May 17th, 2024 10:04 PM by Eric Willner
Radio Show Notes 05/15/24 Wednesday:
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Unlock the Door to Affordable Housing: The Midweek Mortgage & Market Report Reveals Down Payment Solutions
By Eric Willner, Host of The Real Estate Show, America’s longest running daily radio show about real estate.
Welcome to the Real Estate Show – South Florida's #1 Real Estate Radio Show and America's longest running daily radio show about real estate! My name is Eric Willner, known as the Voice of Real Estate and founder of America's longest running daily radio show about real estate, and also creator of The Automatic Landlord System for Owning Cash Flowing Real Estate "Profitably and Hassle-Free." This show is a virtual real estate seminar in every episode.
This is the Wednesday "Midweek Mortgage & Market Report" Edition of The Real Estate Show, and today we're continuing our conversation about why NOW is the perfect time to buy real estate. We're focusing on a powerful strategy: You Can Double Down On Your Down Payment.
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Understanding the news gives you a financial edge! We'll continue our discussion about why NOW is the time to buy real estate by analyzing recent headlines and articles related to affordable housing, wealth creation, and achieving peace of mind. Stay tuned as we connect the dots and show you how to get organized for financial success.
Here are the top trending topics for today's update:
Mortgage rates ticked down this week, according to Bankrate’s national survey of large lenders. The spring homebuying season has been tough for buyers, with stubbornly high inflation translating to mortgage rates well above 7 percent. With the dip this week, however, more borrowers applied for loans, according to the Mortgage Bankers Association. On May 1, the Federal Reserve again announced it’s putting off rate cuts. (While the central bank doesn't directly set mortgage rates, Fed policy does influence their direction.) May also marks one of the best months for home sellers to garner the highest offers — another factor stacked against buyers.
Did you know? By implementing creative down payment strategies, you can significantly increase your buying power and secure your dream home sooner than you think. We'll discuss these strategies in detail throughout the show, so stay tuned!
Here are the top three trending real estate news stories:
1. Q1 Metro Home Price Report:
2. New-Home Sales Surge Amid Tight Housing Market:
3. Affordability Crisis in the 2024 Election Spotlight:
We’ll keep you informed and keep an eye on these developments!
Article #1 from CNBC.com
KEY POINTS
· The median down payment on a home purchase was $26,000 in the first quarter of 2024, or an average of 13.6%, reaching a new first-quarter high, according to a new report by Realtor.com.
· While 20% is considered to be the standard, it is by no means “the law of the land.”
CNBC: Consumers are putting down more money to buy a home — but the typical down payment is still much less than you might expect.
The average down payment was 13.6% in the first quarter of 2024, according to a new report by Realtor.com. The median down payment amount was $26,000.
Both figures are up year over year but down from peaks in the third quarter of 2023, the report says. At that point, buyers put down an average of 14.7% or a median of $30,400.
Even at recent elevated levels, the average down payment is still well below 20%, a share that people typically think of as the gold standard when buying a home.
But 20% is not always necessary, experts say.
There are a lot of reasons why people have gravitated toward the idea of putting 20% down, like trying to avoid mortgage insurance or lessen monthly payments, said Mark Hamrick, senior economic analyst at Bankrate.com.
“But by no means is this essentially the law of the land,” Hamrick said.
One way to reduce your monthly mortgage payment is by putting down more money and borrowing less. But for many households, trying to get a higher down payment can be challenging, said Danielle Hale, chief economist at Realtor.com.
“It really showcases the conundrum the housing market is in where there’s not a lot of affordability,” she said.
Having enough savings for a down payment is a big hurdle for most buyers. Close to 40% of Americans who don’t own a house point to a lack of savings for a down payment as a reason, according to a 2023 CNBC Your Money Survey conducted by SurveyMonkey. More than 4,300 adults in the U.S. were surveyed in late August for the report.
Rising home prices make that 20% goal especially daunting. But the reality is, you don’t need 20%, experts say.
“Not only is it possible to buy a home with less than 20% down, but this data show that a majority of buyers are in fact doing so,” Hale said. “It’s definitely not required.”
Nationally, the average down payment on a house is closer to 10% or 15%, Hale said. In some states, the average is well below 20% while some are even below 10%, she added.
Some loans and programs are available to help interest buyers purchase homes through lower down payments.
For example, the Department of Veterans Affairs offers VA loan programs that enable those who qualify to put down as little as 0%. Loans from the U.S. Department of Agriculture, referred to as USDA loans, are geared toward helping buyers purchase homes in more rural areas, and they also offer 0% down payment options.
Federal Housing Administration loans, which can require as little as 3.5% down for qualifying borrowers, are available to first-time buyers, low- and moderate-income buyers, as well as buyers from minority groups. Those are “designed to help close homeownership gaps among those targeted populations,” Hale said.
Even with a conventional loan, buyers’ required down payment could be between 3% and 5%, depending on their credit score and other factors.
“There are options,” Hale said.
When you’re deciding how much of a down payment you can afford, tread carefully: There can be added costs associated with smaller upfront payments. While a lower down payment is one way to “attack affordability challenges,” it can be a “mixed bag,” Hamrick said.
With a lower down payment, you will need to borrow more from your lender, which raises the monthly cost of your mortgage, Hale said. A smaller down payment can also mean you don’t qualify for a lender’s best-available interest rate.
When you borrow more than 80% of a home’s value, you may also face the added cost of private mortgage insurance, or PMI.
