Lee Morof's Real Estate Blog

The COVID-19 pandemic has impacted everyone and this includes the real estate industry. One of the biggest impacts that this pandemic has had involves the home lending process. Because many people are looking for ways to buy a home while engaging in proper social distancing measures, the industry has had to adapt. Learn more about some of the changes the COVID-19 pandemic has forced on the home lending process.

Homes Are Getting More Affordable

The demand for homes right now is high; however, homes are still more affordable than they have been in the past. Lenders are trying to find ways to encourage people to purchase homes because they have seen a drop in their business as well. As a result, many lenders are willing to provide potential homeowners with great offers and opportunities to purchase a dream home.

Online Applications Are Becoming More Common

Next, online applications are becoming more common as well. In order to help people buy a home while still engaging in social distancing, it is possible to complete the home application process online. This is usually provided through an intuitive system that provides clear instructions on what has to be submitted for the application process.

Buying Power Is Going Up

Because many homeowners and potential home buyers are realizing that now is a great time to buy, they are learning that they have a lot more power. They might be able to afford a larger home or carry out a home improvement project after buying their home. This provides more flexibility for homeowners.

Refinancing Is Becoming More Common

In addition to changes in the home buying process, there are changes taking place in refinancing as well. Many current homeowners are realizing that they have a unique opportunity right now as well. As a result, they are taking advantage of the opportunity to complete a refinancing deal to save money.

Home Lending Is Changing

These are just a few of the major changes that have taken place in the home lending process due to the COVID-19 pandemic. Anyone who owns a home or is thinking about buying a home should consider looking at their available options as well. There could be opportunities to save money.

Are you a homeowner who is thinking about selling their current home and making an upgrade to a newer, larger home?

If you’re facing the prospect of having to manage a home purchase and a home sale at the same time you’ll find that there are numerous priorities that are begging for your attention.

In today’s blog post we’ll share a few tips for how to manage a buying and selling transaction simultaneously without being overwhelmed by them.

Start By Getting Your Finances In Order

Before you start the hunt for a new home you’ll want to ensure that your finances are in order and that you’re fully prepared for the many costs that you’ll face.

If you are currently paying off a mortgage on your home, you’ll either need to be approved for a second mortgage to buy your new home or you’ll need to sell your current home first.

You’ll also need to have your down payment lined up for the new home, as well as some money set aside to cover your closing costs. If you plan on selling first and then buying afterwards you may want to have a “transition fund” set aside to cover any rental or other costs if it takes a month or two before you get into a new home.

Selling First Is Typically Far Easier

It’s worth noting that selling your home first and then buying is far easier than buying first and trying to sell. There is a lot of uncertainty in the selling process, especially if you’re in a slower real estate market. Conversely, once you find that perfect new home you can typically get an offer in and close on it quickly if you’re the only bidder.

Begin The Hunt For Your New Home Immediately

Although you may want to wait before you buy your new home, you’ll want to get your house hunt started as soon as you decide to make your move. The more time you give yourself to find a new home, the better the chance you’ll get one in your target community and with the features you’re after.

Leverage Professional Expertise To Help You Manage It All

Trying to manage both selling your current home and buying a new one at the same time will be a significant challenge – one that can be made far easier by working with an experienced real estate agent who knows the ins and outs of the local market. Contact your real estate agent before getting started and they’ll be able to advise you how to best proceed.

When people start the process of trying to find a home, they want to make sure that they take the time to get this decision right. The reality is that a home is the most expensive purchase that most people are ever going to make. As a result, they need to make sure they find a home that will meet their needs.

At the same time, it will be hard to find a home that is truly perfect. Therefore, it is a great idea for everyone to come up with a list of necessities and a list of features on which they can be more flexible. How can people do this? How can people fall in love with an imperfect home?

Remember That There Are Options

Every home is going to have its flaws. Those who spend the time trying to find a home that is absolutely perfect are going to have decision paralysis. On the other hand, it is important to remember that there are options available. Nearly everything that is wrong with a potential home can be remedied, fixed up, or recycled. In this manner, even if a home is not perfect when people first look at it, there is a way to make it perfect with a few improvements or upgrades. This is a nice alternative that people should keep in mind.

The Styles Of Homes Change

Furthermore, keep in mind that it might be helpful to find a home that will grow with the family or the homeowners. Styles rotate and change on a regular basis, so people should not worry about finding something that is going to be absolutely perfect right this minute. For example, the open concept is one of the biggest shifts that has taken place during the past few years.

