearethethreemostimportantquestionsyou shouldbeasking.

1.What’sGoingOnwithMortgageRates?

MortgagerateshavecomedownabitfromtheirmostrecentpeaklastOctober.And lookingforward,mostexpertsexpectthemtodeclinefurtheroverthecourseoftheyear, thoughwithsomevolatilityalongtheway.RickSharga,FounderandCEOatCJPatrick Company,explains:

“We’veseenmortgageratesinchbackup,andarelikelytoseethemzigzagin agraduallydownwarddirectionfortherestoftheyear...”

Andevenasmallchangeinmortgageratescanhaveabigimpactonyourpurchasing power,makingiteasierforyoutoaffordthehomeyouwantbyreducingyourmonthly mortgagepayment.

2.What’sUpwithHomePrices?

Eventhoughhomepricesarerisingacrossthecountry,somebuyersareworriedthey mightdrop.Youmightbeoneofthem.

Butexpertssaypriceswon'tfall,they'llactuallykeeprising.That'sbecausethere aren'tmanyhomesforsaleandbuyerdemandisstillhigh.Thosetwofactorswilllikely keepupwardpressureonhomepricesastheyearcontinues.AsSelmaHepp,Chief EconomistatCoreLogicsays:

“...demandforhomesinearly2024islikelytobestrongandwillagainput pressureonprices,similartotrendsobservedinearly2023...Mostmarkets willcontinuetoreachnewhomepricehighsoverthecourseof2024.”

Homepricesareexpectedtokeepgoingupthisyear.So,ifyou'rereadytobuy,it's bettertodoitsoonbecausewaitingmaymeanhigherpriceslater.

3.AreMoreHomesComingontotheMarket?

Inthepastyear,manyhomeownersdidn'twanttosellbecausemortgagerateswere high.Theypreferredtokeeptheirlowerratesinsteadofsellingandtakingonahigher rateontheirnexthome.Butnow,therearesignspeoplearereadytomoveagain.

Lowermortgageratesareencouragingmorehomeownerstoselltheirhouses.This increaseinhomesforsalemeansyoumighthavemorechoiceswhenlookingfora home.AccordingtoMarkFleming,ChiefEconomistatFirstAmerican:

“Thereisreasontobelievethattheratelock-ineffectwilleasemodestlythis yearasmortgageratescomedown.Andyoucouldonlyimagineiftheygot belowsix,thenevenmorepeoplewouldbeagain‘inthemoney’and homeownerswillbecomelessanchoredtothatlow,lowratethattheygot afewyearsago.”

BottomLine

Therearealotofthingstoconsiderwhenbuyingahome.Let’sconnectsoyouhavea housingmarketexpertwhocanansweryourquestions.Wecanchataboutwhat’s goingoninourareaandhowitappliestoyou.

Ifyou’reinafinancialpositiontodosoand readytostayputforatleastafewyears, buyingahouseistotallyworthit.You’ll gainstability,buildequityandretaina senseofownershipandcontrol,rather thanbeingatthewhimofalandlord.

-Bankrate

TheDifference BetweenRenting andBuyingaHome

BuyingaHome MeansAvoiding RisingRents

MedianAskingRent Since1988

WhenYouRent:

Yourmonthlypayment generallygoesupeachtime yousignorrenewalease.

Whendecidingbetween buyingahomeorrenting, thinkaboutthesethree importantfactors.

HomeownersOwn aTangibleand ValuableAsset

OwningYourHome GrowsYourWealth OverTime

WhenYouBuy:

Withyourfixed-rate mortgage,yourmonthly paymentislockedinforthe lengthofyourhomeloan.

...theaverageU.S. homeownerwitha mortgagestillhasabout $300,000inequity...

CoreLogic

WhenYouRent:

Youwon’tgetanyreturnon yourinvestmentasyoupay yourrentmonthly.

Amonthlymortgagepayment isoftenconsideredaforced savingsaccountthathelps homeownersbuildanet worthabout40times higherthanthatofarenter.

LawrenceYun ChiefEconomist,NAR

WhenYouRent:

Youwon’tgetanyreturnon yourinvestmentasyoupay yourrentmonthly.

