Home Mortgage Rates & Purchasing Update

 

Home Mortgage Rates & Purchasing Update

by Amy Lignor

 

When it comes to the facts and figures of the real estate market for 2018, most experts have been making sure to tell buyers that if they’re looking to purchase a home they should do it ASAP.

According to Freddie Mac’s latest forecast: “When it comes to buying a house, time is of the essence.” This is because the GSE expects mortgage rates to jump nearly a half-percent. Although the rates have risen only slightly over the past few months, the GSE believes that by the end of the 4th quarter of 2019, rates on 30-year fixed mortgages will reach 5.1 percent.

It is also important to note, however, that Freddie Mac shows a silver lining for house buyers. Their latest report states that: “While housing inventory is still tight, we expect the increased construction of new homes to help reduce the pressure on house price appreciation. Home sales are holding up despite the increase in mortgage rates compared to last year.”

Competition will also rise along with the rates. Though the mortgage rates will increase, home sales are not looking at slowing down or declining in any way. This follows a definite pattern, seeing as that from 2016 to 2017, home sales continued to thrive along with the rising rates.

So where do these figures come from when Freddie Mac forecasts that homes sales will ultimately reach 6.44 million by the end of 2019? They are basing most of these reports on existing home sales rising in the South and West areas of the U.S. Millennial buyers will also help spur on the competition in the housing market as they begin forming new households at faster rates.

What was once all based on the Baby Boomer generation is now in the hands of the Millennials. They are soon moving into the category of being the largest generation to date and have recently started moving into the housing market. The GSE’s words were: “While the Millennials’ rate of household formation is well below that of prior generations, their sheer size should drive demand higher.”

Yet another reason why Freddie Mac’s new forecast suggests acting sooner rather than later when it comes to purchasing a home. There is no better time than now to shop around and see what mortgage rates you qualify for, but always take things one step at a time. You see, there are no “rules” in place when it comes to how much you can afford, or how big your mortgage can be. This is true partly because mortgage lenders will determine your maximum home purchase price differently from how you might calculate it yourself via a mortgage calculator.

When requesting a bank to help calculate your maximum home purchase price, the bank will give little to no consideration to your existing home hunt, or any properties that you’ve already considered making an offer on. Rather than using a specific sales price, the bank will consider your annual income and your annual debts only, then use this data to find the largest mortgage payment you could make without raising your debt-to-income (DTI) ratio above allowable maximums.

This method of determining how much home you can afford is effective, but dangerous. It’s based on borrowing the absolute maximum for which you can get approved; therefore, it’s important to always keep in mind that banks won’t tell you what you should pay for a home—they can only show you what you could pay.

When leaving the bank out of it, as a home buyer you can put together your own monthly household budget in order to see what you should pay. This way, you can eliminate bank numbers that are calculated at the very highest amount in order to generate more money for the bank. First, determine the maximum monthly payment you’d like to make each month. Then, using a mortgage calculator, plug in your desired payment and today’s mortgage rates to find the loan size that kind of payment will afford.

Taking these very easy, but absolutely necessary steps, will make sure you get the home you want at a price that will not land you and yours in the ultimate “poorhouse.”

To research the methods and steps to take in order to purchase a house the right way and at the right time, information can be found on various websites, including www.freddiemac.com. Find the current national mortgage rates at http://www.freddiemac.com/pmms/.

 

Source:  BaretNewsWire.com

 

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