Can you remember when mortgage rates were way above 5 percent not so long ago? Maybe you are trying to forget such undesirable times, where buying a home was as difficult as solving a Rubix cube the size of Manhattan. This was a very rare event that happened for the first time in nearly seven years, so strong and so uncommon, people began to think it was a new formality.
Fortunately, the opposite came to fruition, homebuyers were extremely upset by such challenge, causing a slowdown in the market that stopped a large number of sales, plummeting home prices in the most discussed and demanded real estate hubs all over the United States.
With prices that high, 5% will create a heavy impact on the market, which was a good point by Robert Dietz, an executive at the National Association of Home Builders.
Now, we are having maybe the best scenario for homebuyers since the start of the decade, with mortgage rates at 4.5 percent, showing steady signals of stability for the remaining months of 2019. Even Federal Reserve Chairman Jerome Powell assured the fact to the press last month.
Bigger Differences & New Trends
This time, buyers can take the time they please to decide which option works best for them, not like in 2018 where prices and rates would often ruin the plans of thousands of families before they can even begin. Also, the amount of money homebuyers can save can go up to +$20K, for a 30-year fixed mortgage rate of $200,000. That’s a huge difference if we compare mortgage rates of 5% against the actual ones at 4.5%, seems little, but it is not.
We must acknowledge the new landscape, that looks even more favorable if you take into account the increasing wages at a considerable pace, the fact that some homes are losing value, mostly the pricier ones; something that benefits sellers with properties that are more affordable.
- Lower your DTI (debt-to-income ratio) by paying off debt with the highest monthly payment possible.
- Higher credit scores get the best deals, such as sub-4 mortgage rates.
- The bigger your downpayment, the lower your rate will be.
On the other hand, some believe that rates aren’t low enough to shake the market, and for that to actually happen, according to Mark Fleming, it’ll need to come down to 3.70-3.90 percent in order to reverse the negative effects from 2018. Want to have more insights like this right on your dashboard? Be sure to follow us on Facebook and Instagram now!