Friday, April 1st, 2016
Buyers are anticipated to outnumber sellers this spring, creating a shortfall in inventory that is driving up asking prices, says Lawrence Yun, chief economist for the National Association of Realtors.
Lenders are predicting a busy borrowing season as there is a lot of pent-up demand. With loans volume for home purchases at its highest level in four months, and low interest rates fueling a mini-refinance boom, buyers seeking the best mortgage deals should start the pre-approval process sooner than later.
Borrowers got a sweet surprise when mortgage rates fell after the Fed meeting last month. The current interest rate for a 30-year fixed-rate mortgage is the lowest it’s been in several months.
With a softened economy, rates aren’t expected to increase much in the near term according to the Wall Street Journal. That said, the next Fed meeting will be in June so who knows how much longer the Fed will continue to hold back on projected rate increases over the long term.
Here are a few more tips for borrowers:
• Appraisals may come in low. Sales are contingent on a home appraisal, and if the home doesn’t appraise at the price offered, the borrower may have to come up with more cash. Until spring sales begin to close, appraisers may be comparing prices of homes sold as far back as October 2015 with current prices.
• Save money on shorter stay. Most borrowers are locking in fixed-rate loans, but those who expect to relocate within five to 10 years can get the lowest rates with adjustable-rate mortgages. Average rates for the five-year hybrid ARM are currently 0.625% lower than 30 year fixed rates.
• Longer lock-ins. The typical rate lock is 60 days, but if a borrower needs more time for a 90 day lock lenders will typically charge a slight premium, usually one-eighth to the rate.