Home Loans and House Prices
October 14, 2023
Some financial pundits and news outlets are making predictions about the state of the housing market going into the last quarter of 2023 and the new year.
According to CNBC, “home prices are expected to continue to rise in 2024,” based on real estate forecasts from agencies including Freddie Mac and the National Association of Realtors.
What does this mean for those who need to buy a home between the time you read this and Spring of 2024? For some, building in some extra time to plan and save is key. For others it may be a question of deciding on the right mortgage loan.
Some would rather build from the ground up using an FHA One-Time Close construction loan where others might decide to buy an existing home using an FHA adjustable rate mortgage. These are just two options, but they are among the most common.
Building on Your Own Lot Instead of Buying Existing Construction
Let’s face it, it might be easier to locate an undeveloped plot of land or build a home on a parcel of land you already own in 2024 if your housing market doesn’t have a lot of homes for sale.
Building from the ground up on your own lot or a lot you buy in conjunction with the construction loan might save you a lot of haggling.
But the drawbacks are important to know before you decide. These loans cost more up front, have higher credit score requirements, and don’t typically allow down payment assistance. That does not bother some applicants, but for those who worry about their ability to qualify for a home loan in general, this option may be best reserved for later.
Buy Using an Adjustable-Rate Mortgage
FHA loan options include ARM loans, which feature a lower introductory interest rate period from one to ten years. Once that intro rate is over your mortgage loan interest rate will adjust annually by a fixed number of points.
The key to an ARM loan is to know how long you have for the lower rate, and planning to refinance or otherwise deal with the higher rates once that intro rate expires.
What you will need to know from your lender is the maximum amount that the lower rate period will last (one to 10 years) and whether or not the loan is more expensive up front for a longer introductory rate or not.
If you don’t make a plan to deal with the mortgage rates once they start adjusting, you could get caught in a cycle of increasing monthly payments, so it’s smart to discuss the process of the loan with your participating lender to ensure you fully understand what happens to your monthly payment once the rates begin adjusting.
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RELATED VIDEOS:
Consider the Benefits and Risks of a Joint Loan
Borrowers Should Know About the Origination Fee
Everyone Needs to Pay Their Property Tax
According to CNBC, “home prices are expected to continue to rise in 2024,” based on real estate forecasts from agencies including Freddie Mac and the National Association of Realtors.
What does this mean for those who need to buy a home between the time you read this and Spring of 2024? For some, building in some extra time to plan and save is key. For others it may be a question of deciding on the right mortgage loan.
Some would rather build from the ground up using an FHA One-Time Close construction loan where others might decide to buy an existing home using an FHA adjustable rate mortgage. These are just two options, but they are among the most common.
Building on Your Own Lot Instead of Buying Existing Construction
Let’s face it, it might be easier to locate an undeveloped plot of land or build a home on a parcel of land you already own in 2024 if your housing market doesn’t have a lot of homes for sale.
Building from the ground up on your own lot or a lot you buy in conjunction with the construction loan might save you a lot of haggling.
But the drawbacks are important to know before you decide. These loans cost more up front, have higher credit score requirements, and don’t typically allow down payment assistance. That does not bother some applicants, but for those who worry about their ability to qualify for a home loan in general, this option may be best reserved for later.
Buy Using an Adjustable-Rate Mortgage
FHA loan options include ARM loans, which feature a lower introductory interest rate period from one to ten years. Once that intro rate is over your mortgage loan interest rate will adjust annually by a fixed number of points.
The key to an ARM loan is to know how long you have for the lower rate, and planning to refinance or otherwise deal with the higher rates once that intro rate expires.
What you will need to know from your lender is the maximum amount that the lower rate period will last (one to 10 years) and whether or not the loan is more expensive up front for a longer introductory rate or not.
If you don’t make a plan to deal with the mortgage rates once they start adjusting, you could get caught in a cycle of increasing monthly payments, so it’s smart to discuss the process of the loan with your participating lender to ensure you fully understand what happens to your monthly payment once the rates begin adjusting.
------------------------------
RELATED VIDEOS:
Consider the Benefits and Risks of a Joint Loan
Borrowers Should Know About the Origination Fee
Everyone Needs to Pay Their Property Tax
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