Closet standards have changed as well. There are even inconvenient structural columns that people have found a way to love. There are plenty of ways that homeowners can take a home that has flaws and find ways to help them match new and trending styles.

These are just a few of the ways that homeowners can find ways to love a home that is not perfect. This could make it easier for homeowners to find the right home for them.

Last week’s economic news included readings from Case-Shiller Home Price Indices, along with Commerce Department readings on public and private-sector job growth and the University of Michigan’s Consumer Sentiment Index. Weekly reports on jobless claims and mortgage rates were also released.

Case-Shiller: Home Price Growth Ramps Up as Demand for Homes Increases

July home prices rose at a year-over-year rate of 4.80 percent in July as compared to June’s reading of 4.40 percent. Shortages of available homes were driven by demand. Homebuyers were looking for larger homes to accommodate working from home and also wanted to leave congested urban areas.

Home prices in Case-Shiller’s 20-City Index rose by 3.90 percent year-over-year in July; Home prices in participating cities grew by 3.50 percent in June. Home prices grew fastest in Phoenix, Arizona with a year-over-year growth rate of  9.20 percent. Seattle, Washington home prices grew by 7.00 percent, and home prices in Charlotte, North Carolina rose by 6.00 percent.

Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, said,

“Prices were particularly strong in the Southwest and West were comparatively weak in the Midwest and Northeast.” 16 of 19 cities in the 20-City Home Price Index reported a faster growth rate for July’s home prices. Detroit, Michigan did not report data for July’s 20-City Home Price Index.

Construction spending in August jumped from July’s reading of 0.70 percent growth to 1.40 percent. This could be positive news if it indicates a faster pace of home construction, but it could also reflect higher prices for building materials. Rising costs of building materials are typically added to home prices, which further challenges first-time and moderate-income home buyers.

Mortgage Rates and Jobless Claims Fall

Freddie Mac reported lower fixed mortgage rates last week; The average rate for a 30-year fixed-rate mortgage dropped two basis points to 2.88 percent; rates for 15-year fixed-rate mortgages averaged four basis points lower at 2.36 percent. The average rate for 5/1 adjustable rate mortgages was unchanged at 2.90 percent. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages 0.20 percent. 

New jobless claims fell to 837,000 claims filed from the prior week’s reading of 873,000 initial claims filed. Ongoing claims were also lower last week with 11.77 million filings as compared to 12.75 million ongoing claims filed in the previous week.

The national unemployment rate dipped below 8.00 percent for the first time since March with a reading of 7.90 percent. Analysts said that the number of people in the workforce dropped from 164.5 million in February to 160.1 million workers in September; this indicates that 4.4 million workers have left the workforce.

Consumer sentiment rose to its highest level since March according to the University of Michigan’s Consumer Sentiment Index reading for September was 80.40 as compared to August’s index reading of  74.10.

What’s Ahead

This week’s scheduled economic news includes readings on job openings and the minutes from the Fed’s Federal Open Market Committee meeting. Readings on public and private-sector jobs will also be reported.

The real estate market has been in flux during the past few months. As a result, this could be a great time to both buy and sell a home. This is because mortgage rates are attractive for borrowers right now. With so many people who are looking to buy a home, is likely the people selling a home are going to receive multiple offers. On the other hand, given what the mortgage market looks like right now, borrowers also have attractive options.

As a result, many people are wondering if they should buy a house with cash or take advantage of low interest rates. For homebuyers in this position, there are a few important points to keep in mind. 

Consider What The Cash Can Do

Ultimately, a decision to buy a house with cash or taking advantage of low interest rates is going to be a personal decision. At the same time, there are several factors to consider. One of them involves what the cash is going to be used for. For example, many people have heard the saying that cash is king. Buying a house with cash might be right for some people. 

On the other hand, there might be some individuals or families who can put this cash to better use elsewhere. For example, if this cash is needed to buy a new car, fun retirement, or pay for someone’s education, then the cash might be better spent in this area. It is important to think about how this cash will be spent when deciding whether or not to use it to buy a home. 

The Competitiveness Of A Cash Offer

It is also important to consider the advantages of buying a house with cash. In addition to the obvious benefit of not having a mortgage payment, a cash offer is also going to be seen as more competitive. With so many people looking to buy a house right now, it is critical for homebuyers to appear competitive right off the bat. 

A cash offer is always going to look better than someone who is trying to take out a loan because the transaction is simpler, faster, and provides the seller with an instant source of liquidity. 

These are a few of the most important points that people should keep in mind when deciding how they are going to purchase a home.

