Mortgage and Housing Update With Dale Vermillion | FaithFi
June 10, 2022
Mortgage and Housing Update With Dale Vermillion
Faith & Finance with Rob West
There’s no doubt this is a challenging time to buy a home but is the situation improving? Skyrocketing values the past year have priced many “would be” home buyers right out of the market but signs indicate the red hot market may be cooling.
There’s no doubt this is a challenging time to buy a home, but could the situation be improving for homebuyers? We’ll discuss that today with mortgage expert Dale Vermillion.
Dale says there are signs that the red-hot housing market may being cooling just a tad.
Residential starts decreased 0.2% last month according to government data
Applications to build fell 3.2%
Zillow's home value forecast calls for a gradual slowdown in annual home value growth from the current pace of 20.9% to 11.6% growth through April 2023.
Over the next three months, Zillow expects home values to grow 5.2%, down from 5.5% growth in the previous month's forecast.
Zillow's forecast for existing home sales has been lowered as well, to 5.73 million sales in 2022. That would mark a 6.4% decrease from 2021.
These are all signs that home values will likely moderate some in the months ahead, but working against would-be home buyers are mortgage rate increases.
RISING INTEREST RATES
After a long and sustained period of incredibly low interest rates, there was really nowhere to go but up. And as the Federal Reserve looks to battle rising inflation, they have no choice but to elevate rates.
It’s difficult to predict when we’ll see the rise in mortgage rates begin to level off. But Vermillion says many analysts predict that by the fourth quarter of 2022, we’ll see rate rises taper off, likely settling off somewhere in the low 5s (percent) or perhaps the high 4s.
Many industry expects believe that’s where interest rates will be in 2023, but that prediction is far from unanimous, and of course, only God knows for certain what the future will bring.
Still, compared to historical rates, interest rates are likely to remain relatively low into next year.
TO BUY OR NOT TO BUY
How do you decide to rent or buy a home in this market?
Start with a sound household budget
Do you have at least 20% for a downpayment?
Can you purchase without becoming “house poor”?
Create a house-buying budget. Decide what you can and will offer. Don’t get caught up in the emotion of bidding wars.
Talk to a tax preparer about the tax benefits of homeownership and how that factors into the decision. The tax benefits may increase with rising interest rates.
Vermillion says it likely only makes financial sense to buy a home if you plan to live in it for at least 7 years.
To be more competitive as a buyer:
Make sure your credit is in the best shape possible to keep your interest rate as low as possible
Make sure you have a strong down payment
Have a pre-approval in place, not just a pre-qualification
Check out local homebuyer incentive programs
You can read a lot more about landing the right house with the right mortgage in his book, Navigating the Mortgage Maze. And learn more about Dale at DaleVermillion.com.
On this program, Rob also answers listener questions:
Is day trading always tantamount to gamblign? Is it biblically wrong?
Where should you deposit money from a cash settlement to ensure it’s safe but liquid and accessible?
How you can you invest a small amount of money conservatively?
Remember, you can call in to ask your questions most days at (800) 525-7000 or email them to Questions@MoneyWise.org. Also, visit our website at MoneyWise.org where you can connect with a MoneyWise Coach, join the MoneyWise Community, and even download the free MoneyWise app.
