This duality was at the forefront of the recent discussions surrounding Jerome Powell’s statements regarding interest rates and the Federal Reserve’s monetary policy. As the Chair of the Federal Reserve, Powell’s words carry significant weight, and his stance on interest rates has far-reaching implications for the housing market and mortgage industry.

The Importance of Stability in Mortgage Rates

During the recent market update, Jaysen Barlow, a real estate professional with Sell for 1%, expressed gratitude towards Powell’s decision to refrain from lowering interest rates too quickly. Barlow’s sentiment echoes a larger concern shared by many industry experts – the fear of triggering another market frenzy akin to the one witnessed during the COVID-19 pandemic.

Cast your mind back to 2020 when interest rates plummeted from 4% to 2%, fueling a buying frenzy that caused home prices to skyrocket by as much as $100,000 in some markets. Such drastic swings in pricing not only make it difficult for buyers to keep up but also create an unsustainable bubble that eventually bursts, leaving both buyers and sellers in a precarious position.

By maintaining a steady course and avoiding drastic rate cuts, Powell and the Federal Reserve are attempting to engineer a “soft landing” – a scenario where the housing market gradually cools without plunging into a full-blown recession. This approach aims to strike a delicate balance, preventing a chaotic market collapse while also discouraging the kind of unchecked price appreciation that can price many potential buyers out of the market.

The State of Mortgage Rates

According to Ryan Cochrane of NFC Lending, a mortgage expert featured in the market update, interest rates have remained relatively stable over the past few weeks. Depending on factors such as credit profile, loan amount, and overall financial strength, Cochrane notes that buyers can expect to see mortgage rates ranging from the mid-6% to mid-7% range.

While these rates may seem high compared to the historically low levels seen in recent years, they represent a degree of normalization that many economists and industry professionals have been advocating for. By maintaining rates within a reasonable range, the market can gradually adjust to a new equilibrium, allowing both buyers and sellers to make more informed and sustainable decisions.

Opportunities in a Stable Market

Despite the perception that higher interest rates may dampen buyer demand, the current market conditions present unique opportunities for both buyers and sellers. As Jaysen Barlow mentioned, he recently experienced a surge in bidding wars for some of his listings, indicating that there is still healthy competition among buyers.

For prospective homebuyers, acting sooner rather than later could be advantageous. With spring traditionally being a busy season for real estate, buyers who secure financing and make their moves now may be able to avoid even steeper competition and potential price hikes as the year progresses.

Sellers, on the other hand, can take advantage of the current market dynamics by pricing their properties competitively and leveraging the existing buyer demand. While the days of rapid price appreciation may be behind us, a stable market allows sellers to showcase their properties to a pool of qualified and motivated buyers, increasing the likelihood of securing a fair and reasonable sale price.

The Takeaway

As we navigate the complexities of the housing market and the ever-changing landscape of interest rates and monetary policy, it’s crucial to remember that stability should not be mistaken for stagnation. Instead, it presents an opportunity for both buyers and sellers to make informed decisions and participate in a market that is gradually finding its equilibrium.

By maintaining a steady course and avoiding drastic rate cuts or increases, the Federal Reserve and policymakers like Jerome Powell are attempting to create an environment where the housing market can cool in a controlled manner, reducing the risk of a sudden collapse or an unsustainable surge in prices.

If you’re considering buying or selling a home in the current market, it’s essential to work with experienced professionals who can guide you through the process and provide valuable insights based on the latest market trends. At Sell for One Percent, our team of dedicated real estate experts is committed to helping you make informed decisions and achieve your goals in a stable and sustainable manner. Contact us today to schedule a consultation and take the first step towards a successful real estate transaction.

Check out our YouTube page for more!

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Introduction to FHA and Conventional Loans

FHA vs Conventional loans, the first thing to understand is the basics of each type of loan. FHA loans are backed by the Federal Housing Administration, while Conventional loans are not. FHA loans are considered government-backed loans, while Conventional loans are from entities outside of the governmental scope.

