Last year, the Federal Reserve took action to try to bring down inflation. In response to those efforts, mortgage rates jumped up rapidly from the record lows we saw in 2021, peaking at just over 7% last October. Hopeful buyers experienced a hit to their purchasing power as a result, and some decided to press pause on their plans.
Today, the rate of inflation is starting to drop. And as a result, mortgage rates have dipped below last year’s peak. Sam Khater, Chief Economist at Freddie Mac, shares:
“While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023.”
That’s potentially great news if you’re a buyer aiming to jump back into the housing market. Any drop in mortgage rates helps boost your purchasing power by bringing down your expected monthly mortgage payment. This means the lower mortgage rates experts forecast this year could be just what you need to reignite your homebuying goals.
While this opens up a window of opportunity for you, remember: you shouldn’t expect rates to drop back down to record lows like we saw in 2021. Experts agree that’s not the range buyers should bank on. Greg McBride, Chief Financial Analyst at Bankrate, explains:
“I think we could be surprised at how much mortgage rates pull back this year. But we’re not going back to 3 percent anytime soon, because inflation is not going back to 2 percent anytime soon.”
It’s important to have a realistic vision for what you can expect this year, and that’s where the advice of expert real estate advisors is critical. You may be surprised by the impact even a mild drop in mortgage rates has on your budget. If you’re ready to buy a home now, today’s market presents the opportunity to get a more affordable mortgage rate, find your dream home, and face less competition from other buyers.
The recent pullback in mortgage rates is great news – but if you’re ready to buy now, holding out for 3% is a mistake. Work with a local lender to learn how today’s rates impact your goals, and contact The Belt Team to explore your options in our area.
If you’ve been thinking of buying a home, you may have been watching what’s happened with mortgage rates over the past year. It’s true they’ve risen dramatically, but where will they go from here, especially as the market continues to slow?
As you think about your homeownership goals and decide if now’s the time to make your move, the best place to turn to for that information is the professionals. Here’s a summary of the latest mortgage rate forecasts from housing market experts.
Experts Project Mortgage Rates Will Stabilize
While mortgage rates continue to fluctuate due to ongoing inflationary pressures and economic uncertainty, experts project they’ll start to stabilize in the months ahead. According to the latest projections, mortgage rates are expected to hover in the low to mid 5% range initially, and then potentially dip into the high 4% range by later next year (see chart below):
That could bring you some welcome relief. So far this year, mortgage rates have climbed over 2% due to the Federal Reserve’s response to inflation, and that’s made it more expensive to buy a home. And wondering if the rise in rates will continue is keeping some prospective buyers on the sidelines.
But now that experts say mortgage rates should stabilize, this gives you a bit more certainty about what they think the future holds, and that may help you feel more confident about your decision to buy a home.
Whether you’re looking to buy your first home, move up to a larger home, or even downsize, you need to know what’s happening in the housing market so you can make the most informed decision possible.
Contact Terry Belt and The Belt Team to discuss your goals and determine the best plan for your move.
In the last few weeks, the average 30-year fixed mortgage rate from Freddie Mac inched up to 5%. While that news may have you questioning the timing of your home search, the truth is, timing has never been more important. Even though you may be tempted to put your plans on hold in hopes that rates will fall, waiting will only cost you more. Mortgage rates are forecast to continue rising in the year ahead.
If you’re thinking of buying a home, here are a few things to keep in mind so you can succeed even as mortgage rates rise.
How Rising Mortgage Rates Impact You
Mortgage rates play a significant role in your home search. As rates go up, they impact how much you’ll pay in your monthly mortgage payment, which directly affects how much you can comfortably afford. Here’s an example of how even a quarter-point increase can have a big impact on your monthly payment (see chart below):
With mortgage rates on the rise, you’ve likely seen your purchasing power impacted already. Instead of delaying your plans, today’s rates should motivate you to purchase now before rates increase more. Use that motivation to energize your search and plan your next steps accordingly.
The best way to prepare is to work with a trusted real estate advisor now. An agent can connect you with a trusted lender, help you adjust your search based on your budget, and make sure you’re ready to act quickly when it’s time to make an offer.
Serious buyers should approach rising rates as a motivating factor to buy sooner, not a reason to wait. Waiting will cost you more in the long run. Let’s connect today so you can better understand your budget and be prepared to buy your home even before rates climb higher.
When it comes to buying a home, it can feel a bit intimidating to know how much you need to save and where to find that information. But you should know, you’re not expected to have all the answers yourself. There are many trusted professionals who can help you understand your finances and what you’ll need to budget for throughout the process.
To get you started, here are a few things experts say you should plan for along the way.
1. Down Payment
As you set your savings goal for your purchase, your down payment is likely already top of mind. And, like many other people, you may believe you need to set aside 20% of the home’s purchase price for that down payment – but that’s not always the case. The National Association of Realtors (NAR) says:
“One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership. Having this knowledge is critical to know what to save . . .”
The good news is, you may be able to put as little as 3.5% (or even 0%) down in some situations. To understand your options, partner with a trusted professional who can go over the various loan types, down payment assistance programs, and what each one requires.
