BOSTON – As interest rates rise and the number of mortgage applications drops, a Boston-based realtor says things are looking better for prospective home buyers.
“We’re seeing a lot of inventory coming on the market. There’s definitely less foreclosures and more properties that don’t agree,” said realtor Mike Urban.
The long-term US mortgage rate fell below 7 percent this month, a day after the Federal Reserve raised its benchmark borrowing rate to the highest level in 15 years. Mortgage broker Freddie Mac reported on November 3 that the average rate on a 30-year mortgage was 6.95 percent. The rate was 3.09 percent last year at this time.
“I don’t think everything in Massachusetts is going to be a buyer’s market but some areas are definitely becoming that way,” Urban said.
Urban explains the advantages of buying a home in a high interest market in his video, “Are We Finally in a Buyers Market?”
SELLER PAYS COSTS OF COSTS
Urban says it may seem like a foreign concept, but sellers are starting to pay for closing costs again.
“It could be anywhere from three percent to six percent,” Urban said. “This is something we haven’t seen in the last two years. I now have contracts now where the seller pays the closing costs.
SELLER PAID THE PRICE
According to Urban, this is a new concept where the seller of a home credits a portion of their income to the home buyers, also known as a seller’s concession. Dealer concessions can also be used to pay off mortgage points and buy interest rates.
“You can get a lower rate for up to two years. Other lenders may have different programs,” Urban said. “Instead of paying your closing costs, you can use them to buy your rate.”
CONTINGENCIES AND REPAIRS PAID BY SELLER
Whether it’s for an inspection, viewing or mortgage, Urban says buyer contingencies are coming back in a big way.
“People are starting to do inspections again,” Urban said. “A lot of people aren’t waiving inspections because they don’t have to.”
Urban said he’s also starting to see more dealers doing repairs or giving credit back for repairs.
“It’s something I haven’t seen in probably over two years,” Urban said. “The reason they did that wasn’t necessarily because they were desperate, but they saw what was happening in the market.”
MANY TYPES OF LOANS
Urban said during the pandemic, it makes a difference what kind of loan you have. Conventional loans and cash dominate, but Urban says he’s starting to see more VA home loans and FHA home loans accepted.
“The reason these types of loans are coming back is because the places are sitting on the market. The longer they are on the market, the more things are open to you as a buyer. One of the things is the obvious type of loans .”
Urban recommends talking to your lender if you want to apply for a VA or FHA loan.
For a long time, how much money you put down was as important as the loan itself, but Urban says that’s not the case anymore.
“There’s a big misconception that people need a 20 percent down payment. They need that to get accepted,” Urban said. “Now we’re seeing buyers putting 3.5 or five percent down. They’re using the rest of the money to buy furniture, to do renovations, to do whatever. That’s another benefit of the market that we go for the buyers.”
NEGOTIATING SALE PRICE
Urban says if you all have the qualities of a 2021 buyer — a 20 percent down payment, conventional loan, no inspection — you can save a lot of money on the actual sale price of the property. .
“Now you can negotiate the sale price,” Urban said. “The cleaner your offer, the more negotiable the seller will be.”
TIME TO THINK
Buying a home during a pandemic can be scary, stressful and frustrating. With more inventory on the market, Urban says buyers are able to slow down and think about what they’re doing.
“Higher interest rates have relieved a lot of stress,” he said. “You don’t have to rush into a decision. You’ll pay more money for your home than if you paid two years ago, but focus on what you’ve gained by having that higher rate.
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