FHA loans are typically offered to those with lower credit scores, or those who may not have the funds for a large down payment. They are typically easier to qualify for than Conventional loans, but they also come with certain restrictions.

Conventional loans, on the other hand, are not backed by any government agency. They usually require a larger down payment, and they typically have stricter credit score requirements. Conventional loans are typically offered to those with higher credit scores, or those who have the funds for a larger down payment.

FHA Loan Advantages

When comparing FHA vs Conventional loans, it’s important to note that FHA loans come with a few key advantages. One of the biggest advantages of FHA loans is that they are easier to qualify for. Since FHA loans are backed by the government, they typically have less stringent credit score requirements than Conventional loans. Borrowers with lower credit scores usually find that FHA loans cost less per month than a conventional loan

Another advantage of FHA loans is that they typically have lower down payments than Conventional loans. This can make them more accessible to those who might not have the funds for a large down payment. FHA loans also come with certain benefits, such as the ability to roll closing costs into the loan, and the ability to refinance at a lower interest rate.

Conventional Loan Advantages

Conventional loans come with a few key advantages as well. One of the biggest advantages of Conventional loans is that they typically offer lower interest rates than FHA loans. This can save you money over the life of the loan, which can make them a great option for those looking to save money.

Another advantage of Conventional loans is that they often have fewer restrictions than FHA loans. This can make them a great option for those who are looking for more flexibility in their mortgage. Conventional loans also typically have fewer fees associated with them, which can also save you money.

Finally, Conventional loans often have higher loan limits than FHA loans. This can be beneficial for those looking to buy a larger home, or those who are looking for more financing options.

Comparing Loan Rates

With FHA vs Conventional loan rates, it’s important to keep in mind that FHA loans typically have lower interest rates than Conventional loans. This is because FHA loans are backed by the government, and the government often offers lower interest rates than the market.

However, it’s important to note that FHA loans also come with certain restrictions and fees that can add to the cost of the loan. It’s important to compare the total cost of the loan, including the interest rate, fees, and other costs (amortization), to make sure you’re getting the best deal.

Comparing Loan Requirements

When looking at FHA vs Conventional loan requirements, you will find that FHA loans typically have less stringent credit requirements than Conventional loans. FHA loans often require a lower credit score, and they may also allow for higher debt-to-income ratios. The debt-to-income ratio must be 56.99% or less for an FHA loan while it is 45% or less for conventional loans.

It’s also good to know that FHA loans typically have lower down payment requirements than Conventional loans. FHA loans often require a down payment of at least 3.5%, while Conventional loans often require a down payment of at least 5%.

Comparing Loan funding fees

Comparing FHA vs Conventional loan funding fees, FHA loans typically come with a higher funding fee than Conventional loans. FHA loans often require a funding fee of 1.75%, while Conventional loans typically require a funding fee of 0.5%.

However, FHA loans also typically require a lower down payment than Conventional loans, which can offset the higher funding fee. Additionally, some FHA loans may be eligible for a funding fee waiver, which can make them even more affordable.

Comparing Loan Qualification

When going over both loan qualifications, typically FHA loans require a lower credit score than Conventional loans. FHA loans often require a credit score of 580 or higher, while Conventional loans typically require a credit score of 620 or higher.

Additionally, FHA loans often require a lower debt-to-income ratio than Conventional loans, 56.6% for FHA and 45% for conventional. This means that you may be able to qualify for an FHA loan with a higher debt-to-income ratio than you would for a Conventional loan.

Comparing Loan Limits

When comparing FHA vs Conventional loan limits, it’s important to note that FHA loans typically have lower loan limits than Conventional loans. FHA loans are typically capped at $331,760, while Conventional loans can go as high as $625,500 in some areas. FHA loan limit in Franklin County for 2023 will be $488,750 and conventional loan limit will be $726,200, loan amounts any higher become considered a “Jumbo” loan. 

The loan limits for FHA loans can vary depending on the area, so it’s important to check with your lender to see what the loan limits for your area are.

