Starting Sept. 14, the U.S. Department of Housing and Urban Development is including a mandate that instructs lenders to inform borrowers when they first meet to get a home inspection prior to purchasing a home. The mandate will be added to the HUD/Federal Housing Administration Single Family Policy Handbook and will include a document called “For Your Protection, Get a Home Inspection.”
“We are proud to provide critical inspection information for this handbook to help home buyers protect themselves,” says Frank Lesh, American Society of Home Inspectors, executive director. “Owning a home is one of the biggest financial investments in a person’s life, and a home inspection can help prevent costly problems.” We agree!
Source: “HUD and FHA Urge Buyers to Have Homes Inspected Before Purchase,” RISMedia (Aug. 31, 2015)
Whether it’s for a starter home or a second home, some buyers take the idea of a “little place of their own” seriously. Houses that may be smaller than some living rooms.
The five featured build-to-order homes — many of which come on wheels — range in size from a cozy 140 square feet to an expansive 269 square feet. The colorful Toy Box Tiny House, for example, can be had for as little as $35,000 and features a “sliding glass door, built-in planters, reconfigurable storage/seating cubes, floating cabinet for cooking ingredients, [and a] loft big enough for a king-size bed,” reports Curbed’s Jenny Xie.
Because of the tight space of these floor plans, most units come with at least some custom amenities. But if your buyers want even more minimalism, Monarch Tiny Homes can supply a 170-square-foot “half and half” for only $22,000 with no interior furnishings. The structure, says Xie, includes “plywood flooring, recycled siding, self-contained composting toilet, LED lighting, [and] mostly bare interiors ready for your own vision.”
Source: “5 Impressive Tiny Houses You Can Order Right Now,” Curbed.com
A last-minute problem with financing can quickly delay a closing on a home sale. Here are two of the most common financing problems that can surface:
- Failure to disclose key financial information. One of the biggest reasons for a financial issue is the failure of the buyer to disclose key financial information, The New York Times reports. Buyers who are not forthright about their financial circumstances can face a delay. Lenders will quickly find borrowers who are behind on child support obligations or real estate taxes, for example.
- Running up credit as a mortgage application is pending. Buyers may go out and purchase new furniture or a car prior to closing on a home, but doing so, could cause them a delay to the closing of their home sale. Lenders will recheck borrowers’ credit right before the closing date. If new debt obligations suddenly appear, that can be a red flag to a lender. Prior to making any large purchases prior to closing, borrowers should check with their lender, says Douglas Rotella, an executive vice president and loan originator with HomeBridge Financial Services.
Source: “How Mortgage Problems Unravel Home Deals,” The New York Times (Aug. 14, 2015)
The lowest mortgage rates on record have lured buyers during the last few years, but the Federal Reserve has already given plenty of signals that will soon come to an end.
Mortgage rates are already inching up, ever-so-slightly. From January to June, the 30-year fixed-rate mortgage climbed from 3.7 percent to 4.2 percent.
In this latest era of super-low mortgage rates, what’s normal? A 6 percent interest rate is “normal,” says Jonathan Smoke, realtor.com®’s chief economist. He says mortgage rates likely won’t hit that point in the next two years, however.
“We will likely see less than a 100 basis point increase over the next two years, which would bring us to around 5.5 percent in 2017,” he says.
Source: “Just How High Might Mortgage Rates Go?” realtor.com® (Aug. 14, 2015)
Home owners may be increasingly overvaluing their homes. Appraiser opinions of home values were 2.33 percent lower than home owners’ estimates in July, according to Quicken Loans’ national Home Price Perception Index. The gap between home owner estimates and appraiser opinions were nearly double the gap between the values in May.
“Many home owners around the country are seeing the national headlines about home value increases and they are optimistic about their equity increasing,” says Bob Walters, Quicken Loans chief economist. “While some areas are seeing the same level of home appreciation, or even more, there are also some areas that have slower home value increases. This can lead to home owners and appraisers not quite seeing eye-to-eye.”
“A slowing of home value increases adds to the misunderstanding of local home values,” Walters says. “Appraisers are viewing the housing industry every day; they know when home values growth may be slowing. Home owners may think values are still skyrocketing, when they have instead returned to more healthy appreciation in their area.”
Source: Quicken Loans
For the third consecutive week, averaged fixed mortgage rates edged down as uncertainty about the economy continued to push Treasury yields lower, Freddie Mac reports in its weekly mortgage market survey. The 30-year fixed-rate mortgage dropped 7 basis points this week to 3.91 percent, its lowest average since June 4.