WhenYouBuy:

Ashomepricesrise,andas youpaydownyourhome loan,youbuildequity.

WhenYouBuy:

Asyoubuildequitythrough theyears,yougiveyournet worthabigboost.

WhatLowerMortgageRatesMean forYourPurchasingPower

Ifyouwanttobuyahome,it’simportanttoknowhowmortgageratesimpact whatyoucanaffordandhowmuchyou’llpayeachmonth.

Mortgageratesdon’tmoveinastraightline.Instead,theybouncearoundbecausethey’re impactedbysomanydifferentfactors.Fortunately,ratesfor30-yearfixedmortgagesarelower thantheirmostrecentpeakatendoflastOctober.That’sgoodnewsforbuyers.Asarecent articlefromBankratesays:

“Theratecool-offsomewhateasesthehousingaffordabilitysqueeze.”

AndaccordingtoEdwardSeiler,AVPofHousingEconomicsandExecutiveDirectorofthe ResearchInstituteforHousingAmericaattheMortgageBankersAssociation(MBA): “MBAexpectsthataffordabilityconditionswillcontinuetoimproveasmortgagerates decline...”

Here’sabitmorecontextonhowthiscouldhelpwithyourplanstobuyahome.

Understandingtheconnectionbetweenmortgageratesandyourmonthlymortgagepaymentis crucialforyourplanstobecomeahomeowner.Thechartbelowillustrateshowyourabilityto affordahomechangeswhenmortgageratesshift.Imagineyourbudgetallowsforamonthly paymentbetween$2,400and$2,500.Thegreenboxesinthechartbelowshowpaymentsin thatrangeorlower.

Buyer’sPurchasingPower

MonthlyMortgagePayment(PrincipalandInterest)

Mortgage Interest Rate

PreBubble Bubble Bust

Principalandinterestpaymentsroundedtothenearestdollar.TotalMonthlypaymentmayvarybasedonloanspecificationssuchas propertytaxes,insurance,HOAdues,andotherfees.Interestratesusedhereareformarketingpurposesonly.Consultyourlicensed MortgageAdvisorforcurrentrates.

Source:Mortgagecalculator.net

Asyoucansee,evensmallchangesinratescanaffectyourbudgetandtheloanamountyou canafford.

GetHelpfromReliableExpertsToUnderstandYourBudgetandPlanAhead

Whenyou’relookingtobuyahome,it’simportanttogetguidancefromalocalrealestateagent andatrustedlender.Theycanhelpyouexploredifferentmortgageoptions,understandwhat makesmortgageratesgoupordown,andhowthosechangesimpactyou.

Bylookingatthenumbersandthelatestdatatogether,thenadjustingyourstrategybasedon today’srates,you’llbebetterpreparedandreadytobuyahome.

BottomLine

Ifyou’relookingtobuyahome,evenasmallchangeinmortgageratescanaffectyour move.Let’sconnecttoplanyournextsteps.

Lowerborrowingcostssincetheendof2023have broughtsomemuch-neededrelieftotheUShousing market....improvedaffordabilityhasmorebuyers wadingbackintothemarketandmoresellers listingtheirhomesastheygiveuptryingtotime themarket...

-BusinessInsider

MortgageRatesAreDownfromTheirRecentPeak

Whiletherecouldbesomefluctuationsinthepathforward...thegeneral expectationisthatmortgagerateswillcontinuetotrenddownward, aslongastheeconomycontinuestoseeprogressoninflation. JiayiXu,

Economist,Realtor.com

WagesAre IncreasingFaster ThanUsual

ThinkingAboutBuyingaHome?

AskYourselfThisQuestion

Ifyou’rethinkingofbuyingahomethisspring,here’sanimportantquestion youneedtoaskyourselfasyoumakeyourdecision.

WhereDoIThinkHomePricesAreHeading?

