If you have student loans and want to buy a home, you might have questions about how your debt affects your plans. Do you have to wait until you’ve paid off those loans before you can buy your first home? Or is it possible you could still qualify for a home loan even with that debt? Here’s a look at the latest information so you have the answers you need.

A Bankrate article explains:

“Roughly 60 percent of U.S. adults who have held student loan debt have put off making important financial decisions due to that debt . . . For Gen Z and millennial borrowers alone, that number rises to 70 percent.”

This includes one of the biggest financial decisions you’ll ever make, buying a home. But you should know, even with student loans, waiting to buy a home may not be necessary. While everyone’s situation is unique, your goal may be more within your reach than you realize. Here’s why. 

Can You Qualify for a Home Loan if You Have Student Loans?

According to an annual report from the National Association of Realtors (NAR), 38% of first-time buyers had student loan debt and the typical amount was $30,000.

That means other people in a similar situation were able to qualify for and buy a home even though they also had student loans. And you may be able to do the same, especially if you have a steady source of income. As an article from Bankrate says:

“. . . you can have student loans and a mortgage at the same time. . . . If you have student loans and want a mortgage, there are multiple home loan programs you might qualify for . . .”

The key takeaway is, for many people, homeownership is achievable even with student loans. 

You don’t have to figure this out on your own. The best way to make a decision about your goals and next steps is to talk to the professionals. A trusted lender can walk you through your options based on your situation, and share what’s worked for other buyers.

Bottom Line

Lots of other people with student loan debt are able to buy their own homes. Talk to a lender to go over your options and see how close you are to reaching your goal.

Source link

As you think about the year ahead, one of your big goals may be moving. But, how do you know when to make your move? While spring is usually the peak homebuying season, you don’t actually need to wait until spring to sell. Here’s why.

1. Take Advantage of Lower Mortgage Rates

Last October, the 30-year fixed mortgage rates peaked at 7.79%. In January, they hit their lowest level since May. That means you may not feel as locked-in to your current mortgage rate right now. That downward trend in rates has made moving more affordable now than it was just a few months ago.

Another reason today’s rates make now a good time to sell? More buyers are jumping back into the market. Many had been waiting on the sidelines for rates to fall, but now that that’s happening, they’re eager and ready to buy. That means more demand for your house. According to Sam Khater, Chief Economist at Freddie Mac:

“Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market.”

2. Get Ahead of Your Competition

Right now, there are still more people looking to buy a home than there are houses for sale, which puts you in a great position. But keep in mind, with the recent uptick in new listings, we’re seeing more sellers may already be re-entering the market.

Listing your house now helps you beat your competition and makes sure your house will stand out. And if you work with an agent to price it right, it could sell fast and get multiple offers. U.S. News explains:

“When there is low housing inventory, sellers could get top dollar for their homes.”

3. Make the Most of Rising Home Prices

Experts forecast home prices will keep going up this year. What does that mean for you? If you’re ready to sell your current house and plan to buy another one, it may be a good idea to think about moving now before prices go up more. That would give you the chance to buy your next home before it gets more expensive.

4. Leverage Your Equity

Homeowners today have tremendous amounts of equity. In fact, a recent report from CoreLogic says the average homeowner with a mortgage has more than $300,000 in equity.

If you’ve been waiting to sell because you were worried about home affordability, know your equity can really help with your next move. It might even cover a big part, or maybe all, of the down payment for your next home.

Bottom Line

If you’re thinking about selling your house and moving to another one, connect with a local real estate agent to get the process started now so you can get a leg up on your competition.

Source link

According to the latest data from Fannie Mae, 23% of Americans still think home prices will go down over the next twelve months. But why do roughly 1 in 4 people feel that way?

It has a lot to do with all the negative talk about home prices over the past year. Since late 2022, the media has created a lot of fear about a price crash and those concerns are still lingering. You may be hearing people in your own life saying they’re worried about home prices or see on social media that some influencers are saying prices are going to come tumbling down.

If you’re someone who still thinks prices are going to fall, ask yourself this: Which is a more reliable place to get your information – clickbait headlines and social media or a trusted expert on the housing market?

The answer is simple. Listen to the professionals who specialize in residential real estate.

Here’s the latest data you can actually trust. Housing market experts acknowledge that nationally, prices did dip down slightly late last year, but that was short-lived. Data shows prices have already rebounded this year after that slight decline in 2022 (see graph below):

But it’s not just Fannie Mae that’s reporting this bounce back. Experts from across the industry are showing it in their data too. And that’s why so many forecasts now project home prices will net positive this year – not negative. The graph below helps prove this point with the latest forecasts from each organization:

What’s worth noting is that, just a few short weeks ago, the Fannie Mae forecast was for 3.9% appreciation in 2023. In the forecast that just came out, that projection was updated from 3.9% to 6.7% for the year. This increase goes to show just how confident experts are that home prices will net positive this year.

