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If you are a prospective homebuyer, things have changed in the past year.   Most notably, mortgage rates have more than doubled which has created an affordability gap that has taken approximately 15 million buyers out of the market. Inventories are growing but it isn't because more people are deciding to sell their homes; it is because it is taking longer to sell properties because less people are qualified.   Current housing inventory is a little more than a quarter of what it was in 2008. Buyers are wondering when the market will return to normal, as if mortgage rates at three and four percent should be commonplace.   The average mortgage rate between April 1971 and November 2022 is 7.76%. Predictions for mortgage rates in the third quarter 2023 range from 4.5% for Fannie Mae, 5.0% for Mortgage Bankers Association, and 5.2% for Freddie Mac. Traditionally, over the past 35 years, there is a 175-200 basis point difference between the 10-year Treasury and th...

If you're on the sidelines to buy a home, there are things you can do to be ready when you do get back in the game. Improve your credit score to qualify for the best mortgage rate available which are reserved for those with the highest scores.   Get a copy of your current credit reports from all three of the main credit bureaus: Equifax, TransUnion, and Experian.   You can get them at AnnualCreditReport.com without paying for them. While you won't see a credit score on these reports, you will see a history of your available credit accounts.   According to the Federal Trad Commission, one in five people have at least one error on one of their credit reports which can lower your score or increase the cost or likelihood of receiving new credit.   Identify and correct these mistakes.   Explain in writing the error in the report and include copies of documents that support your dispute.   Both the credit bureau and the business that supplied th...

The seller wants the most for their home and the buyer wants to pay the least possible.   From the very beginning of the homebuying process, there are adversarial positions between the principals.   If you happen to be in a multi-offer situation, it just complicates things further. Then, there are the emotions that tend to cloud the decision making on both sides of the transaction.   Sellers have lived in the home for years, possibly, with cherished family experiences and maybe, having put considerable effort and money into capital improvements. On the buyer side, they may have lost out on several homes due to competing offers and now, this year, interest rates have doubled, and the discretionary funds required to pay for a home could be causing cuts in their budget in other areas. A year ago, buyers were waiving contingencies for financing, appraisals, inspections, and other things just to be competitive.   Today, to make the home more affordable with ...

As the expression goes, "if I could turn back time", maybe you'd would do some things differently.  If you're wanting to buy a home, the regret may come from not getting a mortgage when rates were half of what they are today.  There may not be a way to literally "turn back time" but you may still be able to get a mortgage with last years' rates. Let's say a home was sold in the fall of 2021 for $350,000 with a 3% FHA loan.  Today, winter of 2023, the home is on the market for sale at $400,000.  There are buyers who have $40,000 for a down payment, who like the home, and want to purchase it. At today's mortgage rate of 6.42%, the $360,000, 30-year mortgage payment would be $2,2565.54 for the principal and interest.  They have been looking for a year and in the past 12 months, the mortgage rates have doubled which will stretch their finances along with all the other inflationary pressures. Their incredibly savvy agent has learned ...

The dilemma facing would-be buyers today is to wait until things settle down or move ahead in this unsettling economic environment.   More specifically, the question should be, what are you waiting to settle down: mortgage rates, or prices or both? Mortgage rates haven't been this high since 2002, so it could be considered plausible that the high rates are temporary.   That leads to the question of how long before they do start coming down.   If we look back further, the average 30-year fixed-rate mortgage, dating back to April 1971 is 7.81%, so the current rate is lower than the 50-year average. The other variable is waiting for prices to come down.   That one is probably not as likely to happen.   We have seen some softening of prices for homes on the market which is due to a decline in sales based on affordability and the resulting increase in inventory.   Sales reached a seasonally adjusted annual rate of 4.09 million in November which is...