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Real Estate Market Update:
Even though mortgage rates just recently hit their record low for the 13th time this year…low inventory means it’s going to be more difficult to find a house, THAT’S going to lead to more competition, and – in the end – that translates into HIGHER PRICES.
There’s also a brand new 0.5% “ADVERSE MARKET FEE” that will be charged on ALL Fannie Mae and Freddie Mac home refinances beginning December 1st.
n terms of what this means for you – if you have a mortgage backed by Fannie Mae or Freddie Mac, which is about 50% of all home loans…if you want to refinance your house, it’s now going to cost your lender an extra .5%, which is expected to then be passed on to YOU as the customer.
Overall, even though I THINK that type of “adverse market fee” is annoying…it’s not the end of the world. When you refinance a mortgage, you’re doing so because you want to lower your payment…and even though a .5% fee means less money back to you…in most cases, you’re still saving money at the end of the day.
And lastly…let’s talk about what’s going on with mortgage forbearances:
The GOOD news is that, since April…the total number of loans in forbearance has been steadily decreasing week after week, as homeowners began making their payments again. This was a REALLY good sign that, homeowners took forbearance out of an abundance of caution…they didn’t need it…and now they’re in a good position to resume as usual. HOWEVER…in an unexpected turn of events…in these last 2 weeks, for the first time since April… the number of mortgages in forbearance actually started to tick back up.
Now, a more TELLING sign would be if this trend CONTINUES for another few months, in which case – that’s something to address….OR, if this is a result of new shutdowns, fewer people opting OUT of forbearance, or wanting to play it a little safer over the holidays.
It’s too early to tell, but I’ve still maintained the position that – overall – mortgage forbearances only make up a small portion of the housing market, it won’t cause a wave of foreclosures, and even IF people are unable to pay – I have a strong feeling that banks will want to work with their clientele to AVOID foreclosing on them at all costs. So, I’d venture to say that – even though, YES, it’s unfortunate that these numbers are going up – it’s too early to draw any meaningful conclusions.
If you’re a buyer for homes right now, my best advice is to keep looking, don’t get discouraged, and you MUST be quick to get a deal when you see the right home. I WOULD expect prices to come down at some point, ESPECIALLY once interest rates EVENTUALLY go back up…but, that could be awhile, and until then, if you’re looking for some place to buy and hold long term, over 10 years…it’s probably a better idea to spend the time finding the right place, locking in as low of a rate as you can possible get…and then, do nothing.
As long as you can comfortably afford to make the payments, any fluctuations in price won’t matter…and from there, you can ride out anything that might happen. Long term, I’m still bullish on real estate…but, in the short term, competition and lack of inventory is going to make it REALLY hard to find something worth buying.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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