So, if you believe home prices are falling, it may be time to get your insights from the experts instead – and they’re saying prices aren’t falling, they’re climbing.

Bottom Line

There’s been a lot of misleading information about home prices over the past year. And that’s still having an impact on how people are feeling about the housing market today. But it’s best not to believe everything you hear or read.

If you want information you can trust, turn to the real estate experts. Their data shows home prices are on the way back up and will net positive for the year. If you have questions about what’s happening in your area, connect with a local real estate agent. 

Source link

If you remember the housing crash back in 2008, you may recall just how popular adjustable-rate mortgages (ARMs) were back then. And after years of being virtually nonexistent, more people are once again using ARMs when buying a home. Let’s break down why that’s happening and why this isn’t cause for concern.

Why ARMs Have Gained Popularity More Recently

This graph uses data from the Mortgage Bankers Association (MBA) to show how the percentage of adjustable-rate mortgages has increased over the past few years:

As the graph conveys, after hovering around 3% of all mortgages in 2021, many more homeowners turned to adjustable-rate mortgages again last year. There’s a simple explanation for that increase. Last year is when mortgage rates climbed dramatically. With higher borrowing costs, some homeowners decided to take out this type of loan because traditional borrowing costs were high, and an ARM gave them a lower rate. 

Why Today’s ARMs Aren’t Like the Ones in 2008

To put things into perspective, let’s remember these aren’t like the ARMs that became popular leading up to 2008. Part of what caused the housing crash was loose lending standards. Back then, when a buyer got an ARM, banks and lenders didn’t require proof of their employment, assets, income, etc. Basically, people were getting loans that they shouldn’t have been awarded. This set many homeowners up for trouble because they couldn’t pay back the loans that they never had to qualify for in the first place.

This time around, lending standards are different. Banks and lenders learned from the crash, and now they verify income, assets, employment, and more. This means today’s buyers actually have to qualify for their loans and show they’ll be able to repay them.

Archana Pradhan, Economist at CoreLogic, explains the difference between then and now:

“Around 60% of Adjustable-Rate Mortgages (ARM) that were originated in 2007 were low- or no-documentation loans . . . Similarly, in 2005, 29% of ARM borrowers had credit scores below 640 . . . Currently, almost all conventional loans, including both ARMs and Fixed-Rate Mortgages, require full documentation, are amortized, and are made to borrowers with credit scores above 640.”

In simple terms, Laurie Goodman at Urban Institute helps drive this point home by saying:

“Today’s Adjustable-Rate Mortgages are no riskier than other mortgage products and their lower monthly payments could increase access to homeownership for more potential buyers.”

Bottom Line

If you’re worried today’s adjustable-rate mortgages are like the ones from the housing crash, rest assured, things are different this time.

And, if you’re a first-time homebuyer and you’d like to learn more about lending options that could help you overcome today’s affordability challenges, reach out to a trusted lender.

Source link

Some Highlights

• With ongoing high inflation pushing up everyday costs, some people are worried that’ll create a flood of foreclosures. Here’s why that’s unlikely.
• Fewer people are seriously behind on mortgage payments right now. If foreclosures were going to rise a lot, more people would need to be late on their payments.
• Since most are paying on time, a wave isn’t coming. If you’re concerned about a flood of foreclosures, the data shows that’s not likely.

Source link

The rising cost of just about everything from groceries to gas right now is leading to speculation that more people won’t be able to afford their mortgage payments. And that’s creating concern that a lot of foreclosures are on the horizon. While it’s true that foreclosure filings have gone up a bit compared to last year, experts say a flood of foreclosures isn’t coming.

Take it from Bill McBride of Calculated Risk. McBride is an expert on the housing market, and after closely following the data and market environment leading up to the crash, he was able to see the foreclosures coming in 2008. With the same careful eye and analysis, he has a different take on what’s ahead in the current market:

“There will not be a foreclosure crisis this time.”

Let’s look at why another flood is so unlikely.

There Aren’t Many Homeowners Who Are Seriously Behind on Their Mortgage Payments

One of the main reasons there were so many foreclosures during the last housing crash was because relaxed lending standards made it easy for people to take out mortgages, even if they couldn’t show that they’d be able to pay them back. At that time, lenders weren’t being very strict when assessing applicant credit scores, income levels, employment status, and debt-to-income ratio.

But now, lending standards have tightened, leading to more qualified buyers who can afford to make their mortgage payments. And data from Freddie Mac and Fannie Mae shows the number of homeowners who are seriously behind on their mortgage payments is declining (see graph below):

Molly Boese, Principal Economist at CoreLogic, explains just how few homeowners are struggling to make their mortgage payments:

“May’s overall mortgage delinquency rate matched the all-time low, and serious delinquencies followed suit. Furthermore, the rate of mortgages that were six months or more past due, a measure that ballooned in 2021, has receded to a level last observed in March 2020.”