2. Earnest Money Deposit
Another item you may want to plan for is an earnest money deposit. While it isn’t required, it’s common in today’s highly competitive market because it can help your offer stand out in a bidding war.
So, what is it? It’s money you pay as a show of good faith when you make an offer on a house. This deposit works like a credit. You’re using some of the money you already saved for your purchase to show the seller you’re committed and serious about their house. It’s not an added expense, it’s just paying some of that up front. First Americanexplains what it is and how it works:
“The deposit made from the buyer to the seller when submitting an offer. This deposit is typically held in trust by a third party and is intended to show the seller you are serious about purchasing their home. Upon closing the money will generally be applied to your down payment or closing costs.”
In other words, an earnest money deposit could be the very first check you’ll write toward your purchase. The amount varies by state and situation. Realtor.com elaborates:
“The amount you’ll deposit as earnest money will depend on factors such as policies and limitations in your state, the current market, what your real estate agent recommends, and what the seller requires. On average, however, you can expect to hand over 1% to 2% of the total home purchase price.”
Work with a real estate advisor to understand any requirements in your local area and what they’ve recommended for other buyers in your market. They’ll help you determine if it’s something that could be a useful option for you.
3. Closing Costs
The next thing to plan for is your closing costs. The Federal Trade Commission (FTC) defines closing costs as:
“The upfront fees charged in connection with a mortgage loan transaction. …generally including, but not limited to a loan origination fee, title examination and insurance, survey, attorney’s fee, and prepaid items, such as escrow deposits for taxes and insurance.”
Basically, your closing costs cover the fees for various people and services involved in your transaction. NAR has this to say about how much to budget for:
“A home costs more than just the sale price. For example, closing costs—which make up about 2% to 5% of the home’s purchase price—are a major added expense…Lenders provide a Closing Disclosure at least three business days prior to closing on a mortgage. But buyers will need to budget for these added costs ahead of time to avoid sticker shock days before closing.”
The key takeaway is savvy buyers plan ahead for these expenses so they can come into the process prepared. Freddie Macsums it up like this:
“If you’re in the market to buy a home, your down payment is probably top of mind. And rightly so – it’s likely the biggest cost of homebuying. However, it is not the only cost and it’s critical you understand all your expenses before diving in.The more prepared you are for your down payment, closing and other costs, the smoother your homebuying journey will be.”
Knowing what to budget for in the homebuying process is essential. To make sure you understand these and any other expenses that may come up, let’s connect so you have reliable expertise on what to expect when you buy a home.
It’s tough out there in the real estate market for buyers! They are dealing with an unprecedented seller’s market (very low inventory = lots of competition), rising home prices and possibly rising interest rates. Here are a few tips from our CEO, Terry Belt, on how buyers can be successful in this market (watch video below).
Are you ready to buy? Make sure you work with a very experienced agent who can help you navigate these tricky waters! If you are in the Northern Virginia area…give us a call and let our 55 years of experience work for you! 703-242-3975. Or shoot us an email at Info@TheBeltTeam
Besure to follow our blog, as well as our pages on Facebook & Instagram and our YouTube channel, to get our updates on the real estate market, community happenings and much more!
There’s no denying the financial benefits of homeownership, but what’s often overlooked are the feelings of gratitude, security, pride, and comfort we get from owning a home. This year, those emotions are stronger than ever. We’ve lived through a time that has truly changed our needs and who we are, and as a result, homeownership has a whole new meaning for many of us.
“Last year, staying home became a necessity and that caused many homeowners to have renewed gratitude for the roof over their head.”
As a nation, we continue to work through the challenges of a pandemic that’s pushed us all to new limits. Over the past year and a half, we’ve spent more time than ever at home: working, eating, schooling, exercising, and more. The world around us changed almost overnight, and our homes were redefined. Our needs shifted, and our shelters became a place that protected us on a whole new level. The same study from Unison notes:
91% of homeowners say they feel secure, stable, or successful owning a home
64% of American homeowners say living through a pandemic has made their home more important to them than ever
83% of homeowners say their home has kept them safe during the COVID-19 pandemic
It’s no surprise this study also reveals that homeowners are now more emotionally attached to their homes as well:
As we’ve learned throughout this health crisis, homeownership can provide the safety and security we crave in a time of uncertainty. That sense of connection and emotional stability genuinely reaches beyond just the financial aspect of owning a home. As JD Esajian, President of CT Homes, LLC, says:
“Aside from the financial factors, there are several social benefits of homeownership and stable housing to consider. It has long been thought that buying a home contributes to a sense of accomplishment. Still, most individuals fail to realize that homeownership can benefit your mental health and the community around you.”
Whether you’re thinking of buying your first home, moving up to your dream home, or downsizing to something that better fits your changing lifestyle, take a moment to reflect on what Mark Fleming, Chief Economist at First American,notes:
“Buying a home is not just a financial decision. It’s also a lifestyle decision.”
If you’re considering buying a home, it’s not entirely about the dollars and cents. Reach out to The Belt Team if you would like to discuss the non-financial benefits that may truly change your life when you need them most.
