Rates Drop

Mortgage

 

The market rate Trump Bump is fading, and that’s good for housing…actually! With the average cost of money at $500 a month per $100,000 in mortgage balance, each 0.125% of a rate is only a messily $8.00/mo on that $100k (or $80.00/mo on 1 million). So, in essence, the actual rate has very little impact on your total payment…however, $8.00/mo also means today’s buyers can grab and extra $1,500 on that mortgage per $100k. Now, if you multiply that times 5 for a $500,000 mortgage, that’s an extra $7,500 they can add into the deal to outbid other buyers if they are advised right! For sellers, it’s a time where they may be able to grab a little extra and that little extra is nice when it comes to the average 3% it takes to sell a home in Chicago and the Chicagoland. You act fast, now, and list at the right price you may get an offer close to or over list as buyers will fight on price for your home, and with the cost of money down (lower rates), you may just get a little more than if you were to sell in a rising rate environment (before the news says it hot). Okay, so now you may be asking, is the volatility in the market going to mean home prices may fall, or is there another housing crisis is on our backs? The honest answer, likely not! It’s mainly due to the last decade’s very restrictive rules to even get a loan, almost so strict we all now assume it’s the norm, and it is. The loosey-goosey ways of the Wild West style lending (12 years ago) are done for and this adds more stability than we as a national have lived in before, our time here. These set rules which ultimately say, prove your income and let us banks then verify that with the IRS, and we do. Now, show me the money, and those assets must be in your account to buy a home and are truly verified while placed under high anti-money laundering laws. That means that today’s buyers that are actually getting mortgages and closing on homes are more qualified today than over the last 20+ years! The millennials are more qualified than their parents were, period! So, what drives price the fastest? Today’s buyers and the new norm. That new norm is simple, and it’s just math; rates are half the price they were for the last generation of buyers. Today’s buyers are paying half the cost of money than their parents. To these parents, what cost them for a $50,000 loan costs today’s buyer the same per month for $100,000 loan. Now, put that on steroids because we have younger buyers making more money and to add to that, two forms of household income! That’s half the price of money on twice or more the household income. The new “norm” for a 1st home is a massively higher home price, and more affordable now than ever. So, buy now and sell now. It’s time to get into that next property that is a new smarter investment because your home is an investment! Sell right rebuy right, it’s right now. Anthony J Marinaccio Chicago Mortgage Broker NMLS#211587

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