Mary Foley Real Estate Inc.
Mary Foley Real Estate Inc.


Posted by Mary Foley Real Estate Inc. on 11/26/2019


 Photo by Dede via Pixabay

Mortgage rates in 2019 are as low as they’re ever been. The downward trend caught a lot of people by surprise. In 2018, there were predictions that they’d be on the rise, possibly moving to 5 percent and higher. Instead, they’ve ducked comfortably under 4 percent. Will they stay there? If you’re thinking of buying a home, do you have to jump in now or say goodbye to your best opportunity to nail down inexpensive financing?

Will Low Rates Continue?

Most experts think so. A survey of 10 real estate and finance professionals by The Mortgage Reports found that most of them expected 2020 rates to continue at 2019 levels. The average prediction was that rates will remain under 4 percent, with 30-year rates in the high threes and 15-year in the low threes. Two disagreed, with one saying they would move back above 4 percent and one forecasting they would dip below three.

Could the Experts be Wrong Again?

After all, the drop in 2019 fooled them. There are several things that could happen in 2020 to change the outlook. We’re overdue for a recession – the economy has been growing for 10 years now and it won’t grow forever. A severe one could drop rates even lower. Another X-factor is trade wars, which tend (although not with absolute predictability) to foster low rates. A resolution of international trade disputes could actually cause mortgage rates to rise. Also, the increasing federal deficit is bringing new debt to the market, which may cause mortgage rates to have to rise to attract investors.

Historical Perspective

Most young people and many middle-aged people have no recollection of inflation and high interest rates. In the 1980s, mortgages peaked around 16 percent. There was a slow decline until the turn of the century, and even in the first decade of the new century rates hovered in the 5 to 6 percent range. It’s only since 2009 that they’ve dropped to under 5 percent. Even a rise from today’s level would leave a rate that’s low by historical standards.

What Does This Mean for Buyers?

Continued low interest and mortgage rates (along with other factors such as low unemployment) will continue to stoke demand and keep housing prices on the rise. Low rates put home ownership within the reach of more buyers: on a $250,000 home, a 1 percent change will make a difference of about $200 in a monthly payment.

Even if mortgage rates get lower, some of a new home buyer’s savings will be offset by a faster rise in prices. If you’re not in a position to buy today, indications are that the low rate opportunity will be open for a while longer. But if you’ve been thinking about moving on home ownership, it’s hard to imagine there’ll be a more opportune time to get a friendly mortgage. With rates as low as they are, if the experts are wrong there’s more room for interest to move up than to move down.

This may also be an excellent time for current homeowners to refinance, especially those with high rates or variable rates. Consider all the costs as well as the length of the new mortgage, but there’s a good chance the numbers will work out.





Posted by Mary Foley Real Estate Inc. on 4/30/2019

If you’re in the market to buy a home, you’re probably learning many new vocabulary words. Pre-approved and pre-qualified are some buzz words that you’ll need to know. There’s a big difference in the two and how each can help you in the home buying process, so you’ll want to educate yourself. With the proper preparation and knowledge, the home buying process will be much easier for you.  


Pre-Qualification


This is actually the initial step that you should take in the home buying process. Being pre-qualified allows your lender to get some key information from you. Make no mistake that getting pre-qualified is not the same thing as getting pre-approved.


The qualification process allows you to understand how much house you’ll be able to afford. Your lender will look at your income, assets, and general financial picture. There’s not a whole lot of information that your lender actually needs to get you pre-qualified. Many buyers make the mistake of interchanging the words qualified and approval. They think that once they have been pre-qualified, they have been approved for a certain amount as well. Since the pre-qualification process isn’t as in-depth, you could be “qualified” to buy a home that you actually can’t afford once you dig a bit deeper into your financial situation. 


Being Pre-Approved


Getting pre-approved requires a bit more work on your part. You’ll need to provide your lender with a host of information including income statements, bank account statements, assets, and more. Your lender will take a look at your credit history and credit score. All of these numbers will go into a formula and help your lender determine a safe amount of money that you’ll be able to borrow for a house. Things like your credit score and credit history will have an impact on the type of interest rate that you’ll get for the home. The better your credit score, the better the interest rate will be that you’re offered. Being pre-approved will also be a big help to you when you decide to put an offer in on a home since you’ll be seen as a buyer who is serious and dependable.  


Things To Think About


Although getting pre-qualified is fairly simple, it’s a good step to take to understand your finances and the home buying process. Don’t take the pre-qualification numbers as set in stone, just simply use them as a guide. 


Do some investigating on your own before you reach the pre-approval stage. Look at your income, debts, and expenses. See if there is anything that can be paid down before you take the leap to the next step. Check your credit report and be sure that there aren’t any errors on the report that need to be remedied. Finally, look at your credit score and see if there’s anything that you can do better such as make more consistent on-time payments or pay down debt for a more desirable debt-to-income ratio.