Comparing Loan Credit Score Requirements

FHA loans typically require a lower credit score than Conventional loans. FHA loans often require a credit score of 580 or higher, while Conventional loans typically require a credit score of 620 or higher.

Additionally, FHA loans may be eligible for a credit score waiver, which can make them even more accessible to those with lower credit scores. Some lenders may be willing to work with you on an individual basis to determine if you are eligible for an FHA loan.

Comparing Loan Closing Costs

When comparing, FHA loans typically have lower closing costs than Conventional loans. FHA loans often have fees associated with them, including the upfront mortgage insurance premium and the annual mortgage insurance premium.

However, FHA loans also typically have lower down payment requirements than Conventional loans, which can offset the higher closing costs. Some FHA loans are eligible for closing cost assistance, which can make them even more affordable. FHA mortgage insurance is mandatory regardless of the down payment amount, it can’t be canceled unless you refinance into a conventional loan. For conventional loans a private mortgage insurance is required when the down payment is less than 20%, and it may be canceled after 20% equity has been hit.

Comparing Refinancing

Concerning refinancing, FHA loans can often be refinanced at a lower interest rate than Conventional loans. This can save you money over the life of the loan and can make a great option for those looking to save money.

However, again, FHA loans typically have higher closing costs than Conventional loans, so it’s important to compare the total cost of the loan to make sure you’re getting the best deal. Don’t forget that FHA loans are eligible for closing cost assistance, which can help offset the higher closing costs.

Conclusion

When it comes to mortgages, it can be difficult to determine which type of loan is the best for you. FHA and Conventional loans both have their advantages and disadvantages but understanding them can help you make an informed decision.

When comparing FHA vs Conventional loans, it’s important to consider the interest rate, fees, loan limits, credit score requirements, and other factors. Additionally, it’s important to weigh the advantages and disadvantages of each type of loan to determine which one is the best for you.

If neither of these sound like good options, give us a call today, with 50+ years of experience and our list of people we trust in the business we will help you find your perfect loan!

The post Clearing Up the Confusion: A Guide to Comparing FHA vs Conventional Loans appeared first on sellfor1percent.

Are you ready to take the plunge into home ownership in 2023? Buying a home is a major life decision and requires careful consideration of your current and future financial situation. This comprehensive guide will provide you with all the information you need to know before you commit to buying a home in 2023. From understanding the real estate market to understanding your credit score and budget, you’ll have all the information you need to make an informed decision. We’ll also provide tips on how to save money during the home-buying process, as well as ideas on how to find the perfect home for you and your family. With this guide in hand, you’ll be well prepared to purchase a home in 2023.

Assessing Your Financial Situation

Before you begin to search for a home and talk to realtors, you should first assess your financial situation. You’ll need to understand your current income and expenses, as well as your future financial goals, to determine if you have the ability to purchase a home. Some considerations to make before you start your home search are: What are your current monthly expenses? What are your long-term financial goals, such as saving for retirement or sending your children to college? Do you have any debt, such as student loans or credit card payments? How much do you currently earn annually? What is your credit score? Do you have any other liens, such as car loans or mortgages? All of these factors will play a role in your ability to qualify for a mortgage, the amount you’ll be approved to borrow and the interest rate you’ll be offered.

Researching Your Local Real Estate Market

The first step in your home search is to research your local real estate market. You’ll want to evaluate current home sales in your area to determine if the market is hot or cold. By understanding the supply and demand of your local real estate market, you’ll be able to make more informed decisions throughout the home-buying process. There are many online resources that offer real estate market reports, including: The National Association of Realtors realtor.org> : The National Association of Realtors is a great source for real estate market reports, including information on existing home sales, inventory of homes for sale and local real estate trends. Trulia trulia.com> : Trulia is a real estate search engine that provides a wide range of local real estate market reports, including information on home sales, home values, rental rates and neighborhood demographics. Zillow zillow.com> : Zillow is another real estate search engine that provides local real estate market reports, including information on home sales, home values and neighborhood demographics.

