Home Buying

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Time in the Market Beats Timing the Market

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Trying to decide whether it makes more sense to buy a home now or wait? There’s a lot to consider, from what’s happening in the market to your changing needs. But generally speaking, aiming to time the market isn’t a good strategy – there are too many factors at play for that to even be possible.

That’s why experts usually say time in the market is better than timing the market.

In other words, if you want to buy a home and you’re able to make the numbers work, doing it sooner rather than later is usually worth it. Bankrate explains why: 

“No matter which way the real estate market is leaning, though, buying now means you can start building equity immediately.” 

Here’s some data to break this down so you can really see the benefit of buying now versus later – if you’re able to. Each quarter, Fannie Mae releases the Home Price Expectations Survey. It asks over one hundred economists, real estate experts, and investment and market strategists what they forecast for home prices over the next five years. In the latest release, experts are projecting home prices will continue to rise through at least 2029 – just at a slower, more normal pace than they did over the past few years (see the graph below):

 
 

But what does that really mean for you? To give these numbers context, the graph below uses a typical home value to show how it could appreciate over the next few years using those HPES projections (see graph below). This is what you could start to earn in equity if you buy a home in early 2025. 

 
 

In this example, let’s say you go ahead and buy a $400,000 home this January. Based on the expert forecasts from the HPES, you could gain more than $83,000 in household wealth over the next five years. That’s not a small number. If you keep on renting, you’re losing out on this equity gain.

And while today’s market has its fair share of challenges, this is why buying is going to be worth it in the long run. If you want to buy a home, don’t give up. There are creative ways we can make your purchase possible. From looking at more affordable areas, to considering condos or townhomes, or even checking out down payment assistance programs, there are options to help you make it happen.

So sure, you could wait. But if you’re just waiting it out to perfectly time the market, this is what you’re missing out on. And that decision is up to you.

Bottom Line

If you’re torn between buying now or waiting, don’t forget that it’s time in the market, not timing the market that truly matters. Connect with an agent if you want to talk about what you need to do to get the process started today.

Read more at Keeping Current Matters

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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The Biggest Perks of Buying a Home This Winter

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Waiting for perfect market conditions often means missing out. Because what you may not realize is, if you’re ready and able to buy, this time of year could actually give you an edge. Here’s why. As the weather cools down, the housing market can too – and that works in your favor.

You Likely Won’t Feel as Rushed

Homes tend to take a little longer to sell during this time of year. Data from the National Association of Realtors (NAR) shows the average time a house sits on the market jumps up during the winter months.

This is partly because fewer buyers are active at this time of year – and that decrease in buyer competition means the houses that are on the market aren’t going to be snatched up as quickly. So, if you decide to buy a home in the next couple of months, you’ll likely have more time to consider your options and negotiate a deal without feeling as pressured.

Sellers May Be More Willing To Negotiate

And since homes generally take longer to sell during the winter, sellers are often more motivated to close a deal. That can work in your favor, too. According to NAR:

“Less competition can lead to better deals. While homes are not selling as fast as during the summer, sellers may be more willing to negotiate.”

Whether it’s compromising on price, covering closing costs or repairs, or including extras like appliances, you have more room to ask for what you need.

Homes Are Less Expensive in the Winter

With less competition from other buyers and sellers who are more willing to negotiate, you may see slightly lower prices too. In fact, according to NAR, homes are typically about 5% less expensive now compared to when prices normally peak in the summer.

That might not seem like a huge difference, but on a $400,000 home, it could mean savings of $20,000 on the purchase price.

You can see this expected seasonal shift in home prices taking place this year. Take a look at the graph below showing the median sales price of existing homes (homes that were previously owned) over the past 12 months. You’ll notice in the green bars that prices were lower in the winter months last year, and it seems like that’s going to happen again this year. That gives you the chance to make your budget go further:

 
 

Bottom Line

Buying a home during the winter means less competition, motivated sellers, and potentially lower prices, too. Work with a local real estate agent to find the right one at the right price for you.

Read more at Keeping Current Matters

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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FHFA finalizes new housing goals for Fannie Mae, Freddie Mac

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The agency announced the final rule on Thursday, establishing new affordable housing goals for loans purchased by the GSEs over the next three years.

The Federal Housing Finance Agency (FHFA) this week announced a new final rule establishing affordable housing goals for the loan purchases of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac from 2025 through 2027.

The goals, originally proposed in August, are largely unchanged from the initial draft. They are designed to “support equitable housing access for low-income families and families in low-income areas,” according to an announcement.

