The mortgage situation has been on the front pages since last August with more discussion of mortgages in the media than probably anytime in history. The positive aspect that is not emphasized is mortgage rates are at 40-year lows and mortgage money is very available. Lower rates mean that homebuyers can purchase a more expensive home for the same monthly payment. A recent positive development is the coming increase in loan limits within a few months. Currently any loan greater than $417,000 is considered a jumbo loan given at higher rates. The higher limits coming for many conventional loan programs and FHA will mean more purchasing power for buyers.
What is making the news more often is the other side of this positive picture. As people were seeing double digit annual home appreciation in the first half of this decade, many new loans and refinancings allowed loans around 100% of the home value assuming the next year would bring higher values. But as inventories rose, instead of upward pressure on prices, the opposite happened and some homeowners were upside down in a similar fashion as some people are with their car loans.
Also, those with adjustable rate mortgages, and those who should not have entered into a home loan due to their financial situation, are finding themselves with a loan they cant afford in a home with a value lower than the loan amount. This situation can result in foreclosure action. However with all the media attention, foreclosures affect only about 1% of homeowners in our area.
What does the current mortgage situation mean for most of us? Buyers can buy a more expensive home for their monthly payment. Sellers who then buy another home are selling lower, but buying lower to their advantage with a possible lower rate and payment. If you would like to discuss anything about the current market with The belt Team, fell free to give us a call at (703) 242-3975.