This week’s Highlights:
- Mortgage rates are up from last week… but that’s not the whole story
- Can you afford to wait to lock in a mortgage rate?
- Buying a condo: What you need to know
Mortgage rates have risen from last week
According to the Freddie Mac weekly survey, the current purchase rate on a 30-year fixed is 2.81%, up a bit from last week. Before you panic, this time last year was 3.5%, so things are still looking good on a yearly comparison. Vice President and Chief Economist Sam Khater said that “economic spending has improved due to the most recent stimulus … but supply chain shortages are causing downstream inflation, leading to higher mortgage rates.”
So what does that mean? Based on the current economic trends, we can expect to see mortgage rates bump back up to the low three percent range throughout the rest of the year.
How long should you wait to lock in a mortgage rate?
Short answer: Do NOT wait to lock in your rate! We had a client who was looking to get a jumbo loan in the $600,000 range, and by the time it took him to get back to us on moving forward, rates had already increased. While we don’t expect them to skyrocket immediately, it’s never a good idea to wait on a good rate. Lock it in as soon as possible to get the best rate and monthly payment for you.
Learn how to get the best rate for you with Accunet Mortgage and our team of refinance experts—click here to get started.
Buying a Condo: Relocation story
We have a retired client who’s looking to relocate from the Chicago area to Ft Lauderdale, Florida (chasing those warmer winters!). He’s got his eye on a 2 bedroom, 2 bath beachfront condo in the $500,000 range. For those who don’t know, Florida has no state income tax, and property taxes are relatively low.
When we looked into how much HOA fees are for what he’s looking at in the area he’s looking, we discovered the average cost is a whopping $1,200 a month. Yikes!
This is important information to have because our rock-solid pre-approval illustrates how much people can afford on a monthly basis. This doesn’t JUST include the mortgage payment. It also includes taxes, insurance, HOA fees and any additional money involved in the home buying process, which can definitely impact how you finance a condo.
Buying a new home? Start here so you know what to expect from the process!
Getting a loan for a new condo
Simply put, Fanny and Freddie do not like lending on a new condo construction. It’s too dangerous for them because too much can go wrong. The developer is the market maker. If sales soften in the development, let’s say they’re halfway through and sales are rough, the developer is going to drop the price and up the concessions to sweeten the deal. Now if you need to sell your condo for whatever reason, you’re competing with the people who have a lot more to offer than you do. It’s not a great bet.
What we have here in Wisconsin and parts of Illinois is a couple of investors who will lend on condo units that are not otherwise eligible for Fannie Mae. These loans are not eligible for 30-year fixed mortgages, so you’ll either get a 15-year or a flexible mortgage (7 or 10 year, for example). Then when the development is completed, it’ll transfer over to the owner. THEN we can look at a 30-year fixed because it will no longer be considered a new development so we have more options.
Down payment matters a lot when you’re buying a condo
If you put less than 10% down on a condo, and it’s your primary residence, you’ll be subject to a full condo review. At the current time, Accunet does not conduct condo reviews on a purchase transaction. AKA we are unable to lend if you plan to put 10% down.
Why? Well, condo reviews just take way too long. It entails getting articles of organization, bylaws of condo association, budget, and insurance. We need to give that to the condo review team, which takes weeks. Regardless of how much you’re putting down, we strongly recommend condo buyers conduct their own review anyway to make sure everything’s in tip-top shape before you purchase.
Lock in your rock-solid pre-approval before rates continue to rise—click here to get started.