As wages grow and mortgage rates eventually stabilize, our analytics are telling us that it will be a favorable home purchase market with a month over month inventory increase.
TKT: What should we expect the Spring 2019 real estate market to look like?
Travis: A lot of analysts are predicting a softer market in 2019.
Prices may level off but I think the overall market will be strong. There will be a huge pool of well qualified, motivated buyers this spring, (a large portion will be millennials), and slightly higher inventory. Unemployment levels are the lowest they’ve been in 50 years, wage growth is strong and the local numbers in the DC Metro area even more impressive than the national figures. Finally, a few large companies – Amazon, Google and Apple- are expanding in to the area soon, which will help to make a strong market even stronger.
TKT: How do you think interest rates will trend?
Travis: The Federal Reserve has made several increases to short term rates since Q2 2018 but long term mortgage rates have not necessarily followed suit. Average rates on 30 year fixed loans for clients with excellent credit scores rose from the high 3’s in 2017 to the mid 4’s in 2018. I tend to agree with Mike Frantanoni, the MBA’s chief economist, when he says, “30 year rates in 2019 should rise only modestly from here”. In other words, I think rates could drift slightly higher than the mid 4’s but it should not be anything too drastic.
TKT: How can a seller financially prepare now for selling in the spring?
Travis: First and foremost, sellers should call The Tamara Kucik Team!
Once they’ve made that crucial step and an approximate list price has been determined, they should subtract approximately 8% of the sales price and the payoff of any outstanding mortgages to determine an approximate net amount. It’s smart to go over these figures with a financial planner and/or accountant to make sure there aren’t any tax implications or financial considerations they’re forgetting. More than likely, their agent will give them a “to do list” and a budget to set aside for readying their home for the market. If they’re really on the ball, they can also initiate home, pest and/or roof inspections to get in front of any potential issues. If they’re looking to buy something as well, they should contact a local Loan Officer to get fully pre-approved!
TKT: How can a buyer financially prepare now for buying in the spring?
Travis: Great question…GET PREAPPROVED RIGHT AWAY by a trusted, local lender.
Common sense doesn’t always work in step with lending guidelines so it’s important to run through a loan application to get a firm idea of what you can and cannot qualify to buy. I would strongly recommend doing this sooner than later. Credit reports are good for 120 days. You should also make sure to keep most recent paystubs, bank statements, W2’s and tax returns (if self-employed) handy.
TKT: Renting vs Buying- What’s the smart avenue to take?
Average rents have increased dramatically year over year since 2014 and 2019 will be no different. Buying is a great short and long term investment, especially in the DC area. With the new tax laws for 2018, mortgage interest deductions for primary residences are still available up to $750,000, down payment requirements are low and most loan programs allow for borrowing against 401k or utilizing gift funds from relatives for down payment and closing costs. If you’re able to buy… do it.
TKT: What if someone’s credit isn’t perfect, do you have loan programs that they would be eligible for?
Travis: We do! We can go as low as 580 on FHA and 620 on Conventional with limited down payment requirements. More importantly, we take a consultative approach with all clients and we’re more than willing to offer advice and stay involved with clients over the long term who need to improve their credit to be able to qualify down the line. I have a 501(c) non-profit organization I like to refer credit challenged clients to as well, InCharge Debt Solutions – (877) 906-5599.
TKT: Recently, we’ve heard this question a lot – What is a reverse mortgage?
Travis: A reverse mortgage is a financial product for homeowners who have substantial equity in their home that they would like to draw against to provide, or supplement, retirement income. The funds can come as a lump sum or via monthly draws. Unlike standard mortgages, there are no monthly mortgage payments to make on reverse transactions. Borrowers are still responsible for paying taxes and insurance on the property and must continue to use the property as a primary residence for the life of the loan.
To qualify for a reverse mortgage, you must:
- Be at least 62 years of age or older
- Own your home and use it as your primary residence
- Own your own home free and clear or only have a small amount left to pay on the existing mortgage
- Have a single family, multi-unit (4 or less), approved condo or manufactured home.
- The home also must be in good condition
- Credit is not pulled
Thank you so much to Travis for providing us with this in-depth and helpful mortgage information to help our buyers and sellers prep for the Spring market. If you would like to learn more about your financing options, please contact Travis Vollmerhausen and mention that the Tamara Kucik Team sent you.