Preferred Properties of Texas

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Buyers Feel Pinch of Rising Interest Rates

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Although homeownership is the largest investment and source of wealth for most households in the United States, there are many factors that make it more difficult to achieve homeownership, particularly for first-time buyers. Rising mortgage interest rates are the latest factor. The average rate for a 30-year fixed mortgage rose 2 percentage points from 3.22 percent in the first half to 5.7 percent in the second half of 2022.

Potential buyers face many consequences from rising interest rates. They reduce buyers’ purchasing power. The mortgage payment increases with rising mortgage rates, which in turn leads to a decrease in buyers’ purchasing power. This means that it is more difficult for them to get a mortgage loan. The mortgage rate rises means that the income required to be eligible for a mortgage loan for the same home is higher. This effectively pushes out more buyers from the housing market. With a 3 percent rate of interest, 34.8 percent Texas renters could afford the first-quartile price for a home in 2Q2022. With a 6. percent interest rate, this percentage drops to 24.7 per cent.

A higher interest rate equals a higher mortgage payment. This increases the buyer’s debt to income (DTI). This makes buyers more risky to lenders and could reduce the chances of getting a mortgage loan. A higher DTI ratio can make it more difficult to repay mortgages, especially for those who have lost their job.

Higher interest rates mean higher mortgage payments. This reduces the return on homeownership and prolongs the time it takes to break even.

 

To read more click on original article: https://www.recenter.tamu.edu/articles/tierra-grande/Home-Stretch-2362

Can You Purchase a Home with a Home Equity Loan?

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A home equity loan can be used to purchase a house. However, it is not always the best decision. With caveats, home equity can be used to purchase a second or investment property.

A home equity loan allows you to access the equity in your home by taking out a second mortgage. Home equity is the difference between your home’s value and what you owe.

There are two things you should know if you want to use your equity from your home to purchase another property. Is this a purchase of a second house or an investment?

A home equity loan is a great option if you are looking to purchase an investment property.

You can contribute more to your down payment. You can put more towards your down payment with a home equity loan. You will be more competitive in the current market and your monthly payments and interest rates will be lower.

A second property can be more difficult to finance due to the higher down payment requirements. A home equity loan is a better option and can be more affordable.

Home equity loans are secured by collateral which is your home. You will enjoy lower interest rates as a result.

Your home equity could be an asset in wealth building if you are looking to buy an investment property. You should consider the fact that a second house will not bring you income as an investment. This means you will be borrowing money to buy your second home.

There are downsides to using equity to purchase investment properties. You are effectively trading an asset for debt. You are taking the portion of your home you own and then putting it in a loan.

Housing market shifts can make you vulnerable, especially if you have two properties. If something happens in the housing markets, you’re at double your risk. If your property’s value falls, for example, you could owe more on both your home equity loan or your mortgage.

You could lose both your properties if you default on your loan.

It is possible to end up with three mortgages and only two homes. You will need to combine the home equity loan with the loan for your second house.

A downside to consider is that the interest on your home equity loan won’t be tax-deductible due to 2018 tax code changes.

This is the big takeaway: Yes, you can use your home equity to purchase a second home. Sometimes it’s a good option. However, it comes with risks. It’s not always the best decision. You need to carefully consider your particular situation.

 

Original Post: https://realtytimes.com/archives/item/1043687-can-you-use-home-equity-to-buy-another-property?rtmpage=

Today’s Mortgage Rates

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It is important to understand the relationship between mortgage rate and your purchasing ability if you are looking to purchase a home. Your purchasing power is the ability to afford a home that you are able to purchase. The monthly payment you pay on your home will directly affect the mortgage rates. Rates rise and so will the monthly payment that you can lock in on your home loan. This could impact your purchasing power in the future, especially in a rising rate environment such as we are currently experiencing.

The average 30-year fixed mortgage rate today is higher than 5%. Experts predict that this will rise in the coming months. If you act now, you can get ahead of this increase in your purchasing power.

If you get a smaller home loan amount, your chances of exceeding your target payment range increase. You can use this motivation to buy a house now if you are ready to do so.

When searching for a house, it is important to remember your budget. Consider what might happen if rates go up by getting preapproved. . . You should know what this would mean for your monthly expenses and how comfortable that makes you feel. This will help you to adapt if rates go up.

It doesn’t matter what, it is best to collaborate with your real-estate advisor and trusted lender to develop a plan which takes rising mortgage rates into account. You can both look at your budget and compare it to current rates, and create a strategy that you are ready for changes.

Even small increases in mortgage rates could have a significant impact on your purchasing power. It’s important to have a solid plan if you are in the process of purchasing a home. To help you achieve your homeownership dream, partner with a trusted lender and real estate advisor.

 

 

Original article: https://www.keepingcurrentmatters.com/2022/05/09/how-todays-mortgage-rates-impact-your-home-purchase/

Spring Housing And What To Expect

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You want to be prepared for the spring housing market. There are many factors that can cause uncertainty such as the conflict in the Middle East, rising inflation and the first rate hike from the Federal Reserve over three years , but the housing market seems relatively stable.

Here are some predictions from experts about spring.

Mortgage Rates Will Rise

Freddie Mac The 30-year fixed mortgage rate increased by more that a full percentage in the last six months. Experts believe that rates will rise over the next 90-days, despite mild fluctuations in recent week.

If you are a first-time buyer, or a seller looking to move into a better home, you should know that you will pay a higher interest rate if you wait. This higher rate can increase your monthly payments and add up over the loan’s life.