On the single-family side, 25% of the purchase mortgages acquired by Fannie and Freddie must go to borrowers earning less than 80% of the area median income (AMI), a decline from the 28% required in the previously outlined goals.

In line with the August proposal, there is also a new goal for very low-income purchases (for borrowers earning less than 50% AMI). The GSEs must allocate 6% of their purchases in this area, down from 7% in the previous plan. The low-income refinance goal of 26% as proposed is unchanged, as is the purchase subgoal for low-income census tracts at 4%. A purchase subgoal for minority census tracts is now 12%, up from the current 10%.

“The affordable housing goals better enable the Enterprises to effectively advance their missions and support housing finance markets in a safe and sound manner,” FHFA Director Sandra Thompson said in a statement. “It is critical that the Enterprises meet these goals, as required by law and regulation.”

For the single-family goals, “the Enterprises must meet the benchmark level or the actual market level of loans for each category,” the agency explained. “The actual market level is determined retrospectively for the year based on Home Mortgage Disclosure Act (HMDA) data.”

The goals also establish what FHFA calls “measurement buffers,” which help to determine what to do if either GSE fails to meet a goal. In these instances, the enterprise “must develop a housing plan (which is an action plan to demonstrate how it will improve its performance),” the FHFA explained.

A housing plan may be required if Fannie or Freddie “fails to meet a goal and the gap between the Enterprise’s performance and the market level is greater than the buffer defined in the final rule,” the agency stated.

The final rule is scheduled to go into effect on Feb. 27, 2025, or 60 days following its publication in the Federal Register.

Read more at Housingwire

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Fintech Solutions Create Flexible Financing Options

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Home values are hovering at near record highs. For many homeowners, their home is their most valuable asset and home equity can be a significant source of their wealth.

Homeowners can leverage the value of their home, such as in the form of a home equity loan and home equity lines of credit (HELOC). They may use their home equity funds to try to increase their property value by repairing or renovating the home to prepare it to sell. They may also use home equity funds to eliminate private mortgage insurance (PMI). But consumers often find that home equity financing can be overly complicated. A 2022 survey of U.S. borrowers indicated that approximately one-third of respondents thought getting a mortgage was more difficult than buying a car (31%), applying for jobs (29%) and applying to college (26%). 

Further, home equity loans and HELOCs are not without drawbacks. Borrowing against your home equity means the mortgage balance stays high, interest rates add costs, borrowers can find themselves owing more than their home is worth, credit scores can suffer, and, in the worst cases, homeowners could lose their homes due to missed payments. 

Those risks beg the question: Are home equity loans and HELOCs the best options?

Leveraging Home Equity Without a Loan

Because real estate professionals are often trusted sources of information for homeowners, they may face questions over financing options. Agents should always advise their clients to speak with mortgage lenders and financial experts over their personal financing matters. But technology could help them find some answers, too. Financial technology (aka fintech) companies are offering real estate professionals and consumers alternative financing options that may be worth exploring. 

For example, Unlock Technologies (a fintech company focused on helping consumers improve their financial status) has created a financing option—a home equity agreement (HEA)—that allows homeowners to leverage home equity without taking on a loan. The concept is fairly simple: Homeowners receive an interest-free lump sum of cash in exchange for a share of their home’s future value. Because an HEA is not a loan, there are no monthly payments. The qualification threshold is lower than traditional home equity loans and HELOCs, making HEAs an option for a wider population of consumers. Income requirements are also lower, so HEAs may be a better option for homeowners who are self-employed, retired or who may lack a steady income. 

HEA funds can be used for any purpose, including home renovations or repairs, consolidating or eliminating debt, education expenses or funding a business. Homeowners can access the wealth created via their home equity while retaining the title to their homes and avoiding additional debt.

Other potential benefits of Unlock’s HEAs include streamlined application and approval processes, including an online estimate feature that takes only minutes and won’t impact credit scores. Unlike reverse mortgages, HEAs are available to property owners of all ages, and applicants do not need perfect credit to qualify.

An Unlock HEA includes a home improvement adjustment, which means that homeowners who make significant improvements to their homes retain the value added from those improvements. 

An HEA is completed when one of the following scenarios plays out: A homeowner buys back their equity in one lump sum at any point during the 10-year term; a homeowner makes a partial buyout of Unlock’s investment; or, a homeowner settles Unlock’s investment when the home is sold. 

