If you are planning to venture into the real estate business this year in 2020, you should be knowledgeable about the trends going on nowadays. It is not looking good, but don’t let this get you down as some trends might be looking for a continuation in 2020. There are some good changes as well.
Bad news for homebuyers, as mortgage rates will remain low in 2020, and just like last year, affordable houses will be scarce in the market. However, if you are looking for a home loan, a lot of lenders are surfacing up, competing for the best prices and more clients. However, if this is your first time buying a house, you might be in for a challenge as 2020 will be a seller’s market. This means that starter houses will be harder to find.
This is not all, as there are still things you should look out for in the year 2020. Here are some of them.
Mortgage rates are expected to plummet.
Mortgage rates will still be low in 2020, just like last year, where the average APR is only 4%. Freddie Mac, Fannie Mae, the National Association of Realtors, and the Mortgage Bankers Association all predicted that the average annual percentage rate would only be higher by a quarter of even a point lower than last year.
The forecasters also predicted that the tension will be mild and will only go through smooth sailing later this year. This also accounts for this year as an election year, meaning that mortgage rates will be untouched because of the election.
It will be harder for first-time homebuyers.
This is a rough time for homebuyers this year since there will even be lesser homes that are on sale, and this is expected to last until the end of the year.
There are too few homes being built, and most of them are priced not fit for entry-level homebuyers. This is bad news for first home buyers as it will be harder for them to purchase a house.
Homeowners are more willing to stay than sell.
In the past, where Americans are restless, they often move houses every six or so years because of the certain changes in their lifestyles. The typical homeowners in the past last in their homes for 13 years. In 2010, however, the years got reduced to only eight years.
According to Jessica Lautz, the vice president of demographics and behavioral insights for NAR, “People used to move every six to seven years because of a change in life such as having children and needing a bigger one.”
However, in 2019, a lot of people are citing fewer reasons to move out of their house and acquire a new one. One of the most common reasons is to be closer to their family or friends. This is especially true to Boomers, who are now more willing to stay in their current houses and are not actively looking for a new one. This means that Millennials will have to wait for Gen Xers to move up and acquire a new home.
Borrowers might find broader options for lenders.
A lot of big banks in the last year have cut back their FHA loans due to the severity of the punishment given by the feds when an error occurs on bank loans. This resulted in fewer institutions offering FHA loans and providing competition in the market. However, non-bank lenders have stepped in to do the job that banks aren’t willing to do.
To combat this predicament, the department of Justice and Housing and Urban Development have said that they will still ensure the severity of the punishments while matching it with the appropriate remedy. This is done to encourage big banks to resume their FHA loans and provide more competition in the market.
Many homeowners will shed their PMI when given the chance.
For a lot of homeowners, paying additional payments because of the PMI seems like a tax. For context, PMI is required when the homebuyer can’t afford a down payment that is more than 20%. In specific situations, however, a homeowner can get rid of his PMI.
Although the standards of having to get rid of your PMI can vary from lender to lender, the idea remains. You have to have no outstanding debts on your home, a good payment history, and an appeal to your lender.
This is not an easy task, however, as you will have to ask your lender to cease any additional payments to your mortgage, which can be a loss in the part of the lender.
There are a lot of reasons to delve into the real estate industry. however, now might not be the time. If you are a homeowner, there are a lot of chances for you to sell your current house, but it might be a bit of a challenge to acquire a new one. Always be on the lookout for these trends and take every opportunity if presented. If you need assistance, you can visit https://www.precisionfunding.com.au/ for more information about mortgage trends.
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