Understanding Mortgage Rates and Terms

When you’ve found a home you want to purchase, you’ll need to apply for a mortgage loan. You’ll work with a mortgage lender to apply for a loan that is used to purchase the home. There are many organizations that provide mortgage loans, including banks, credit unions, online lenders and mortgage brokers. Before you apply for a loan, you’ll want to understand the different types of mortgage rates and terms. Fixed-rate mortgage: A fixed-rate mortgage is a type of mortgage loan in which the interest rate and monthly payment amount remains constant for the life of the loan. Because the interest rate does not change, this type of loan is generally considered less risky for the lender. Adjustable-rate mortgage: An adjustable-rate mortgage (ARM) is a type of mortgage loan in which the interest rate and monthly payment amount can change at predetermined times during the life of the loan. An ARM may be an option if you have a lower credit score, since it may be more difficult to obtain a fixed-rate mortgage loan.

Looking at Home Prices and Appraisals

When you’ve found a home you want to purchase, you’ll want to obtain a home appraisal. An appraisal is an estimate of the value of a home that is used to determine the loan amount you qualify for and the home’s value if you ever sell it. You may also need an appraisal if you’re refinancing your home or you’re applying for a home equity line of credit. Before you purchase a home, you’ll want to ensure that its appraised value is close to its sales price. You don’t want to buy a home that is significantly overpriced, as this could lead to financial issues in the future. If the home you want to purchase appraises for significantly less than its sales price, you can negotiate the sales price with the seller or look for another home.

Working with a Real Estate Professional

While purchasing a home is a major life decision, it doesn’t have to be done alone. Many home buyers seek the help of a real estate agent when purchasing a home, as they can help streamline the process and provide valuable insight into the home-buying process. When you’re ready to purchase a home, you should consider hiring a real estate agent to assist you. A real estate agent can provide you with valuable insight into the home-buying process and help you navigate the real estate market. Additionally, you may be able to find a real estate agent that charges a fee-for-service, meaning you don’t have to pay them a percentage of the home purchase price, as is common in a traditional real estate commission.

Understanding Home Inspections and the Home Closing Process

Before you sign the final paperwork to purchase a home, you’ll want to obtain a home inspection. A home inspector will thoroughly examine the interior and exterior of the home, including the roof and foundation, to determine if any issues need to be addressed before you purchase the home. A home inspector will provide you with a report of any issues they find, and you can use this information to negotiate the sales price or ask the seller to fix any issues before you purchase the home. Additionally, you’ll want to familiarize yourself with the home closing process.

Knowing Your Rights as a Home Buyer

Prior to purchasing a home, you should be familiar with your rights as a home buyer. You have the right to receive a clean title to the home, meaning the seller has no liens or other interests in the property, as well as a clear title to any adjoining property. You also have the right to an accurate written appraisal, clear and accurate disclosure about the property and an inspection of the property before you purchase it. You have the right to have the seller repair any issues with the property and make the property safe before you purchase it. You also have the right to rescind the contract and get your down payment back if the seller doesn’t make the necessary repairs.

Finding the Right Home for You

Once you’ve gone through the home buying process and understand the steps that come with purchasing a home, you’ll want to find the right home for you and your family. There are a few ways you can go about finding the right home for you, including: Talk to your friends and family members who are currently homeowners and see if they know of any houses that are for sale. Search for homes for sale online. Visit open houses and talk to real estate agents about the homes you like. Sign up for text alerts from real estate companies so that you can be notified when homes that meet your criteria go on the market.

Preparing for the Unexpected

Even though you may have done your due diligence when purchasing a home, unforeseen events can happen. No home is perfect, and you may have to make repairs or complete renovations as soon as you move into your new home. You may also have to deal with uncooperative neighbors or other common homeowner issues. Here are some ways you can prepare for the unexpected: Before you purchase a home, make sure you have enough money saved to cover the cost of repairs. Consider purchasing homeowners insurance. Join a homeowners association. Get to know your neighbors.

