Finding Funds for a Down Payment
A soft second loan, sometimes called a silent second, is subordinate to the first mortgage, whose payment is deferred or forgiven until a specific date or the resale of the property. This would mean that buyers would not have to contend with regular payments thereby keeping their debt-to-income ratio lower and more affordable. While normal lending institutions may not be open to such types of financing, family and friends may be. In some cases, these relatives and friends may be inclined to make a gift to help buyers get into a home. Instead of an outright gift, if the person makes the loan,...
Read MoreWhen will the market turn?
Housing affordability has declined dramatically in 2022 due to continued rising home prices and a three-percentage point jump in mortgage rates. Based on the popularity of Google searches for "housing bust" or "housing bubble", it could be surmised that buyers are anticipating relief, but they are probably not going to see it anytime soon. Home price appreciation is moderating and is down from the 20% level experienced in 2021. Some of the major industry prognosticators are estimating anywhere from 9% to 14% for 2022. Interest rates are expected to continue to rise...
Read MoreAnother Tool to Improve Affordability
The rapid rise in mortgage rates during 2022 coupled with continued appreciation of home prices have limited the number of buyers in the market which is reflected by the lower number of home sales currently. "It’s a fact that many households are impacted by higher mortgage rates as they no longer earn the qualifying income for the median-priced home." Nadia Evangelou, NAR Economist One of the things that agents are doing to help buyers lower their house payments is to suggest an adjustable-rate mortgage. The rates on these types of loans are tied to indexes that reflect the...
Read MoreGift Amount Increased for 2022
The limit for tax free gifts for 2022 is $16,000 and no tax is due to the donor or the donee. There are provisions that would allow gifts higher than this amount providing the total lifetime gifts above the annual exclusion of $12.06 million for 2022 has not been met. The donor and donee can be separate persons so that the aggregate tax-free gift for one-year amounts to more money. For instance, a father and mother can gift $16,000 each to their married son in 2022 and an additional $16,000 each to the daughter-in-law for a total $64,000. If the son and daughter-in-law used the money as a...
Read MoreHousing Affordability – Call to ARMs
Housing Affordability is negatively affected by both rising home prices and mortgage rates. A 20% increase in nominal home prices and a 2% increase in the 30-year fixed rate mortgage since January have contributed to a 46 point drop in the NAR Housing Affordability Index. The Index was 143 in June 2021 and is 98.5 in June of 2022. The Housing Affordability Index indicates whether a median income family can qualify for a mortgage loan with a 20% down payment and 25% qualifying ratio for monthly housing expenses to gross monthly income. 100 points is considered the tipping point. As the Index...
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