Are Low Mortgage Rates to Blame for High Home Prices?

Are Low Mortgage Rates to Blame for High Home Prices?: A rush of buyers and lack of inventory are also pushing up costs, realtor.com® reports.

Fall Home Sales Surge Ahead of Normal Patterns

Fall Home Sales Surge Ahead of Normal Patterns: Speedy home sales continue in all regions of the country, with the median home price up nearly 15% from a year ago, NAR reports.

Pros and Cons of Buying Repossessed Properties

 Oct 15, 2020

LaTasha Beal

Buying a house can be incredibly exciting and terrifying at the same time, especially if it’s your first or second home. For a lot of buyers today, the idea of getting a killer deal is the ultimate goal, one that you may have heard is possible with a bank-repossessed property (also known as a “real estate owned” property or simply “REO”). Real estate prices are only going up, after all, so what’s the scoop on these REOs?

Can You Get a Deal on Repossessed Properties?

It’s a tricky question with a lot of caveats. In some markets, it will almost certainly be easier to take advantage of REOs to find lower entry price points. Other markets may not offer a lot of financial benefit to the buyer. When market inventory is low in the property type and area you’re shopping for, prices will tend to trend higher, even for repossessed properties.

On the other hand, if you’re pretty flexible and aren’t overly concerned about neighborhoods, an area with a lot more inventory can be a difficult place for a seller, creating a super local buyer’s market. Even banks are sensitive to these pressures, and since they can be more flexible about their pricing, may discount REOs more sharply in order to unload them.

What Should You Know Before Making an Offer on Repos?

If you manage to find a steeply discounted property that you’re interested in, there’s still a lot to consider before making an offer. The caveats with repos are many, but they can still work for buyers who go into the transaction with their eyes wide open.

Be aware that:

• REOs are almost exclusively sold “as is”. Yes, that means you get what you get, and since there’s unlikely to be a good history, it may be a lot worse than you imagine. You could get lucky and totally win the REO lottery, but remember that many repossessed properties have been sitting vacant for extended periods with little to no maintenance or human interaction, which can encourage insect and animal infestations on top of problems you’ve been made aware of.
• Always get a home inspection with an REO. In most areas you can still back out of the transaction if the condition of the home is worse than you imagined, though be aware that these inspections are limited in scope, and surprises may still be hiding. Sold “as is” means just that, though. Banks aren’t generally interested in fixing anything, so if your inspector says the A/C is bad and the roof is leaking, you’ll need to figure that into your overall cost equation.
• REOs can be very competitive. Investors often really like buying REOs, which means you’re going to be competing against other buyers who have a lot of cash on hand. Cash deals close faster and there’s less risk they’ll fail to close because of lending issues, which makes them pretty nice for a seller. A good REO is likely to be a competitive buy, so be fully prepared, fully qualified for your loan, and ready to make your highest and best offer out of the gate. You may only get one shot.
• REOs can be difficult to finance. Some REOs and lending programs are meant to go to future homeowners, but most are not especially friendly to non-investor buyers. You’ll need a substantial down payment, high credit score, solid debt to income ratio, and reliable employment for a bank to take that level of risk on a home that may become a money pit. It can absolutely be done, but this is far from a basic first time homebuyer sort of process. Loans like the FHA 203(k) can sometimes be used, as well as conventional loans, depending on the condition of the property.
• REOs can be difficult to close. If you have to borrow to buy an REO, expect the process to take months. Even if you don’t have to borrow, there are layers of red tape to cut through, because you’re dealing with a corporate owner rather than an individual. Allow plenty of time to get through all the steps of the process and be prepared to have to pivot into a different loan program if things get dicey.

• Should I Buy a Repossessed Home?

  If you’ve thoroughly prepared yourself for owning a home with a poorly documented history and a higher than normal risk of unexpected problems, as well as the stressful buying process that can go with it all, then absolutely buy the REO if it’s right for you. Sometimes REOs are the only way to get into the right neighborhoods or even find a home in your budget, so there are definitely reasons to pull that trigger.

  Once you’ve closed, though, you’ll probably need a lot of expert help. Don’t forget to lean into your HomeKeepr community. Not only can you access all the best home pros in your area, they’re right at your fingertips, day or night. It’s the perfect place to be if you want to buy a project home!

Mortgage Rates Set Record Low for 10th Time

Mortgage Rates Set Record Low for 10th Time: Home buyers, as well as homeowners looking to refinance, may have been able to snag a 2.81% rate for a 30-year mortgage this week.

September Portland Market Action Report

 

Real Estate Continues to Show Unprecedented Strength This Year

 

Real Estate Continues to Show Unprecedented Strength This Year

The 2020 housing market has surpassed all expectations and continues to drive the nation’s economic recovery. The question is, will this positive trend continue throughout the rest of the year, especially given the uncertainty around the current health crisis, the upcoming election, and more?

Here’s a look at what several industry-leading experts have to say.