Home price growth fueled by high demand for single-family homes was higher in July according to Case-Shiller’s National Home Price Index. Analysts said that millennials seeking to purchase homes and the continued exodus from large urban areas propelled rising home prices. Home prices grew fastest in the West and Southeastern regions.

While home prices grew moderately before the pandemic, high unemployment has not impeded rapid home price growth since the pandemic. Low mortgage rates and more demand for homes overcame consumers’ concerns about jobs and the economy. Analysts said that rapidly rising home prices could benefit homeowners struggling with mortgage payments as additional equity could provide more cash for relocation.

20-City Home Price Index: Three Top Cities in July

Home prices rose at the fastest pace in Phoenix  Arizona at 9.20 percent year-over-year. Seattle, Washington reported a home-price growth rate of 7.00 percent; Charlotte, North Carolina reported year-over-year home price growth of 6.00 percent. In July.

The COVID-19 pandemic caused many workers to switch from commuting to their jobs to working from home. Home-buyers also looked for homes in less-populated areas. 16 of 19 cities reported in July’s 20-City Home Price Index reported a faster pace of home price growth than in June. Detroit, Michigan did not report home prices for the July 20-City Home Price Index.

Homeowner migration from congested cities to suburbs was confirmed by Robert Dietz, the Chief Economist at the National Association of Home Builders, who said: “…builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.” Building single-family homes in all price ranges would help ease the shortage of homes.

FHFA Reports Highest Home Price Growth Rate From May to July

The Federal Housing Finance Agency reported a record price growth rate of more than two percent for the two months between May 1 and June 30. FHFA reports data on homes owned or financed by Fannie Mae and Freddie Mac.

Those who are in the process of buying a new home need to be aware of some of the factors that might influence their ability to do so. Even though credit score, income, and assets will play major roles in whether or not someone might be approved for a loan, there are other factors that will play a role as well.

Buying a new car might even have an impact on the homebuying process.

Why is this the case?

The Debt Payments On The Car Will Play A Role

There are multiple ways to buy a car. Some people elect to pay cash for the entire vehicle. While this is a challenge for most families, this will prevent any new debt from being added to the family’s finances. At the same time, this could also reduce the amount of cash the family has on hand to put toward the new home.

Most families end up putting a down payment on a car and taking out a loan for the rest. While this is a financially responsible decision, this can also make it harder to purchase a new home. This is because the payments on the car are going to be added to the family’s existing debt. A potential lender is going to see these debt payments and reduce the amount of money they are willing to provide. This could make it hard for a family to purchase their dream home.

Factor In The Cost Of The Car

Those who need a new car need to factor the monthly cost of the car into the home buying equation. For example, if the monthly payments on the car are going to be $200, then this is $200 less that the family can afford for the mortgage payment. The same math has to be done by removing the down payment for the car from the potential down payment on the house.

Do The Math Carefully

People need cars to get around in most parts of the country. At the same time, the financially responsible decision is to take the cost of the car and deduct this from the assets that are available to pay for the home to avoid any surprises. The lender is going to do the same thing.

The coronavirus pandemic has impacted everyone. For homeowners, they might be wondering how they are able to keep up with their mortgage in light of shelter in place orders, financial difficulties, and unemployment problems.

Federal agencies and regulatory authorities are putting relief measures in place during the pandemic to help people who might have trouble keeping up with their mortgage. When it comes to coronavirus mortgage relief, there are a few tips that everyone should keep in mind. 

Talk To The Lender First

The first step is always to talk to the lender directly and see if there are relief options. The last thing A lender wants us to have a bunch of loans go into default. When this happens, the lender might be forced to sell the property for a significantly reduced cost, meaning they will lose a significant amount of money. They do not want their borrowers to foreclose either. Therefore, as long as they are given enough notice, they should be able to help borrowers by adjusting their payment plans. 

Understand The Options

Everyone has a different type of mortgage and every contract is different. Borrowers me to take a look at the details of their plans and make sure they understand what their options are. For example, borrowers with certain types of loans might have lenders who are obligated to offer deferred or reduce mortgage payments for a period of six months. This is called forbearance. 

This means that borrowers do not have to pay their mortgage for a few months and will not be charged late fees or added interest. It is important to know that they will owe this money eventually. All borrowers need to read their contracts to see if they qualify for forbearance. 

Foreclosures And Evictions Have Been Halted

Finally, during the pandemic, Federal officials have imposed a nationwide halt when it comes to foreclosures and evictions. This moratorium only affects borrowers with certain plans. Therefore, everyone needs to read their contracts closely to see if they’re playing qualifies. Furthermore, there are certain cities, counties, and states that have halted foreclosures for everybody. 