Let our 54+ years of experience work for you! 703-242-3975 | Info@TheBeltTeam.com | Contact Us
Part 2 of Krissy O’Malley’s sit down with Terry Belt! In this episode, Terry talks about how he has been working with out of town buyers who were not able to travel here to see homes given the COVID-19 situation. And don’t miss the special cameo!!
If you have a question for Terry, real estate related or not, please don’t hesitate to contact him at 703-242-3975 | email@example.comClick Here!
And…if you are in the market for a home, be sure to check out our state of the art website for buyers and set up a free search today! https://beltteamrealestate.com/
Last week we blogged about selling your home during the holidays so this week we want to share some information about buying a home this time of year.
Here are four great reasons from our friends at Keeping Current Matters to consider buying a home today, instead of waiting.
1. Prices Will Continue to Rise
CoreLogic’s latest Home Price Insights Reportshows that home prices have appreciated by 3.6% over the last 12 months. The same report predicts prices will continue to increase at a rate of 5.8% over the next year.
The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.
2. Mortgage Interest Rates Are Projected to Increase Next Year
The Primary Mortgage Market Survey from Freddie Macindicates that interest rates for a 30-year mortgage have recently hovered just above 3.5%. This is great news for buyers in the market right now, because low interest rates increase your purchasing power – but don’t wait! Most experts predict rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting that rates will increase by this time next year.
An increase in rates will impact your monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is needed to buy your next home.
3. Either Way, You Are Paying a Mortgage
There are some renters who haven’t purchased a home yet because they’re uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you’re living rent-free with your parents, you are paying a mortgage – either yours or that of your landlord.
As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.
Are you ready to put your housing costs to work for you?
4. It’s Time to Move on With Your Life
The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears both are on the rise.
But what if they weren’t? Would you wait?
Look at the actual reason you’re buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over custom renovations, maybe now is the time to buy.
Buying a home sooner rather than later could lead to substantial savings. Call or email The Belt Team to help you determine if homeownership is the right choice for you and your family this fall. 703-242-3975 | firstname.lastname@example.org.
Can’t wait to hear from you and help with make your real estate dreams come true!
Have you seen the show on HGTV called “Love It Or List It“?
If you haven’t seen it, the story each week is of a family who is debating whether to renovate their home or whether to move. Sometimes their existing home is really out of date. Sometimes the family has grown & they need more space. So they invite in a designer and a Realtor to discuss their options.
They discuss their budget, and analyze their needs & wants. The designer makes & executes a design plan to renovate the home. And the Realtor takes the owners out to look at what their budget would allow them to buy. Once the renovation is complete (and there are ALWAYS problems with the renovation on the show), the owners decide whether to stay in their renovated home (“LOVE IT”) or whether to sell & buy a new home (“LIST IT”).
The show itself is of course very dramatic and there are problems after problems. The husband & wife always disagree. The designer always runs into road blocks. And their budget never seems to go as far as they want. And yet, there is ALWAYS a Cinderella ending where the family is uber happy.
Despite some of the “only on TV exaggerations”, this scenario is one that many of our clients deal with. They wonder whether they should “right size” their home. Should they renovate & stay, or sell and move into a larger home? Should they adapt their home as they age and stay in it? Or should they sell and down size into something with less maintenance?
And The Belt Team can help with that. Not only do we know the market well and can advise you on which changes are saleable, which add value and which changes may negatively impact resale value of your home; we also are in touch with designers, builders, contractors and more who can meet with you to discuss the options.
One of the members of our team went through this scenario. We thought you might enjoy a sample before & after picture. She lived in her home in Vienna since the 80’s when it was brand new. After 26 years of family living, it was time to make a change. So – it was time to decide – “love it” or “list it”. She chose to renovate and ended up loving it. A before & after picture of the kitchen is below. Stay tuned for more pictures and an upcoming post with her “Top 10 Tips To Survive A Renovation”!
Kitchen Before: Vinyl flooring, laminate countertops, flourescent lighting, maple cabinets, rose wallpaper, cream appliances, only one oven
Kitchen After: Hardwood floors, granite countertops, additional counterspace/breakfast bar, tile backsplash, white cabinets including some glass front, recessed & pendant lighting, stainless steel appliances, two ovens
Call The Belt Team at (703) 242-3975. We can help you decide whether to “love it” or “list it”!
We get questions from first-time homebuyers like this all the time:
Do I have to have a perfect credit score?
Do I need 20% cash for my down payment?
Aren’t interest rates really high?
Can I really afford to buy?
Check out what Keeping Current Matters has to say about the myths related to buying a home:
Interest rates are still below historic numbers.
88% of property managers raised their rent in the last 12 months!
The credit score requirements for mortgage approval continue to fall.
The Belt Team has a Buyer Specialist whose expertise is First-Time Homebuyers. If you’re looking for someone to walk you through each step of the process, call Beth Dadisman at (703) 577-1144. Or click here to schedule a FREE consultation.
Here’s how you might feel after you buy your first place! We helped these first time homebuyers find their dream home and go to settlement just last week! The Belt Team is ranked in the Top 20 Real Estate Agents in the State of VA (out of 30,000 agents). Don’t you deserve the BEST?!