“All eyes are on the upcoming July employment report, as the Fed has made it clear developments in the labor market will affect the timing of any potential rate hike,” says Sean Becketti, Freddie Mac’s chief economist.
Freddie Mac reports the following national averages for the week ending Aug. 6:
- 30-year fixed-rate mortgages: averaged 3.91 percent, with an average 0.6 point, dropping from last week’s 3.98 percent average. A year ago, 30-year rates averaged 4.14 percent.
- 15-year fixed-rate mortgages: averaged 3.13 percent, with an average 0.6 point, dropping from last week’s 3.17 percent average. A year ago, 15-year rates averaged 3.27 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.95 percent, with an average 0.4 point, holding the same average as last week. Last year at this time, 5-year ARMs averaged 3.27 percent.
Source: Freddie Mac
Closing costs dropped 7.1 percent year-over-year, falling from $1,989 in 2014 to $1,847 in 2015, according to a newly released Bankrate.com survey. The Bankrate analysis requested Good Faith Estimates from up to 10 lenders in large cities for a hypothetical $200,000 mortgage for a single-family home assuming a 20 percent down payment.
While average origination fees were down about 22 percent in this year’s survey, average third-party fees rose nearly 22 percent.
However, industry leaders are warning that mortgage lending and its costs will likely rise, notably on title insurance. We agree and suggest you seek today’s buying opportunities!
Source: “Even as Mortgage Closing Costs Drop, You’d Better Shop Around,” Bankrate.com (Aug. 3, 2015)
Americans traditionally have chosen to downsize in retirement, but that may no longer be the case. A wave of retirees are choosing to upsize and enjoy the best home of their lives in retirement, according to a recent Merrill Lynch and Age Wave retirement study of more than 3,600 respondents. In fact, 65 percent of retirees recently surveyed say they’re currently living in the best home of their lives.
The study showed that 49 percent of retirees say they didn’t downsize in their last move and 30 percent ended up moving into larger homes. Retirees’ top reasons for upsizing were wanting a home large and comfortable enough for family members to visit (33 percent) or even live with them (20 percent). One out of six retirees – or 16 percent – say they have a “boomerang” child who has moved back in with them, according to the study.
Nineteen percent of retirees also said they upsized in retirement in order to have a more prestigious home and 16 percent say they wanted a larger home to have more room for friends to visit, according to the study.
Source: “Home in Retirement: More Freedom, New Choices,” Merrill Lynch (July 2015)
First-time home buyers have found themselves in a sellers market, faced with above-average price appreciation and bidding wars due to limited inventories of homes for-sale.
But in the second half of the year, the market is expected to shift toward more of a balance as more sellers – motivated by higher home prices – put their homes on the market, alleviating the inventory shortage. This will help provide buyers with more choices of homes to buy as well as likely soften the speed at which home prices are rising.
For potential first-time home buyers, the housing market will soon be more inviting, writes Jonathan Smoke, realtor.com®’s chief economist, in recent commentary. “Combined with a temporary reprieve from rising mortgage rates and slightly easier access to credit, buyers should find it easier to purchase a home in the months ahead,” Smoke says.
Source: “Don’t Lose Faith, Would-Be Home Buyers: It Will Get Better,” realtor.com® (July 23, 2015)
The total amount of time consumers spend on smartphones has surpassed PCs, with more than 50 percent of all digital time now spent on mobile devices, according to data from MarketingLand.com. “Mobile Internet usage is growing faster than Internet usage in general, up 23 percent compared with just 8 percent and, as a whole grew 34 percent year over year, while desktop digital advertising grew 11 percent.”
The findings should inform the way real estate professional present their advertising and listings. After all, 50 percent of home buyers used a mobile website or application in the home buying process last year, according to the National Association of REALTORS®.
While mobile advertising continues to grow, consumers are reporting that advertisements are disrupting their mobile experience. Contextual relevancy is key, according to a Forrester/Tapad report. Twenty-three percent of consumers surveyed say they want ads to be tailored to the content they’re viewing, and 21 percent expect ads to be tailored to their location, according to the report.
Source: “Buyer Behavior Trends Driving the Digital Shift Toward Mobile,” Marketingland.com (June 18, 2015) and “Over 50 Percent of all Digital Time Now Spent on Mobile,” RISMedia (July 21, 2015)