Buying a Home: What to expect in 2021
The market has been booming in 2020- with interest rates at an all time low. Most agents and homeowners actually had an easier time selling & buying than prior years. During the pandemic people have been finding more affordable living spaces and relocating.
Now what to expect for 2021? Now extended time at home is shaping how people live everyday and where they want to live beyond the pandemic.
In 2021, here are a few trends shaping for the housing market:
- Interest rates are expected to remain low but increase gradually.
- Average home prices will rise.
- Home inventory will remain low, despite plenty of new construction.
- Homebuyers will stay focused on the suburbs.
- Renters hurt financially by the pandemic will continue to struggle, and rental assistance is needed.
The housing market will continue to flourish during the start of 2021. Homebuyers should not be...
Could mortgage rates sink as low as 2.9% in 2021?
Fannie Mae is forecasting that the rate for the 30 yr FRM (Fixed Rate Mortgage), will fall to 2.9% in the second quarter of 2021 (one year from now). If it does, it's possible that borrowers with very strong credit could see rates in the mid- or even low-2's. This will be important as the prices for existing home sales continue to rise.
To put this in perspective, prior to this coronavirus pandemic of 2020, the lowest average mortgage rate recorded was 3.31% in 2012 (source, Freddie Mac). This March when the US economy was blindsided with the ramifications of COVID19 causing a near halt to all business, that record low was broken. The new lowest average mortgage rate is 3.29% (source, Freddie Mac). For comparison, in the first quarter of 2019 just over a year ago, the average 30 yr FRM mortgage rate was 4.4%. That's a big difference and the savings (or expenses) can really add up over the life...
There has been some discussion recently on home prices in relation to mortgage rates. Some believe if there is a rapid rise of mortgage rates, home prices should decrease. Logically it makes the most sense for the price of the house to drop when interest rates are rising, but this is not always the case.
This theory of home prices decreasing is typically discussed by future home buyers. As a buyer you would like to think if you are paying higher rates on your mortgage, you should be able to see a decrease in cost somewhere else. Unfortunately, these rates are rising because the economy is in better shape. As the economy succeeds, incomes rise, rates go up, as well as the price of the home.
A recent study by the John Burns Real Estate Consulting...
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
It is important for you to be prepared and have your own questions ready. No matter what other opinions you are getting, you are the one buying the home and your comfort level will help make your final decision. Here are three important questions to ask before you purchase a home.
1. Why am I Buying a Home?
Regardless of the finances, it is important to think about what made you want to buy...
Potential homebuyers are always cautioned to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago. The market is still tight however, and homebuyers should be prepared to shop around until they find a lender who is offering something that will meet the needs of their family.
Mortgage lending companies have high standards so it is important to make sure you and anyone else who will be included on the mortgage have their credit in check. The mortgage market is strict because lenders do not want to be put in a situation where they are forced to repurchase loans that are not paid on. They also do not want to end up in a litigation...