Curious how it works? Assume your home value was $600,000. You choose an “Investment Payment” of $60,000—10% of your home’s value. Your exchange rate is 2.0%, so your “Unlock Percentage” is 20% (10% x 2.0). If you sell your home later for $750,000, the Unlock Share is 20% of that $150,000 gain in value. For additional examples, check out Unlock’s Product Guidepdf.

It’s also important to point out, that fintech companies like Unlock are not lenders. In fact, Unlock is a team of finance, mortgage and real estate leaders dedicated to helping consumers create more financial flexibility.

The Benefits for Real Estate Professionals 

Home equity funds are plentiful. Current market data indicates that, as of August 2024, U.S. borrowers held $17.6 trillion in home equity collectively, with $11.5 trillion of that considered tappable. Further, U.S. mortgage data indicates that three in five homeowners have at least $100K in available equity.

Real estate professionals add tremendous value when they let clients know that they can have access to these funds, especially when home equity is used to repair or renovate homes. After all, every party in a real estate transaction benefits when top condition homes sell for market value in a competitive real estate landscape. 

In addition to funding home improvements, homeowners carrying high debt loads can access their home equity via HEAs to pay down debt and qualify for better mortgage rates when buying their next home. Also, homeowners who are looking for investment or rental properties can use HEAs to fund down payments. 

With high interest rates, growing personal debt and sky-high home equity values, homeowners are looking for alternative financing options. Innovative fintech solutions have the potential to expand beyond traditional home lending to include more people at more stages of their lives. Real estate professionals who are part of that financial transformation can build trust and relationships that benefit everyone. 

Read more on NAR

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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‘Unverifiable income’ can limit your mortgage options — here’s how to get around it

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A number of factors can get your mortgage application denied. So-called “unverifiable income” is one of them. 

Mortgage lenders want to know if you’re financially capable of paying back the loan. One way they’ll do that is by requesting documents like your federal income tax returns, W-2 and current pay stubs, according to Freddie Mac. 

Any money that you earn that isn’t tied to a form like a W-2 or 1099 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree. 

For instance, income you earn from a rental property you own may be tricky for a mortgage lender to verify, he said. The same can be said for things like gifted cash for a down payment or side hustle earnings.

It’s a more common problem than you might expect.

About 12% of recent prospective homebuyers were denied a mortgage because a lender could not verify their income, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors.

The NAR polled 5,390 buyers who purchased a primary residence between July 2023 and June 2024.

In such instances where you have different forms of income or are self-employed, it may be worth looking into non-conventional mortgage options, said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. 

“The good news is that there are programs available for people who don’t qualify conventionally,” she said. “But it is a little bit more expensive.”

For example, you may have to sustain higher-than-usual mortgage rates.

Here’s what you need to know.

How a non-qualified mortgage works

Some homebuyers who need more flexibility when applying for mortgages could benefit from a non-qualified mortgage, or a Non-QM loan, Cohn said.

Such loans verify income differently. If you’re self-employed, a non-QM lender can use bank statements to calculate the income that may qualify for the loan instead of a pay stub, tax return or W-2, she said.

“They might also look at what kind of assets you have,” Channel said.

Other banks and lenders will accept the most recent 1099 and do not rely upon tax returns if you’re self-employed in a business you own, Cohn said.

But, be careful. While it may be easier to qualify through income, such loans can be more costly, said Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender. 

“You may have to jump through more hoops in order to get those mortgages,” Channel said.

For example, you may need a higher credit score or be required to provide a bigger down payment.

The loan may also come with a rate higher than that of a conventional loan. That’s because non-QM loans do not follow the criteria of qualified mortgages set by the Consumer Financial Protection Bureau.

In the first half of 2024, the average initial 30-year interest rate for non-QM loans was 6.7%, compared to 6.4% for a qualified loan, according to data from CoreLogic.

A ‘stepping stone’ for unverified income

Non-QM loans are often better suited for those who invest in real estate or wealthy individuals with a number of assets, Channel said.

“In those instances, you can kind of substitute assets for active income,” he said.

Even if you suspect your income will be hard to verify, it’s smart to start with traditional loan options.

If your application for a conventional mortgage is rejected, reach out to your lender and ask why it was denied, he explained.

“Maybe you submitted the wrong year’s W-2 form. Mistakes do happen,” Channel said.

But if you’re going through a transition from being employed to self-employed, or starting a new job with a new company, a non-QM loan could be a “stepping stone,” Cohn said.

Once you start to show sufficient income on your returns, you can always apply for a refinance in the future, experts say.

“Just because you take out a non-QM loan doesn’t mean you’re stuck,” Cohn said.

Read more on CNBC

Related Links

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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