The Accunet Mortgage Show (5-30-2021) Episode
This Week’s Highlights:
- Are home prices really skyrocketing?
- The closing table: benefits of coming with extra money
- The benefits of working with an experienced mortgage lender
Download a transcript of this week’s episode here.
Are home prices really skyrocketing?
Look at any article about home sale prices out there, and you’re likely to find a running narrative that says that the market is frothy, with homes consistently selling far over asking price. When looking at the data though, it appears that while homes tend to sell above asking prices, the statistics aren’t nearly as staggering as the mainstream media is suggesting.
Home price index posted a 13.2% annualized gain for March, the largest jump in home prices going back to 2005, which preceded the housing and financial crisis. While this data may offer proof for skyrocketing home prices, it’s important to note that back in 2005, ninja loans were being offered, so almost anyone could get a home loan. When the bubble burst back in 2008 through 2012, home prices subsequently plummeted over 20%. A couple of years later, new home buyers suddenly realized that their payments were doubling on their loans. This led to homeowners flocking to sell their homes at the same time, causing supply to balloon, and that eagerness to sell caused home prices to rapidly drop.
When you look at data for the current market, there are some discrepancies in comparison to these articles about overpaying. In the month of May, 1,472 homes were sold in the Five County Metro area. Of those, 17% (or nearly 1 out of 5) sold for under the asking price. Furthermore, the median number of dollars over asking price for those homes was only $10,350, or 4% over asking price. This suggests that while there are definitely cases where people are paying 14%-20% over asking price, this is not true of the entire market.
Another important thing to note is that an asking price is just that. There is always a good chance that the asking price is already too high. That’s why it’s so important to work with knowledgeable buyer agents who can reel in home buyers when asking prices are too high.
The closing table: benefits of coming with extra money
Accunet recently worked with a young couple looking for help getting pre-approved and ready to buy a home. After filling out our online application, we found that the wife’s credit score was around 723, So the second-best tier. The husband’s credit score, on the other hand, was 704. Because they want to put 10% down, their credit scores matter even more, as it affects not only the interest rate and closing costs, but also the cost of the monthly private mortgage insurance (PMI).
We used our Credit Expert Tool and quickly discovered that if the husband were to pay off his $926 balance on his credit card to $250 or less, there would be a 97% chance of his score popping back up to over 720. Once this was done and his credit was run again, his higher score ended up helping with the PMI cost. While the couple had the money to put 20% down, they had decided that they wanted to put down 10%. The experts at Accunet Mortgage were able to show them that with the 10% down, they could get a 2.99% 30 year fixed rate with an APR 3.15. They gave the seller wiggle room of $15,000, meaning they would still pay $300,000 on a home with an asking price of $250,000.
In this case, the monthly payment would be $1,636. While they would need a total of $33,000 for closing, it would actually be $600 less than simply putting 10% down, while only increasing their monthly payments by $17. Keep in mind that while this kind of strategizing can vary from situation to situation, Accunet Mortgage and Realty can help homeowners to ensure that they’re getting the best rates across the board, even if they have to give more than the asking price.
Lock in your rock-solid pre-approval before rates continue to rise—click here to get started. A major client win!
The benefits of working with an experienced mortgage lender
We recently worked with another first-time buying couple who were looking to put 20% down on a new home with an asking price of $534,000. Our job was to show them exactly what that would look like. Accunet Mortgage and Realty was able to help the couple by suggesting that they pay up to $560,000, $26,000 more than the asking price. As long as that home appraises out for the listing of $534,000, the couple had the extra $20,700 that would also need to be added into the final cost.
Accunet had another option for them though, by simply increasing their monthly payments by $48.54 cents per month. And then they just have to come up with $120,000. The difference in the cost is simply the monthly PMI, which would automatically drop off in slightly less than four years. We were able to put these numbers on a computer screen and make it easily digestible for the couple.
Whether you are a buyer or a realtor, it’s important to have people on your side who understand the implications of overpaying or not overpaying, and that’s where Accunet Mortgage and Realty comes in. If you’ve lost out on more than three offers, it might be time to consider upgrading your pre-approval with the help of the sharpest mortgage financiers in Wisconsin.
Remember, when the seller has numerous offers on the table, all that matters is who can make good on their offer.
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