Housing Stock Will Rise

Buyers looking for homes to buy may find some relief. Realtor.com reported recently that the number new homes increased for each of two months. The National Association of Realtors just announced that the month’s supply of inventory increased. This is the first time it has happened in eight-months. Based on the activity in recent months, it appears that the inventory of existing homes will grow every spring.

It looks like buyers who are frustrated by the lack of homes for sale could be able to find relief this spring. If you do find the perfect home, it is important to act fast.

Listing now is better than waiting for more competition if you are a seller. As more homes are added to the market, your leverage in negotiations will be affected.

Home prices will rise

Supply and demand determine prices. Despite the increasing number of homes on the market, buyer demand is still very strong.

What does this mean for you? Home prices will continue rising as the demand for housing continues to outpace supply. Experts believe that the rate of appreciation will decline from the double-digit highs we have seen in the past two years. This means that prices will continue rising, but at a slower pace. Experts predict that home prices will not fall.

Will Increasing Mortgage Rates Not Cause Home Prices to Fall?

Experts disagree with the belief that a 1% rise in mortgage rates will cause home prices to drop.

If you are a first-time or repeat buyer, you will likely pay more to buy a home late in the year if you wait.

Three things seem certain about the spring housing market

  1. The mortgage rates will continue to rise
  2. There will be a slight increase in the number of homes for sale
  3. The pace of home price appreciation will be slightly slower, but it will not stop.

You should act quickly if you are thinking about buying a home. Selling is a good option if you want to beat rising competition. Contact Preferred Properties of Texas to speak with one of our knowledgeable agents today! 

 

Original Blog: https://www.keepingcurrentmatters.com/2022/03/24/what-you-can-expect-from-the-spring-housing-market/

Take Advantage of Today’s Low Rates Before They Begin to Rise

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Mortgage interest rates in today’s realty market are at or near record lows. If you have owned your home for many years, and haven’t refinanced recently, it’s likely that you have an interest rate on your mortgage that’s higher than the current average.

Many of today’s homeowners are rethinking what they need in a home and redefining what their dream home means. For some, remote work means they need additional space. Some people may choose to move to a less expensive area or downsize. These are great options if you’re thinking about moving.

Today’s rates are less than 3%. But experts predict in the coming years, rates will rise.

Take advantage of the opportunity to get a lower interest rate on your mortgage if it is higher than average. Lower rates mean you may be able to get more house for your money and still have a lower monthly mortgage payment than you might expect.

As mortgage rates rise so does your monthly payment.

Even a slight increase in rate can make a big difference in your monthly mortgage payment.

To keep your monthly payments the same, you will need to consider a home that is less expensive.

Whatever your reason for wanting to move up or down, this is the best time to do it. Even a slight change in interest rate can make a huge difference to your purchasing power.

Consider refinancing if making a move now doesn’t feel right. If you want to reduce your monthly mortgage payments and remain in your home, refinancing may be a good option.

Take advantage of today’s low rates before they begin to rise. Whether you’re thinking about moving up, downsizing, or refinancing, contact Preferred Properties of Texas today to discuss your options.

Understanding Escrow Accounts

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All mortgages require a monthly payment. Normally, the monthly payment is made from the principal repayment, prorated property taxation, prorated homeowner’s insurance coverage and interestrates. Of them, your premiums and insurance obligations are held in a trust account with the creditor, called the escrow accounts. If you refinance a mortgage, present credit card accounts are often closed and a new one is opened unique into the brand new loan.

To better understand the benefits and pitfalls of escrow accounts and how they operate, browse below.

Recognizing Escrow Accounts. When you cover your monthly mortgage payment, then your own insurance and taxes are stored in an escrow account held by your mortgage business. Whenever these invoices are expected, the lender is accountable for paying them in a timely way. Some lenders require that you open an escrow accounts to be able to give you the loan others will allow you to cover the bills yourself.

The Preceding Escrow Account. If you refinance a loan, then the first escrow accounts stays with the loan. Escrow funds, regrettably, cannot be transferred to fresh loans, even if it’s with the identical lender. All of the property insurance and tax payments you’ve made to this account, because the previous payment has been made, will be returned to you, typically within 45 days through wire transfer or check.

Utilizing Old Escrow Funds. Since the capital will be delivered to you at a subsequent date, it’s typically not feasible to utilize held lien funds from a former loan to apply your new escrow accounts on the refinanced loan. This may ask that you produce more money at closing to finance your new bank account and, depending on the time of year which you’re refinancing, the creditor will need a considerable amount in taxes to be prepaid into escrow.

Advantages of Escrow Accounts. If you decide to use an escrow accounts for the loan, you might be given a lower rate of interest. The lending company gets responsible for paying your quarterly real estate taxation, in addition to obligations for your homeowner’s insurance, preventing you from needing to remember to cover them. Because of land taxes being financially problematic in certain towns, having the ability to divide the sum due into 12 equal payments makes it less difficult to manage for many people.

Selecting a Escrow Account. When picking about an escrow accounts in your own loan, remember that with no escrow accounts, the final costs will usually be lower as you aren’t depositing money for potential property tax or tax premiums beforehand.

On the flip side, with no escrow accounts, your lender may charge you a lien charge or a higher rate of interest on the loan because their risk increases since they’ll be relying upon you to make timely payments for real estate taxes and homeowner’s insuranceplan. In the event you decide to cancel an escrow accounts and you fall behind on taxation or homeowner’s insurance premiums, you can face substantial penalties and late fees. You can lose your homeowner’s insurance policy, and the tax assessor can place a lien from the property. At worst, you can face foreclosure. All this would endanger the creditor’s investment in the house.

 

Preferred Properties of Texas

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