OnereliableplaceyoucanturntoforinformationonhomepriceforecastsistheHomePrice ExpectationsSurveyfromFannieMae–asurveyofoveronehundredeconomists,realestate experts,andinvestmentandmarketstrategists.Accordingtothemostrecentrelease,theexperts areprojectinghomepriceswillcontinuetoriseatleastthrough2028(seegraphbelow):

EstimatedHomePricePerformance

DecembertoDecember,asForecastinQ12024

Source:Q12024HPES

So,whydoesthismattertoyou?Whilethepercentofappreciationmaynotbeashighasitwasin recentyears,what’simportanttofocusonisthatthissurveysayswe’llseepricesrise,notfall,for atleastthenext5years.

Andhomepricesrising,evenatamoremoderatepace,isgoodnewsnotjustforthemarket,but foryoutoo.Itmeans,bybuyingnow,yourhomewilllikelygrowinvalue,andyoushouldgain homeequityintheyearsahead.But,ifyouwait,basedontheseforecasts,thehomewillonlycost youmorelateron.

BottomLine

Ifyou’rethinkingaboutbuyingahome,youneedtoknowwhat’sexpectedwithhome prices.Whilenoonecansayforcertainwherethey’llgo,makingsureyouhavethe latestinformationcanhelpyoumakeaninformeddecision.Let’sconnectsoyoucan stayuptodateonwhat’shappeningandwhythisissuchgoodnewsforyou.

Ifyou’rethinkingaboutbuyinga homethisyear,besureto considerthelong-termfinancial benefitsofhomeownership.

Equityisthecurrentvalueofyourhomeminus whatyoustilloweonyourloan.Itgoesupwhen:

•Youpaydownyourloan

•Homepriceappreciation makesyourhome’svaluegoup

Here’salookathowjustthehomepriceappreciationpiececanincreaseyourwealthovertime.

SinceQ11991,Q42023

AreMoreHomeownersSelling?

Ifyou’relookingtobuyahome,theoveralldownwardtrendinmortgagerates isgoodnewsbecauseithelpswithaffordability.Butthere’sanotherwaythis benefitsyou–itmayinspiremorehomeownerstoputtheirhousesupforsale.

TheMortgageRateLock-InEffect

Overthepastyear,onefactorthat’sreallylimitedtheoptionsforyourmoveishowfewhomes wereonthemarket.That’sbecausemanyhomeownerschosetodelaytheirplanstosellonce mortgagerateswentup.AnarticlefromFreddieMacexplains:

“Thelackofhousingsupplywaspartlydrivenbytheratelock-ineffect....Withhigher rates,theincentiveforexistinghomeownerstolisttheirpropertyandmovetoanewhouse hasgreatlydiminished,leavingthemratelocked.”

Thesehomeownersdecidedtostayputandkeeptheircurrentlowermortgagerate,ratherthan moveandtakeonahigheroneontheirnexthome.

EarlySignsShowHomeownersAreReadyToMoveAgain

AccordingtodatafromRealtor.com,thereweremorehomeownersputtingtheirhousesupfor sale,knownintheindustryasnewlistings,inJanuary2024comparedtoJanuary2023(see graphbelow):

SellersAreRe-EnteringtheMarket

20172018201920202021202220232024

Here’swhythisissosignificant.Thisisthefirsttimesince2019thatwe’veseenanuptickin newlistingsthistimeofyear.Thiscouldbeasignalthattheratelock-ineffectiseasingabit.

WhatThisMeansforYou

Whilethereisn’tgoingtosuddenlybeaninfluxofoptionsforyourhomesearch,itdoesmean moresellersmaybedecidingtolist.AccordingtoarecentarticlefromtheJointCenterfor HousingStudies(JCHS):

“Areductionininterestratescouldalleviatethelock-ineffectandhelplifthomeowner mobility.Indeed,interestrateshaverecentlydeclined,fallingbyafullpercentagepoint fromOctobertoNovember2023...Furtherdecreaseswouldreducethebarrierto movingandgivehomeownerslookingtosellanewfoundsenseofurgency...”

Andthatmeansyoumayseemorehomescomeontothemarkettogiveyoumorefreshoptions tochoosefrom.

