How Low Interest Rates Are Effecting The Housing Market

Mortgage rates are at a historically low level and this can mean a boost in home purchases. However, there are certain factors that may hinder how easy it may be to take advantage of these low rates. While you may want to step into the real estate market you may have to have a tighter hold on what your money portfolio looks like before you make any moves into the home buying realm. 

 

With the pandemic, lenders are starting to tighten the restrictions that you may have to deal with when applying for a mortgage. This may lead to waiting a longer period of time to enter the real estate market in order to garner a larger down payment or to do some work to repair an ailing credit score. This may hinder the application process for some people. Although these are not the only things that lenders look at they are important factors. Any work that you can do to help with the many items that any mortgage lenders will take into consideration is to your benefit. 

 

When it comes to refinancing there is a new fee that may eat into the benefits of the new record lows. This new refinance fee went into effect on December 1st and mortgage lenders Freddie Mac and Fannie Mae are imposing this 0.5% fee on lenders whose loans are backed by these agencies. However, loans that are below $125,000 are exempt from this fee so there is a bit of a reprieve. The fee is designed to help government backed agencies get back some of the money that the CARES Act has put out in order to pay for the program that gives people a forbearance of up to 360 days to their mortgage payment if they are experiencing hardship due to COVID-19. 

 

Low housing inventory is also having a negative effect on how easy it is to find an affordable home in the current market. With home prices on the rise due to the low interest rates and low availability of homes this can have an adverse effect on whether you can find a low level, first home type property. First time home buyers are often looking for a “starter home” that is good for the present but does not mean it will grow with them as their family grows. 

 

The uncertainty that the pandemic brings to the table is having a ripple effect to all parts of the economy. It means that every part of the housing market and beyond are trying to foresee what the pandemic will do to what decisions people will be making about their homes. WIll more people be forced to sell? Will foreclosures be on the rise if the government fails to take any action when it comes to further help for housing issues? Each question brings with it a whole new set of unknowns. Having the right person to bring you through the whole home buying process is key to having a successful experience. A knowledgeable real estate agent will help you through everything you need to do to have a positive experience. Check out our Agents page to find someone to help you buy or sell your home here in Hot Springs Village and the surrounding area.