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In case you set your alarm clock to go off when it was time to buy a home, that clang you may be hearing from somewhere in the distance could be it (figuratively speaking, of course). The reason has to do with the direction of Lewes mortgage rates (among others).
Now, I realize this could come across a little bit like Aesop’s boy who cried ‘Wolf’ since a year and a half ago the experts were unanimous in predicting that mortgage rates would rise throughout 2014 (to at least 5%, if I remember correctly). And not only did they not jump—after a short rise, they actually fell!
The experts were wrong. To the extent I agreed with their call, I was, too—but at least I wasn’t lonely. And I also try to be clear that predicting the future of any financial movement is never a sure thing. The same is true today…but…
Last week, less than a week after the Federal Reserve monetary policymakers emerged from their meeting, Bankrate web commentator Janna Herron published a view that sent alarm bells ringing in my head. It makes so much sense, I feel compelled to share it. Already publicized in the rest of the media was the announcement that 15 of the 17 Fed officials now agree that they expect to raise the federal funds rate at some point within the next 6 months (and one expert was quoted as expecting that as early as September or October). Fifteen out of 17 is a 88% majority, so it couldn’t get much clearer. The funds rate has been cemented to the ground at precisely zero for almost seven years. Since 2008.
Lewes mortgage rates are based upon that Fed funds rate. When it rises, mortgage rates have to rise, or lenders would have to be reclassified as charitable enterprises (not likely). The reasons given for the Fed governors’ near-unanimous prediction are both the rise in the pace of job gains and, as was reported, “The Fed also noted improvement in housing.”
Now, that news may have prompted Lewes mortgage-rate watchers to sit up and take notice—but not necessarily have them hearing alarm bells going off. But there were two other pieces of information:
· First, the current national mortgage rates reported last week rose. They were pegged at just over the 52-week average for 30-year fixed loans, but at 4.13% it remained below the 4.33% of a year before. In other words, still (perhaps momentarily) in the historically basement-level range.
· Second, new mortgage activity began to rise, moving 1.6% up from a week before. Applications had been dropping, but now they were on the move. This while home builder confidence levels soared, with expectations hitting the highest levels in nearly a decade.
As with any batch of economic numbers, the signs can be interpreted in multiple ways, but one way sure does seem to stand out: mortgage rates are attractive now, housing activity is almost certainly on the rise, and mortgage rates and monthly payments are very likely to become more expensive. The same thought may be occurring to more and more people as we enter the summer home-buying season: “What if I could pay less every month for the same home…for the next 30 years…”
Note to Lewes home-buyers. Listen carefully: that could be the sound of your own alarm bell going off! If you think you hear it, now would be a great time to give me a Call/Text me Russell Stucki at (302) 228-7871, email me at firstname.lastname@example.org, visit more listings at www.beachrealestatemarket.com
Whenever an unplanned and unwelcome financial situation develops, a Lewes mortgage-holder can find himself or herself in the onerous position of being unable to keep up with the monthly home loan payments. If the unhappy situation continues long enough, the likely result is a foreclosure or short sale. In addition to losing the property, the impact on personal credit then takes years to undo. That means it takes that much longer for a consumer to acquire a new home and start to build equity again.
Here as elsewhere, there were a raft of such Lewes mortgage defaults following the global financial meltdown. Even those who had no trouble servicing their area mortgages could have suffered when they found that falling property values prevented them from refinancing—even when the purpose was to improve their property. Although those events happened years ago, it’s only now that their aftereffects are finally working their way out of the system.
A recent article in NMP—the national Mortgage Professional’s magazine—delved into the changing status of those who lost homes in the turndown. The details they researched are interesting in themselves—details that are bound to have an impact on Lewes residential sales.
First off is the fact that enough time has elapsed for those who weathered a short sale or foreclosure to begin to return to eligibility. They’re called “Boomerang Buyers”—and nationwide, there are estimated to be 7,300,000 of them! In 2016 alone, more than a million will become eligible to return to the home-buying market. According to NMP, “they’re returning to the market in droves.” The hardest-hit states were Nevada, Florida and Illinois—but there are plenty of Boomerang Buyers scattered across the rest of the nation.
The improving mortgage eligibility landscape extends beyond those who suffered the actual loss of their homes. To the more than 7 million “distressed” homeowners whose properties are still underwater (those who owe more than market value), the government’s HARP 2 program is one possible remedy. Its guidelines encourage lenders to relax the loan-to-value caps that had prevented refinancing for many of those homeowners. Reports are that it has already resulted in an increase in such refinances.
Other program combinations are helping loan originators and Realtors® get more bank-owned homes back into homeowners’ hands. These are properties that make up the ‘shadow inventory’ of unsold homes, many of which have fallen into disrepair. Because of that, they’ve been difficult to finance—and therefore difficult to sell. Through FHA 203K and Fannie Mae’s Homestyle® renovation mortgages, more ambitious prospective owners—including investors—are discovering they now have mortgage options that can put those fixer-uppers within reach.
For those who have previously found it problematic to secure a Lewes mortgage with acceptable terms, it may be worth looking into today’s improved financing alternatives. Especially with mortgage interest rates at the levels we’re seeing this fall, what you find may be a pleasant surprise—one that puts you into the house of your dreams. Call me to discuss first steps! Call/Text me Russell Stucki at (302) 228-7871, email me at email@example.com, visit more listings at www.beachrealestatemarket.com.