BottomLine

Asmortgageratescomedown,moresellersmayre-enterthemarket–thatgivesyou anopportunitytofindthehomeyou’relookingfor.Let’sconnectsoyou’vegotalocal expertonyoursidewho’llhelpyoustayontopofthelatestlistingsinourarea.

WhyPre-ApprovalIsEven MoreImportantThisSpring

Ontheroadtobecomingahomeowner?Ifso,youmayhaveheardthetermpreapprovalgettossedaround.Let’sbreakdownwhatitisandwhyit’simportant ifyou’relookingtobuyahomethisspring.

WhatIsPre-Approval?

FreddieMacexplainsitlikethis:

“Apre-approvalisanindicationfrom yourlenderthattheyarewillingto lendyouacertainamountofmoney tobuyyourfuturehome.... Keepinmindthattheloanamountin thepre-approvalletteristhelender’s maximumoffer.Ultimately,you shouldonlyborrowanamountyou arecomfortablerepaying.”

Now,thatlastpieceisespecially important.Whilehomeaffordabilityis gettingbetter,it’sstilltight.So,getting agoodideaofwhatyoucanborrow canhelpyoureallywrapyourhead aroundthefinancialsideofthings.It doesn’tmeanyoushouldborrowthe fullamount.Itjusttellsyouwhatyou canborrowfromthatlender.

HowDoesItWork?

Aspartofthehomebuyingprocess, alenderlooksatyourfinancesto determinewhatthey’rewillingto loanyou.AccordingtoInvestopedia, thisincludesthingslikeyourW-2,tax returns,creditscore,bankstatements, andmore.Fromthere,they’llgiveyou apre-approvallettertohelpyouknow howmuchmoneyyoucanborrow.

Thissetsyouuptomakeaninformed decisionaboutyournumbers.Thatway you’reabletotailoryourhomesearch towhatyou’recomfortablewithbudgetwiseandcanactfastwhenyoufinda homeyoulove.

WhyPre-ApprovalIsSoImportantThisSpring

Ifyouwanttobuyahomethisspring,there’sanotherreasonyou’regoingtowanttobe sureyou’reworkingwithatrustedlendertomakethisapriority.

Whilemorehomesarebeinglistedforsale,theoverallnumberofavailablehomesis stillbelowthenorm.Atthesametime,therecentdownwardtrendinmortgagerates comparedtolastyearisbringingmorebuyersbackintothemarket.Thatimbalanceof moredemandthansupplycreatesabitofatug-of-warforyou.

Itmeansyou’lllikelyfindyouhavemorecompetitionfromotherbuyersasmoreand morepeoplewhoweresittingonthesidelineswhenmortgagerateswerehigherdecide tojumpbackin.Butpre-approvalcanhelpwiththattoo.

Pre-approvalshowssellersyoumeanbusinessbecauseyou’vealreadyundergonea creditandfinancialcheck.AsGregMcBride,ChiefFinancialAnalystatBankrate,says:

“Preapprovalcarriesmoreweightbecauseitmeanslendershaveactuallydone morethanacursoryreviewofyourcreditandyourfinances,buthaveinstead reviewedyourpaystubs,taxreturnsandbankstatements.Apreapproval meansyou’veclearedthehurdlesnecessarytobeapprovedfora mortgageuptoacertaindollaramount.”

Sellerslovethatbecausethatmakesitmorelikelythesalewillmoveforwardwithout unexpecteddelaysorissues.Andifyoumaybecompetingwithanotherbuyertoland yourdreamhome,whywouldn’tyoudothistohelpstackthedeckinyourfavor?

BottomLine

Ifyou’relookingtobuyahomethisspring,knowthatgettingpre-approvedisgoingto beakeypieceofthepuzzle.Withmorebuyerscomingbacktothemarket,thiscanhelp youmakeastrongofferthatstandsoutfromthecrowd.

ThingsToAvoid AfterApplyingfor aMortgage

Don’tchangebankaccounts.

Don’tdepositcash intoyourbank accountsbefore speakingwithyour bankorlender.

Don’tmakeany largepurchases.