Tips to Make the Home Buying Process Easier

The home buying process can be overwhelming, especially if you don’t know what to expect. There are a few ways you can make the home buying process easier, including making a budget and sticking to it when house hunting. Find a real estate agent you trust and ask them to walk you through the home buying process. Start researching home buying tips and trends now so that you’re prepared for the next real estate market cycle. Prepare for a long process. You should expect to be in the market for a few months, even if you’re ready to buy now.

Looking to buy or sell a home in 2023? Our Realtors® are some of the most experienced agents in Ohio. We know the local real estate market and are always working tirelessly for our customers to get the very best results. Give us a call today to see how Sell for 1 Percent can help you when buying or selling your home.

The post What You Need to Know Before Buying a Home in 2023: A Comprehensive Guide appeared first on sellfor1percent.

Dave: (00:03)
All right, Jaimerinski , whenever you’re ready. Give us a countdown. Three, two, Boom.

Steve: (00:11)
Beep.

Jaime: (00:13)
I don’t wanna do the intro.

Dave: (00:14)
You’re doing the intro.

Jaime: (00:17)
The *quack* do I say

Dave: (00:18)
Whatever you wanna say.

Jaime: (00:23)
Welcome back to another installation of three…

Steve: (00:27)
What, what are we installing?

Dave: (00:36)
We’re installing another episode…

Steve: (00:39)
We’re installing information.

Jaime: (00:44)
Welcome back to another information installation brought to you by Sell for 1 Percent realtors.

Dave: (00:52)
There you go.

Jaime: (00:55)
You do the intro.

Dave: (00:56)
All right, everyone. SB, I think Jaime did a about as good as he could there. So off you go. Tell us about interest rates

Steve: (01:06)
Hey guys. Welcome back to Sell for 1 Percent We’re certainly glad you’re here. And we want to wish our colleague Mike Hopper well. He is under the weather and not able to be with us this week, so take care of yourselves out there. It’s certainly going around.

Good news with interest rates. Last week we reported 6.375 on the 30 year fixed rate, rates have dropped down to 6.25. The 15 year rate from 5.875 last week to 5.625 this week. And the FHA rate from 6.375 last week down to 6.25  this week.

And we were talking a little bit here, before we got rolling; There’s an interesting thing that I think needs to be pointed out. It’s about the

Fed overnight rate

that has been raised 4 consecutive months in a row now, and interest rates. DB interest rates continue to fall even though the Fed keeps raising the overnight rate.

Dave: (02:17)
Well, I think a lot of people get confused because they see the Fed, they see the Fed, they see the Fed, and the Fed and mortgage rates are loosely tied together, but they’re not directly tied together. And so even though the Fed is raising rates, and, and we saw that back at the first of December when they raised rates three quarters of a point, and then the next day we saw interest rates and mortgage interest rates actually drop. And so over the last, you know, few days we’re seeing interest rates continue to drop and it’s a direct result of high interest rates. There’s just not enough demand for the supply of money that’s out there. And so interest rates are falling and we’ll see where they head long term. But the main thing to keep in mind here is that

the Fed overnight rate is not directly tied to mortgage interest rates.

And we should probably do a video about that.

Steve: (03:23)
Well, what a great time to get back into the market. You know, couple good things, there’s not a lot of buyers out there right now, and so

chances of you getting into a bidding war, right now, are pretty slim.

There are sellers out there that still need to sell houses and with interest rates dropping today may be a good day to get some more information by giving us a call right here at Sell for 1 Percent.

Dave: (03:49)
We had a lender on Friday, late Friday, send out a message that said

interest rates had dropped to 6%

and he just wanted us to know for the weekend. And I think you’re exactly right, SB, that interest rates are coming down. As a buyer, you may wanna look at some houses that have been on the market for 60, 70, 80, 90 days. Those sellers, obviously here during the Christmas period, have got to sell something or else they wouldn’t be on the market. And after, two, three months of not getting an offer,

you may have an opportunity to be able to buy something.

So as SB said, give us a call, we’d be happy to help.

Steve: (04:34)
(614) 451-6616, (614) 778-0826. Give us a call here at Sell for 1 Percent.

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