Lawrence Yun, Chief Economist, National Association of Realtors

“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market…Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery."

Frank Martell, President and CEO, CoreLogic

"Homeowners’ balance sheets continue to be bolstered by home price appreciation, which in turn mitigated foreclosure pressures…Although the exact contours of the economic recovery remain uncertain, we expect current equity gains, fueled by strong demand for available homes, will continue to support homeowners in the near term."

Zillow

“Zillow's predictions for seasonally adjusted home prices and pending sales are more optimistic than previous forecasts because sales and prices have stayed strong through the summer months amid increasingly short inventory and high demand.

The pandemic also pushed the buying season further back in the year, adding to recent sales. Future sources of uncertainty including lapsed fiscal relief, the long-term fate of policies supporting the rental and mortgage market, and virus-specific factors, were incorporated into this outlook.”

Bottom Line

Many economists are in unison, indicating the housing market will continue to fuel the economy through the end of the year, maintaining this unprecedented strength.

The Home Mortgage Refinance Process

 Oct 19, 2020

LaTasha Beal

When rates are low, it can seem like the ideal time to refinance your mortgage. After all, who doesn’t like a lower interest rate? There are lots of good reasons to refinance your mortgage, such as adding on or trying to streamline your expenses, but what’s really involved in the process?

Mortgage Refinancing: The Basics

Perhaps the best news any homeowner can get when it comes to a refi is that it’s not likely to be nearly as difficult as getting the original loan was. Breathe a big sigh of relief if you need to; this is the time for it.

For many homeowners, refinancing happens for a few specific reasons: reducing mortgage interest, dropping mortgage insurance, or cashing out for a remodeling expense. When rates are low and values are high, a refinance can provide a double whammy financially. Dropping any mortgage insurance you’re currently on the hook for can make a big dent in your house payment, especially if waiting for it to fall off naturally would take several more years. And, of course, a lower interest rate also means you’re paying less money towards interest over time. Combine the two and it can mean big savings on a home you plan to hold over the longer term. Remodeling is a valid and effective way of adding value, as well, which has a whole lot of other benefits that come with it. In short, there are tons of ways a refi can be helpful to your financial welfare.

The Refinance Process

Much like when you got your initial loan, your mortgage banker or broker will examine your financial history and your longer term prospects, which includes your work history, to ensure you’re financially stable. Your debt to income ratio will be reexamined as well. Although these are closely scrutinized, many banks will grant a bit more wiggle room than they did for initial mortgages, especially for homeowners who have a lot of equity already established.

Once approved for your loan, you’ll choose when to lock in your rate. Because interest rates can vary from day to day, it’s important to pay close attention to both the current rate being offered and your lender’s advice in the matter. If they have noticed rates are going up, locking right away makes a lot of sense, but if you’re the gambling sort and rates are trending down, you may want to float your rate a few days to see if you can do any better. Remember, though, this is a bet that you’re taking that the rate will drop, and it won’t always pay off.

Documents You’ll Need

Just like with the initial mortgage, you’ll need to prove you are who you say you are and that you have the income you claim, among other things. Your banker will almost certainly ask for the following types of paperwork:

• Proof of income. Tax statements and tax stubs are big favorites for proof of income. If you own a small business, you may also be asked for a profit and loss statement, so get to work on preparing that now.
• Credit score. Your lender will run your credit (and the credit of any co-applicants) in order to determine if you remain credit-worthy. Don’t worry, they can’t revoke your current mortgage if things have gotten a little rocky in that department; they just won’t write you a new loan. Pulling a credit report can also inform your lender about your debts.
• Asset information. If you have a retirement account like a 401(k), stocks, bonds, or even a checking or savings account, your lender will want to know about it. These accounts, plus the equity you have in your home and other assets, figure into the equation when lenders are trying to assess your risk of default. They can also serve as sources of collateral, should you need it.
• Other legal paperwork. Divorce decrees and support payment documentation are helpful for your lender to determine what liabilities you have, if any, in relation to those former legal relationships. If you receive support, it can sometimes be figured into your income calculation.

Once your lender has reviewed your paperwork and determined they’re willing to refinance your loan, they’ll order an appraisal of your home. Typically, an inspection won’t be needed, unlike with a purchase. In many cases, a drive-by appraisal will be adequate, especially if it’s very clear at a glance that you’ve maintained the property.

Closing the Loan

With all your paperwork in hand and your appraisal completed, your lender will be ready to send you and your loan to closing. Since there’s not a seller involved, you will be going to closing at a time that’s convenient for you, and it’ll be a very quick process. Make sure to double-check the terms of the loan to ensure you’re agreeing to the mortgage you believed you were signing up for. If you have any questions, your lender will be more than happy to clarify, but ask them before you sign the dotted line.

Following your closing day, you have a special period to change your mind and revoke the loan entirely. Thanks to your right of rescission, you can cancel the loan with no penalties and no modification to your previous mortgage within three days of closing. So, if you wake up the next day with cold feet, it’s not too late to turn back time!