Before there can be a significant rise in foreclosures, the number of people who can’t make their mortgage payments would need to rise. Since so many buyers are making their payments today, a wave of foreclosures isn’t likely.

Bottom Line

If you’re worried about a potential flood of foreclosures, know there’s nothing in the data today to suggest that’ll happen. In fact, qualified buyers are making their mortgage payments at a very high rate.

Source link

Many homeowners thinking about selling have two key things holding them back. That’s feeling locked in by today’s higher mortgage rates and worrying they won’t be able to find something to buy while supply is so low. Let’s dive into each challenge and give you some helpful advice on how to overcome these obstacles.

Challenge #1: The Reluctance to Take on a Higher Mortgage Rate

According to the Federal Housing Finance Agency (FHFA), the average interest rate for current homeowners with mortgages is less than 4% (see graph below):

But today, the typical 30-year fixed mortgage rate offered to buyers is closer to 7%. As a result, many homeowners are opting to stay put instead of moving to another home with a higher borrowing cost. This is a situation known as the mortgage rate lock-in effect.

The Advice: Waiting May Not Pay Off

While experts project mortgage rates will gradually fall this year as inflation cools, that doesn’t necessarily mean you should wait to sell. Mortgage rates are notoriously hard to predict. And, right now home prices are back on the rise. If you move now, you’ll at least beat rising home prices when you buy your next home. And, if experts are right and rates fall, you can always refinance later if that happens.

Challenge #2: The Fear of Not Finding Something to Buy

When so many homeowners are reluctant to take on a higher rate, fewer homes are going to come onto the market. That’s going to keep inventory low. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:

“Inventory will remain tight in the coming months and even for the next couple of years. Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years.”

Even though you know this limited housing supply helps your house stand out to eager buyers, it may also make you feel hesitant to sell because you don’t want to struggle to find something to purchase.

The Advice: Broaden Your Search

If fear you won’t be able to find your next home is the primary thing holding you back, remember to consider all your options. Looking at all housing types including condos, townhouses, and even newly built homes can help give you more to choose from. Plus, if you’re able to work fully remote or hybrid, you may be able to consider areas you hadn’t previously searched. If you can look further from your place of work, you may have more affordable options.

Bottom Line

Instead of focusing on the challenges, focus on what you can control. Reach out to a local agent so you’re working with a professional who has the experience to navigate these waters and find the perfect home for you. 

Source link

If you’re thinking of buying or selling a home, one of the biggest questions you have right now is probably: what’s happening with home prices? And it’s no surprise you don’t have the clarity you need on that topic. Part of the issue is how headlines are talking about prices.

They’re basing their negative news by comparing current stats to the last few years. But you can’t compare this year to the ‘unicorn’ years (when home prices reached record highs that were unsustainable). And as prices begin to normalize now, they’re talking about it like it’s a bad thing and making people fear what’s next. But the worst home price declines are already behind us. What we’re starting to see now is the return to more normal home price appreciation.

To help make home price trends easier to understand, let’s focus on what’s typical for the market and omit the last few years since they were anomalies. 

Let’s start by talking about seasonality in real estate. In the housing market, there are predictable ebbs and flows that happen each year. Spring is the peak homebuying season when the market is most active. That activity is typically still strong in the summer but begins to wane as the cooler months approach. Home prices follow along with seasonality because prices appreciate most when something is in high demand.

That’s why, before the abnormal years we just experienced, there was a reliable long-term home price trend. The graph below uses data from Case-Shiller to show typical monthly home price movement from 1973 through 2021 (not adjusted, so you can see the seasonality):

As the data from the last 48 years shows, at the beginning of the year, home prices grow, but not as much as they do entering the spring and summer markets. That’s because the market is less active in January and February since fewer people move in the cooler months. As the market transitions into the peak homebuying season in the spring, activity ramps up, and home prices go up a lot more in response. Then, as fall and winter approach, activity eases again. Price growth slows, but still typically appreciates.

Why This Is So Important to Understand

In the coming months, as the housing market moves further into a more predictable seasonal rhythm, you’re going to see even more headlines that either get what’s happening with home prices wrong or, at the very least, are misleading. Those headlines might use a number of price terms, like:

• Appreciation: when prices increase.
• Deceleration of appreciation: when prices continue to appreciate, but at a slower or more moderate pace.
• Depreciation: when prices decrease.

They’re going to mistake the slowing home price growth (deceleration of appreciation) that’s typical of market seasonality in the fall and winter and think prices are falling (depreciation). Don’t let those headlines confuse you or spark fear. Instead, remember it’s normal to see a deceleration of appreciation, slowing home price growth, as the months go by.

Bottom Line

If you have questions about what’s happening with home prices in your area, connect with a trusted real estate professional.

Source link