The coronavirus pandemic has been difficult for everyone. It is important to keep these mortgage relief options in mind and ask for help from professionals. That way, everyone can understand all of your options.

Last week’s economic news included readings on new and existing home sales and Fed Chair Jerome Powell’s testimony on changing the Fed’s business loan policy. Weekly readings on mortgage rates and jobless claims were also released.

Sales of New and Pre-Owned Homes Rise In August

New homes sold at a seasonally-adjusted annual pace of 1.01 million sales; analysts expected the sales pace to fall to 900,000 sales from July’s reading of 965,000 new home sales. Homebuyers turned to new homes as the supply of pre-owned homes dwindled. Homeowners stayed put as fears over COVID-19 contagion limited sales.

Pre-owned homes sold at a seasonally-adjusted annual rate of six million homes as compared to the expected reading of 6.03 million sales and 5.86 million sales in July. Previously-owned home sales rose by 2.40 percent from July to August and were 10.50 percent higher year-over-year. The sales pace from July to August was the fastest since December 2006.

The median sales price of pre-owned homes rose to $310.600 in August and the average price for pre-owned homes was 11.40 percent higher year-over-year. Inventories of available pre-owned homes were lower than the six months supply considered average; there was a three months inventory of unsold pre-owned homes in August.

Mortgage Rates, Jobless Claims Mixed

Freddie Mac reported higher fixed mortgage rates last week as the average rate for 5/1 adjustable rate mortgages fell. 30-year fixed-rate mortgages rose three basis points on average to 2.90 percent. Rates for 15-year fixed-rate mortgages averaged 2.40 percent and were five basis points higher. The average rate for 5/1 adjustable rate mortgages was six basis points lower at 2.90 percent. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages, 0.70 percent for 15-year fixed-rate mortgages, and 0.20 percent for 5/1 adjustable rate mortgages.

New jobless claims rose to 870,000 new claims filed from the prior week’s reading of 866.000 initial claims filed. Continuing jobless claims fell to 12.58 million ongoing claims from 12.78 million ongoing claims filed in the prior week

In other news, Fed Chair Jerome Powell testified before the House Financial Services Committee regarding the feasibility of the Federal Reserve offering smaller business loans for COVID-19 relief. The Fed’s current minimum loan amount is $250,000; Chairman Powell told the Committee that the Fed’s loan program had few requests for loans of less than $1 million. He also said that if the minimum loan amount was changed, the current lending program would have to be scrapped and restarted from scratch.

What’s Ahead

This week’s scheduled economic releases include Case-Shiller Home Price Indices,  pending home sales and reports on public and private-sector jobs, and the national unemployment rate.

You’ve found the perfect new house or condo, and you are now preparing an offer that you believe the seller will find tempting enough to accept. However, you know that there are going to be thousands of dollars in closing costs that need to be paid before the sale is completed and you become the home’s new owner.

The question is, should you ask the seller to pay some or all of the closing costs? In today’s blog post we’ll address this question and list a few scenarios in which you may want to consider having the seller pick up the tab.

Ask if You’re Offering the Full Listing Price

If you’re prepared to offer the full asking price for the home you can certainly include the caveat that the seller assist with some or all of the closing costs. Many sellers will price their home slightly higher than they expect to receive as they believe that buyers will submit low initial offers which need to be negotiated.

For example, if a home is listed at $275,000 a seller might actually be expecting $260,000 or $265,000 for it. You can offer $275,000 but ask that they take care of the closing costs.

Ask if You’re Confident the Seller Has Few Other Options

If the home has been on the market for a number of months or if you’re fairly confident that the seller isn’t going to find much luck elsewhere you can ask them to pick up the closing costs as one of your purchase conditions. You’ll obviously want to negotiate in good faith, but if you’re coming from a position of strength you can leverage this in to some additional savings.

Ask if You’re Ready to Close Immediately

Are you ready to sign on the dotted line today? If you’re sure that this is the right home for you, let the seller know that as long as they’re willing to assist with the closing costs and accept your bid that you’ll start the closing process today. Nearly all sellers will be willing to make a small sacrifice to get the deal done.

As you can see, there are a number of situations in which it makes sense to ask the seller to shoulder some of the closing costs. If you have found a home that you wish to purchase and you’d like advice on how to proceed, contact a real estate agent today. An experience real estate professional can help you craft an offer that the seller won’t be able to refuse.