PMI, generally, can cost anywhere from 0.5% to 1.5% of the loan amount per year, depending on factors like your credit score and down payment amount, according to The Mortgage Reports.
For example, on a loan for $300,000, mortgage insurance premiums could cost around $1,500 to $4,500 annually, or $125 to $375 a month, the site found.
Typically, your lender will cancel your mortgage insurance automatically once you reach 22% equity. You can request it to be removed after you reach 20% equity.
In some cases, buyers might choose to do what’s called a “piggyback mortgage,” or get a second mortgage to meet the 20% threshold and not have to pay for mortgage insurance, Hale said.
But, that second loan tends to have a higher mortgage rate, she said.
Don't wait! This is a prime opportunity to leverage the current market conditions and build long-term wealth through real estate ownership. If you're serious about taking control of your financial future, text "Edge" to 561-861-2366 to get started with The Financial Edge University. We'll equip you with the knowledge and tools you need to succeed.
Remember, on this show, we don't just talk about real estate, we make it happen! Throughout the program, we'll provide actionable steps you can take to double down on your down payment and achieve your real estate goals.
Stay tuned! We have more valuable insights coming your way.
Article #2 from CNBC.com
Mortgage rates last week dropped to the lowest level since April, but buyers are still struggling to afford today’s housing market. As a result, mortgage demand flattened at a weak pace. Total mortgage application volume inched up just 0.5% from one week earlier, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.08% from 7.18%, with points decreasing to 0.63 from 0.65 (including the origination fee) for loans with a 20% down payment.
Applications to refinance a home loan, which are most sensitive to weekly rate changes, increased 5% for the week and were 7% higher than the same week one year ago.
“Treasury yields continued to move lower last week and mortgage rates declined for the second week in a row,” said Joel Kan, MBA’s vice president and deputy chief economist. “The decline in rates led to a small boost to refinance applications, including another strong week for VA refinances. However, the overall level of refinance activity remains low.”
Applications for a mortgage to purchase a home fell 2% for the week and were 14% lower than the year-earlier period. The drop was driven by a 9% decline in FHA applications. Those loans are favored by first-time or lower income buyers because they allow much smaller down payments than conventional loans.
“While the downward move in rates benefits prospective homebuyers, mortgage rates are still much higher than they were a year ago, while for-sale inventory remains tight,” Kan added.
Mortgage rates moved slightly lower to start this week, but all eyes are now on the monthly consumer price index report, set to be released Wednesday. Another read on inflation will influence the next move from the Federal Reserve on interest rates.
“Forecasts are already clear in their expectations for a 0.3% increase in core prices, month over month,” wrote Matthew Graham, chief operating office of Mortgage News Daily. “The difference between a result of 0.2 or 0.4 is surprisingly massive when it comes to the world of interest rates. A 0.1 or 0.5 result could easily result in the largest rate jump/drop in months.”
Before you go, one last reminder! Text "Edge" to 561-861-2366 to join The Financial Edge University and unlock your full financial potential. We'll show you how to make real estate a part of your wealth creation strategy.
Affordable Housing: Let's face it, the traditional 20% down payment can feel like a mountain to climb. But the good news is, you don't have to conquer Everest to own a piece of the American dream. Today's show will explore creative financing solutions and down payment assistance programs that can help you double down on your down payment and slash years off your renting timeline.
Wealth Creation: Real estate isn't just a roof over your head, it's a wealth-building machine. By leveraging your down payment and harnessing the power of appreciation, you can build long-term equity and watch your net worth soar. We'll show you how to make calculated moves and strategic investments to turn your real estate purchase into a springboard for financial freedom.
Financial Independence and Peace of Mind: There's a reason they call it "home sweet home." Owning real estate provides a sense of security and stability that renting simply can't match. Knowing you're building equity and investing in your future, not someone else's, brings a peace of mind that's priceless. Today's show will explore how real estate ownership can empower you to take control of your financial future and live life on your terms.
Summary:
Remember: It's a stone-cold fact that real estate is THE best investment. Period. By doubling down on your down payment, you can unlock the doors to affordable housing, jumpstart your wealth creation journey, and achieve the financial independence and peace of mind you deserve. So get yours today!
Thanks for tuning in to The Real Estate Show, a literal seminar in every episode! Don't just listen, take action! Use the knowledge you gained here to get started on your real estate investing journey. Join us again tomorrow for the "ATM Edition – About The Money" where we'll dive even deeper into the financial nuts and bolts of real estate ownership. And don't forget to share this show with friends, family, or anyone you know who should be a homeowner! They'll thank you for it.
Thanks for joining us on The Real Estate Show! We'll see you again tomorrow.
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Want to know more? If you are serious about real estate and paying off debt, then find out more on today and every day’s episodes and learn more about Real Estate Investing and learn HOW TO by listening to The Real Estate Show with Eric Willner , Live every weekday morning at 9 o’clock (EST) on Florida’s Money Talk Radio stations WWNN AM1470, FM 95.3 and FM 96.9. You can also hear us on the free apps: iHeart Radio and TuneIn. Recorded Rebroadcasts are available 24/7 on Facebook. Please share this and our Facebook updates.
Eric Willner is the Host and Founder of The Real Estate Show, an informative show about how to buy, own, and improve real estate the right way, on autopilot. - The Automatic Landlord way. (AutomaticLandlord.com) You can reach Eric Willner at Eric@Ericwillner.com or 888-595-7779.
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