Consistencyisthenameofthegame afterapplyingforamortgage.Besureto discussanychangesinincome,assets, orcreditwithyourlender,soyoudon’t jeopardizeyourapplication.

Don’tapplyfornewcreditor closeanycreditaccounts.

Don’tco-signother loansforanyone.

Thebestplanistofullydiscloseanddiscussyourintentions withyourlenderbeforeyoudoanythingfinancialinnature.

AdviceforMakingYourStrongest OfferonaHome

Thehousingmarketiscompetitiveinmanyplacesrightnowbecausethere aren'tmanyhomesforsale.Ifyou'replanningtobuyahomethisspring,here aresometipstohelpyoumakeastrongoffer.

1.LeanonaRealEstateProfessional

Relyonanagentwhocansupportyourgoalsandhelpyouunderstandwhat’s happeningintoday’shousingmarket.Agentsareexpertsinthelocalmarketandonthe nationaltrendstoo.They’llusebothofthoseareasofexpertisetomakesureyouhave alltheinformationyouneedtomovewithconfidence.

Plus,theyknowwhat’sworkedforotherbuyersinyourareaandwhatsellersmaybe lookingforinanoffer.Itmayseemsimple,butcateringtowhatasellerneedscanhelp yourofferstandout.AsanarticlefromForbessays:

"Gettingtoknowalocalrealtorwhereyou’rehopingtobuycanalsopotentially giveyouacrucialedgeinatighthousingmarket.“

2.GetPre-ApprovedforaHomeLoan

Havingaclearbudgetinmindisespeciallyimportantrightnowgivencurrent affordabilitychallenges.Thebestwaytogetaclearpictureofwhatyoucanborrowisto workwithalendersoyoucangetpre-approvedforahomeloan.

That’llhelpyoubemorefinanciallyconfidentbecauseyou’llhaveabetterunderstanding ofyournumbers,anditalsoshowssellersyou’reaseriousbuyer.Andthatcangiveyou acompetitiveedgeifyoudogetintoamultipleofferscenario.

3.MakeaFairOffer

It’sonlynaturaltowantthebestdealyoucangetonahome.However,submittingan offerthat’stoolowdoeshavesomerisks.Youdon’twanttomakeanofferthatwillbe tossedoutassoonasit’sreceivedjusttoseeifitsticks.AsRealtor.comexplains:

“...anofferpricethat’ssignificantlylowerthanthelistingprice,isoftenrejected bysellerswhofeelinsulted...ifasellerisoffendedbyabuyerorisn’ttaking thebuyerseriously,there’snotmuchyou,ortherealestateagent,cando.”

Theexpertiseyouragentbringstothispartoftheprocesswillhelpyoustay competitiveandfindapricethat’sfairtoyouandtheseller.

4.TrustYourAgent’sExpertiseThroughoutNegotiations

Overthepastfewyears,somebuyersskippedhomeinspectionsordidn’taskfor concessionsfromthesellerinordertosubmitthewinningbidonahome.Anarticle fromBankrateexplainsthisisn’thappeningasoftentodayandthat’sgoodnews:

“It’sinthebuyer’sbestinteresttohaveahomeinspected...Inspectionsalert youtoexistingorpotentialproblemswiththehome,givingyounotjustanearly headsupbutalsoausefulnegotiatingtactic.”

Fortunately,today’smarketisdifferent,andyoumayhavemorenegotiatingpowerthan before.Whenputtingtogetheranoffer,yourtrustedrealestateadvisorwillhelpyou thinkthroughwhatleverstopullandwhichonesyoumaynotwanttocompromiseon.

BottomLine

Whenyougotobuyahomethisspring,let'stalksoyoucanhaveanexpertonyour teamtohelpyoumakeyourtopoffer.

WhyYouShouldUseaRealEstate

AgentWhenYouBuyaHome

Ifyou’vedecidedyou’rereadytobecomeahomeowner,chancesareyou’re tryingtofigureoutwhattodofirst.Itcanfeelabitoverwhelmingtoknow wheretostart,butthegoodnewsisyoudon’thavetonavigateallofthatalone.

