Five First Time Homebuyer Issues to Avoid

Bob Vaughan

Being a first time homebuyer may seem like a daunting situation, but these tips on things to avoid could make your life much more stress free.

  1. Not having home insurance prepared: The lender will require you to have an insurance policy in effect the day of your closing. Forgetting to have your insurance ready will delay your closing.
  2. Lower than necessary appraisals: If your appraisal comes in lower than your offer, it could be the reason you don’t receive funding to close. You’ll have to cover the difference in value to purchase price, negotiate with the seller, or be forced to back out of the deal.
  3. Credit problems: Lenders will re-check your credit prior to close. Opening new credit accounts or making large credit purchases prior to close could ruin your chances of closing.
  4. Homebuyer loan document issues: Make sure to check your loan documents for mistakes. If your name is misspelled or other things are incorrect, notify a loan officer as soon as you can.
  5. Last minute walk through problems: Make sure to be proactive on your final walk through. If anything is in lesser condition than discussed, try to fix this as soon as possible to avoid delay.

End of 2020 Home Prices Soared Year-Over-Year

Bob Vaughan

According to the end of 2020 census, home prices in December increased 10.4% year-over-year from 2019. In November a similar gain was experienced, with home prices rising 9.5% in 2020 when compared to 2019. Last year started in a way that almost no one expected, but low interest rates allowed more homebuyers across the country to enter the housing market, shortening inventory, and causing a surplus of demand in the market. As inventory remains low this far into 2021, demand will continue to outweigh supply and home prices should remain high. While this comes as no surprise given the extremely hot housing market nationwide, this leads to the question of exactly how much higher home prices can go.

Home Mortgage Applications on the Rise Again

Bob Vaughan

Last week mortgage application volume jumped 8.15% from the week prior. The previous two weeks application volume saw decreases after starting the year strong. Refinance volume was the highest, up 11% from the previous week, reaching the highest level since March 2020. This level of refinance activity was 59% higher than this time last year.

 

  • The FHA share of mortgage application volume went down to 9.1% from 9.4% the previous week.
  • The VA share of mortgage application volume went down also, dropping from 12.4% to 12.1% this week.

Do Mortgage Rates Have Seasons?

Bob Vaughan

In a recent study by tech startup Haus, they analyzed over 8.5 million mortgage originations between 2012 and 2018. In this study, Haus found that mortgage rates were the lowest in the beginning of the year around January when there were fewer home mortgage applications coming in. In order to compete for the lower levels of application volume, lenders were forced to make their rates more desirable than their competition. Of note, in 2020 this did not hold to be true as the high volume of mortgage originations allowed lenders to keep their prices relatively steady. That being said, as the economy begins it’s post-pandemic recovery it’s believed that mortgage rates will return to a more predictable pattern. According to a chief economist with Freddie Mac, mortgage rates are expected to stay near record lows as the economy continues to rebound this year.

FHA Raises Single-Family Loan Limit

Bob Vaughan

The Federal Housing Administration announced recently that the loan limit for single-family FHA mortgages will be increased from $331,760 to $356,362 in the majority of counties for 2021. The FHA is required to set single-family loan limits at 115% of area median house prices, subject to a ceiling and floor. This requirement was brought about by the National Housing Act per the Housing and Economic Recovery Act of 2008. The loan limit ceiling for single-family homes in high price housing areas will be raised from $765,600 to $822,375 for 2021. Recently the FHFA announced that the conforming loan limit for conventional loans was raised to $548,250 also, so the rise in FHA loan limits comes as no surprise.

Home Mortgage Application Volume Drops for Second Consecutive Week

Bob Vaughan

For the second week in a row, home mortgage application volume was down. Last week mortgage application volume dropped 4.1% despite being up 83% year-over-year. The second consecutive week of application volume decreases comes as mortgage rates see a slight uptick to close January.

 

  • The FHA’s share of mortgage application volume increased to 9.4% from 9.3% the previous week.
  • The VA’s share of mortgage applications decreased tp 12.4% from 13.8% the previous week.

Mortgage Application Volume Dips

Bob Vaughan

Home mortgage application volume dipped 1.9% this past week after jumping 16.7% week-over-week the period prior. This dip was paced by a 5% drop in refinance activity. Despite last weeks slight drop, as the start to 2021 continues, we should see strong mortgage application numbers for both first time and repeat home buyers.

 

  • FHA’s share of mortgage application volume decreased to 9.3% of total application volume this past week.
  • VA’s share of mortgage application volume increased to 15.8% of total application volume during the same period.

First Week of the New Year Sees Mortgage Application Volume Jump

Bob Vaughan

In the first week of 2021, mortgage application volume jumped 16.7% according to a report from the Mortgage Bankers Association. This comes as no surprise as year after year the market sees a jump in mortgage application volume to begin January after a slow finish to the year  prior due to the holiday season. An increase in refinance volume has once again been a major factor in rising application numbers, bringing them to the highest level since March of 2020.

 

  • FHA’s share of mortgage applications dropped to 9.6% from 10.1% the week before.
  • VA’s share of mortgage applications increased by 2.2% from last week, reaching 15.8%.

Mortgage Application Volume Drops Over Holidays

Bob Vaughan

According to a report from the Mortgage Bankers Association, mortgage application volume was down 4.2% from two weeks ago. Every year during the holidays, home mortgage application volume dips slightly so this decrease comes as no surprise. The FHA’s share of total mortgage application volume remained unchanged from last week coming in at 10.1%. The VA share of total home mortgage application volume increased to 13.6% from 12.1% the week prior.

2021 Housing Market Outlook

Bob Vaughan

2020 has been a remarkable year for the housing market nationwide. Sales volume has been up compared to last year every month since June and home values are growing faster than they have in the last 15 years. In addition to home values rising, the time on market is almost three weeks lower than it was in 2019. This year over 5.66 million homes have been sold and market analysts believe next year that number will rise even further, hitting a possible 6.9 million homes sold. As supply continues to dwindle and demand continues to rise along with the adaption of more technology increasing the ease of purchasing a home, 2021 should be another strong year for the housing market.

Homeowners are $1 Trillion Richer Thanks to Housing Boom

Bob Vaughan

In the past year homeowners with mortgages, representing about 63% of properties, have seen their equity increase 10.8%. Collectively among all homeowners this equates to $1 trillion in gained equity over the course of the last year. This gain marks the highest increase of home equity in over six years. According to CoreLogic’s chief economist, the strong home price growth experienced over the last year has created a record level of home equity for homeowners. Obviously, this differs state by state. Washington homeowners increased their home equity by an average of $35,800, while the lowest average annual equity gain was in North Dakota at only $5,400. The rising prices nationwide are due to the increased demand for housing and decreased supply among other factors. The millennial generation aging into home buying age and record low interest rates are also adding to the increased demand for housing.

Mortgage Application Volume Drops for Second Straight Week

Bob Vaughan

According to a weekly report from the Mortgage Bankers Association, application volume decreased 1.2% during the past week. This marks the second straight week that home mortgage application numbers have dropped. Refinance volume did increase by 2% week-over-week, hitting a 89% increase in volume from 2019. The highest level of refinance volume came from FHA and VA refinances, while conventional refinances slipped slightly.