The Accunet Mortgage Show (6-27-2021) Episode

This Week’s Highlights:

• New Study Commissioned By NAR on Nationwide Housing Shortage
• Should You Use A Home Equity Line Of Credit As a “Bridge Loan?”
• Special Considerations With For Sale By Owner Properties

Download a transcript of this week’s episode here.

Study Commissioned By National Association Of Realtors: 5.5 Million More Housing Units Needed

The biggest story right now in the home buying, selling and lending space is the nationwide housing shortage — caused in part by a lack of existing homes for sale, driving up home prices. However, a lack of new construction is also a contributing factor. A National Association of Realtors study out this month says that the total shortfall of home, condominium and apartment stock in the United States is 5.5 million units. In 2020, the U.S. added a total of 1.25 million housing units of all types. To close the 5.5 million unit gap, rates of construction would need to accelerate to 2 million units annually for the next decade.

That would be a historically high rate of construction.

Following the financial crisis of the 2000s, builders were only constructing new housing units at a rate of about 750,000 per year. Today, rates of new construction are bouncing back — the long-term average rate of construction in the U.S. since 1969 is 1.5 million units annually — but things are still moving too slowly to address the current shortfall in housing stock. That means, both now and for the foreseeable future, home prices are going to be extremely competitive. 

It’s crucial for all would-be home buyers to have a knowledgeable lending partner in their corner. With a rock-solid mortgage pre-approval from Accunet, you’ll be able to submit your bid on a property quickly and with confidence—giving you a potential edge against other buyers considering the very same property.

Should You Use A Home Equity Line Of Credit As a “Bridge Loan?”

If you’re looking to move to a new place and own your current home outright, or have substantial equity in the property, you may be able to streamline the process by taking out a home equity line of credit on the current property as a bridge loan. This will enable you to put down a substantial down payment on the new property and keep your new mortgage payments low — all before you worry about selling your current home.

In the case of a couple we recently worked with at Accunet, that’s exactly what we recommended. They wanted to move out of a property in Ozaukee county to be closer to their grandchildren in Waukesha county. With their existing mortgage totally paid off, they were able to get a $340,000 HELOC while maintaining 20% equity in the current home. That money can then be used toward down payment and closing costs on the Ozaukee property, all while on a fixed social security income. Conveniently, it also means their existing property remains theirs. They didn’t need to put the property on the market, so they can shop for their new property and arrange for moving at their own pace.

Every homebuyer has a unique situation with unique challenges, such as fixed incomes and mixed assets. Get the help you need navigating the market at Accunet! Our team specializes in personalized solutions that help get you into your dream home. 

Special Considerations With For Sale By Owner Properties

Whether you’re the buyer or seller, transactions involving properties that are for sale by owner can have their own particular challenges. 

For sellers, consider that there might be less visibility for your property without the help of an agent. Agents can ensure your property is visible on all the real estate listing services and help connect you with potential buyers. For example, with the housing market so hot, most properties priced fairly in reasonable condition can expect multiple offers above asking price in short order. However, on a property in the Green Bay area we discuss on our show, the seller only received two offers, both below asking. We discuss why and observe that loan consultants have to do more work when purchasing a property listed for sale by owner — and may direct their clients toward properties listed with the help of an agent instead. 

If you’re buying, be sure to consider properties listed for sale by owner! While there may be some additional work and fees involved, these properties may be less competitive, and you may be able to get a purchase price for the property that’s closer to asking (or even below asking!) to offset those additional costs. As of this recording, we found 256 FSBO listings in the city of Milwaukee compared to 1,901 listings with real estate agents. A FSBO property could be the diamond in the rough you’ve been searching for.