We’ve heard it for the last year and then some - Interest rates are high; Interest rates have come down; Oh no, rates are on the rise…
What are home buyers supposed to do? Do they wait for rates to come down? Do they buy now and refinance later? How are they supposed to come up with 20% down payment? How can they afford what they need?
The status of the current market has created a bit of confusion, a lot of chatter, and so much uncertainty. With the media being front and center, and social media being right there with it, it’s hard to know who to trust.
As a wholesale mortgage advisor, when I connect with potential clients, two of the very first items we discuss are down payment options and resources. Borrowers always have a unique story. Maybe it’s the retired Veteran, or one using their VA benefit for the first time. Perhaps it’s a First Time Homebuyer excited and nervous. New investors buying their first short or long-term rental ready to grow their wealth through real estate have increased in our area. We are also seeing home buyers looking for that perfect vacation home/weekend getaway for their family. Then we have those families looking to move from their current home to up-size or downsize, depending on the season their family is in. The good news is today’s financial climate has created an opportunity for our lenders to offer many flexible options. From state-funded down-payment, federal, and lender-specific programs, buyers have access to opportunities to offset the down-payment. We have access to a program with 1% down for first-time buyers, and Fannie Mae’ Homeready at 3% down, plus a Fannie Mae SPCP (Special Purpose Credit Program) which is a grant offering $5000-$6000 in forgivable assistance. There really is something for most everyone. Hearing the excitement from clients when I go over their options, sharing that they don’t have to have 20% down to buy a home – the relief they feel at that moment is one of the best in the mortgage business. Buying a home IS possible!
When I entered the mortgage market six years ago, things had been in flow and the average interest rate had been stable for quite a while. When our world entered the pandemic of 2020, markets were unstable, and we found ourselves navigating the lowest rates the mortgage and real estate industries had ever seen. Homes were being sold at higher prices than market value, cash was king, and bidding wars were the norm. When the transition back toward regulating these markets started to occur, there was no history on record to predict what this would mean. Once again, we were navigating rates increasing, panic among sellers and buyers, more self-employed applications, new programs to accommodate the market, and the buyers, more investments, rates creeping higher and higher, all through 2023. Nearly three years to navigate things we had never been through. Here we are in 2024, where we’ve seen rates drop, and early February gave us a glimpse of things to come. Rates are still lower than they were, and at the time I’m writing this article – the end of February – interest rates have come back up a bit, but nothing showing we are headed back to where we were. The federal reserve is expected to have rate cuts this year, and we are hopeful. At the end of the day, trust your mortgage advisor, who follows the markets regularly, who will respond and not react in panic, but create the best opportunity for you - the buyer.
Down payments are flexible in nearly every program, and with great credit, or a willingness to trust someone to help you achieve it, can create better rate incentives. Monthly payments are determined by several factors - the loan amount, the loan to value (down payment percentage), interest rate (credit score + down payment), mortgage insurance, property taxes and homeowner’s insurance.
Don’t be deceived by the fear of the down payment. There are options that make homebuying possible. My colleagues and I work hard every day to make dreams come true. We are collectively excited about the new programs, flexible lending options, and increased inventory. New Braunfels and the surrounding areas are not slowing down. The excitement and freshness of spring has us all ready to do more, and experience the smiles we see when your family walks into that new home, ready to make new memories.
Article By Christy Meaux / NMLS 1709296, Mortgage Advisor; New Braunfels, TX, Edge Home Finance / NMLS 891464, Corporate office: Minnetonka, MN
New Braunfels and the surrounding areas are not slowing down.