Whenitcomestobuyingahome,therearealotofmovingpieces.Andthat’sespeciallytruein today’shousingmarket.Thenumberofhomesforsaleisstilllow,andhomepricesandmortgage ratesarestillhigh.Thatcombinationcanbetrickyifyoudon’thavereliableexpertiseanda trustedadvisoronyourside.That’swhythebestplacetostartisconnectingwithalocalreal estateagent.

AgentsArethe#1MostUsefulSourceintheBuyingProcess

ThelatestannualreportfromtheNationalAssociationofRealtors(NAR)findsrecent homebuyersagreethe#1mostusefulsourceofinformationtheyhadinthehomebuyingprocess wasarealestateagent.Let’sbreakdownwhy.

HowanAgentHelpsWhenYouBuyaHome

Whenyouthinkaboutarealestateagent,youmaythinkofsomeonetakingyouonhome showingsandputtingtogetherthepaperwork,butagreatagentdoessomuchmorethanthat. It’snotjustbeingthefacilitatorforyourpurchase,it’sbeingyourguidethrougheverystep.

ThelistbelowusesthatsameNARreleasetoshowsomeexamplesofthemanywaysanagent addsvalue.Itincludesthepercentageofhomebuyersinthatreportwhohighlightedeachof thesebenefits:

•HelpedBuyerUnderstandtheProcess(61%):Doyouknowthedifferencebetween aninspectionandanappraisal,whateachreporttellsyou,andwhythey’reboth important?Orthattherearethingsyoushouldn’tdoafterapplyingforamortgage,like buyingappliancesorfurniture?Anagentknowsallofthesebestpracticesandwill sharethemwithyoualongtheway,soyoudon’tmissanykeystepsbythetimeyou gettotheclosingtable.

•PointedOutUnnoticedFeaturesorFaultswiththeHome(58%):Anagentalsohas alotofexperienceevaluatinghomes.They’vetrulyseenitall.They’llbeableto pinpointsomethingsyoumaynothavenoticedaboutthehomethatcouldhelpinform yourdecisionoratleastwhatrepairsyouaskfor.

•ProvidedaBetterListofServiceProviders(46%):Inarealestatetransaction,there arealotofpeopleinvolved.Anagenthasexperienceworkingwithvarious professionalsinyourarea,likehomeinspectors,andcanhelpconnectyouwiththe prosyouneedforasuccessfulexperience.

•NegotiatedBetterSalesContractTermsandaBetterPrice(46%and33%):Did somethingpopupinthehomeinspectionorwiththeappraisal?Anagentwillhelpyou re-negotiateasneededtogetthebesttermsandpricepossibleforyou,soyoufeel confidentwithyourbigpurchase.

•ImprovedBuyer’sKnowledgeoftheSearchArea(45%):Movingtoanewtownand you’renotfamiliarwiththearea,oryou’restayingnearby,butdon’tknowwhich neighborhoodsaremostaffordable?Eitherway,anagentknowsthelocalarealikethe backoftheirhandandcanhelpyoufindtheperfectlocationforyourneeds.

•ExpandedBuyer’sSearchArea(21%):Andifyou’renotfindinganythingyou’re interestedinwithinyourinitialsearchradius,anagentwillknowotherneighborhoods nearbyyoushouldconsiderbasedonwhatyoulike,whatamenitiesyouwant, andmore.

BottomLine

Ifyou’relookingtobuyahome,don’tforgetaboutthemanywaysanagentisessential tothatprocess.Anyhurdlethatpopsup,anegotiationthatneedstotakeplace,and more,youragentwillknowhowtohandleitwhiletheymakesuretominimizeyour stressalongtheway.Let’sconnecttotackleittogether.

“Buyingahousecanbeoneofthemostdifficultand complicatedpurchasesyoumakeinyourlifetime.Not onlyistheamountofmoneyyou’redealingwith substantial,themany,manylegalinsandoutsofreal estatetransactionscanbeconfusingforsomeonewho doesn’tworkdirectlyinthefield.Thisiswhymany homebuyersuseabuyer’sagentwhenthey’re searchingforanewhometopurchase.”

-U.S.News