Why Now May Be a Great Time to Buy a Home

Filed under: Market Comentary

dream homeAccording to a recent article by Gina Ragusa, the combination of slowly rising mortgage rates, the prices of homes, and the easing mortgage requirements may be creating a perfect time for you to purchase that home you have been thinking about.

Ragusa explains that some mortgage experts currently believe that this might be the best time to buy! And even though the U.S. government dodged the fiscal cliff, rates are slowly rising and the prices of homes will probably rise about 10% this year.

But at the same time, Ellie Mae mortgage data shows that the average credit score that borrowers need to obtain a mortgage actually fell from a FICO score of 750 to 732. Ragusa wrote that Ellie Mae reported approximately 32% of mortgages that were approved in September were those with an average FICO score of less than 700, where a year ago, only 17% of approved mortgages actually fell into that range.

The article mentioned that these easing mortgage requirements will mean that home loans are now more accessible to a wider pool of borrowers who apply. And, according to Brad Hunter, chief economist at Metrostudy told MarketWatch, “It does seem there’s a little bit of an opening that’s going on. Lenders are being more lenient.”

However, even with these new opportunities, writes Ragusa, mortgage loan applications have fallen. Mortgage Bankers Association, in a recent survey, reported that applications dropped 0.3%. But, on the other hand, refinance applications actually rose by 64%, which accounted for 66% of all applications.

The decrease in applications may possibly be temporary “confidence drop” due to the recent government shutdown, according to Frank Nothaft, vice president and chief economist at Freddie Mac. According to the article, he said, “Recent confidence measures depict some of the effects of the government shutdown and uncertainty of the budget impasse.”

Nothaft added, “For instance, consumer sentiment in October fell for the second straight month to the lowest reading since January, according to the University of Michigan. However, despite these downturns in confidence, mortgage applications rose for the second consecutive week as of October 11th, elevated by increases in applications for refinancing.’

So if you are in the market and looking to buy or refinance, please give me a call and we can discuss all of the intricacies you need to know to make purchasing a home or refinancing a reality.

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