The Rise of 2017
As the books closed on 2016, many economic indicators were on the rise. Some signal good news for those in the market to buy a home.
Housing Starts Surge
For regions struggling with limited housing inventory, Housing Starts may provide some hope. December Housing Starts surged 11.3 percent from November, the Commerce Department reported. The welcome news follows a disappointing pullback in November and a nine-year high in October. For all of 2016, average monthly Housing Starts were the best since 2007. Building Permits, which signal future construction, fell just short of expectations in December.
On another positive note, Existing Home Sales ended 2016 as the best year in a decade.
Limited housing inventory continued to push home prices up in 2016. CoreLogic, a provider of consumer, financial and property information, reported that home prices, including distressed sales, rose 7.1 percent from November 2015 to November 2016. The recent rise in home loan rates and the expectation of higher rates in 2017 could slow home price gains this year, CoreLogic reported.
Inflation Ticks Up
Consumer inflation was up 2.1 percent from December 2015 to December 2016, as reported in the Consumer Price Index. This 12-month increase marks the fastest pace of inflationary growth since the period ending June 2014.
The U.S. Bureau of Labor Statistics reported wholesale inflation also ticked up in December. The Producer Price Index climbed 1.6 percent from December 2015 to December 2016, which was the largest 12-month gain since 2014.
Rising inflation is worrisome for homebuyers because it reduces the value of fixed investments like Mortgage Bonds and hurts the home loan rates tied to them.
Home Loan Rates Still Attractive
Home loan rates were able to improve slightly in the first part of January, following the post-election volatility in Stock and Bond markets at the end of 2016. However, positive economic news, rising inflation and transitions under the new Trump administration may provide some headwinds for Mortgage Bonds and home loan rates in 2017. For now, home loan rates remain historically attractive.
If you have any questions about home loan rates or loan products, please don't hesitate to contact one of our Loan Originators.
Mortgage Lending Advice : Why Winter is The Best Time to Buy a Mortgage.
For most people, winter is one of the least convenient times to shop for a home. Whether the weather’s keeping them inside, the holidays are eating up their free time, or they just don’t want to potentially mess with their child’s school year, homebuyers are simply not on the hunt. Here are five reasons why it’s ideal to look for a home during the colder months.
- Bargain Prices: There may be fewer buyers out and about, but there will still be houses on sale during the winter causing supply to exceed demand in the housing industry. Because of this home prices are usually at an annual low around January, meaning you will probably end up with more for your money.
- Motivated Sellers: Generally, if a homeowner lists their home in winter it’s because they need to move from their property for one reason or another. You can then use this to your advantage to get a better deal as they’re usually more willing to negotiate.
- Less Competition: Since most people don’t think of winter as prime house hunting season, there’s much less competition in the market. Less competition means there are fewer chances of there being multiple offers on any one property, so you won’t have to worry nearly as much about someone having a better offer.
- Availability of Professionals: Again, fewer people are looking at houses now than during the rest of the year. You won’t have nearly as much competition for a home or for the attention of real estate professionals. Both real estate agents and lenders will have fewer clients to worry about so they’ll be able to spend more time with you answering your questions.
- Seasonal Perspective: When you tour a home in the summer, it’s hard to imagine what life would be like there in the winter. Are there drafts? Does the heat seem to be working well? Are you cold as you walk around? If you live somewhere where the winter weather is particularly harsh, touring a house during that time and seeing how well the heating and insulation actually work could actually be more beneficial than touring in the warmer months.
Despite all these facts, it’s important to remember that the best time to buy a house is the time that works best for you. So, if you should find yourself buying a home this winter call Homestead Funding for all your home financing needs!
Affordable Care Act Tax Scam Alert
The Internal Revenue Service has announced the latest scam to hit the country, which features a fake notice that the recipient owes money due to the Affordable Care Act. If you or someone you know receives a suspicious message you're not sure is from the IRS, you'll want to know these details:
Fake notices designed to look like actual IRS CP2000 notices (sent when information received about your income doesn't match your tax return) will claim you owe money for the previous tax year under the Affordable Care Act.
Emailed notices are a red flag because the IRS doesn't initiate communication by email. These emails may include a link to make an online payment. Fake payment processing websites can not only defraud you but also steal your identity or infect your computer.
Mailed notices may request that a check made payable to "I.R.S." be sent. However, legitimate CP2000 notices request taxpayers only make checks payable to "United States Treasury."
The IRS has defined procedures for communicating with taxpayers and will never:
- Initiate contact by email, text or social media
- Request payments via gift card, prepaid debit card or wire transfer
- Threaten immediate arrest or deportation for failure to pay
If you or anyone you know receives a suspicious notice, a copy should be immediately sent to firstname.lastname@example.org and then deleted from your email account. The Federal Trade Commission should also be notified.
New Conforming Loan Limits in 2017
The Federal Housing Finance Agency (FHFA) announced new maximum loan limits for conforming loans acquired by Fannie Mae and Freddie Mac. This is the first increase since 2006.
Effective January 1, 2017, the maximum loan limit for one-unit properties in much of the country will be $424,100, up from $417,000. Higher loan limits will be in effect in higher-cost areas.
What prompted this change?
The baseline loan limit of $417,000 was established by the Housing and Economic Recovery Act of 2008 (HERA). The law requires that this loan limit be adjusted each year to reflect changes in the national average home price.
FHFA's most recent third quarter Home Price Index report showed average home prices have risen about 1.7 percent above where they were in the third quarter of 2007, prompting an equivalent increase in loan limits.
With home prices on the rise, the conforming loan limit increase opens up opportunities and helps keep home loans more affordable for more Americans.
If you'd like to learn more about these new loan limits or other loan products, please contact Homestead Funding Corp. today!
Happy Veterans Day
In order to honor Veterans, Active Duty Military & Reservists who are eligible for a VA loan, Homestead Funding will be offering a $195 lender credit*. You served your country with honor now let Homestead honor your service! To learn more about this special credit or the VA Program contact your Homestead Funding Loan Originator.
*$195 Closing Cost Discount offer good for purchases and refinances. Veterans discount must be mentioned at initial mortgage application. Application must be made starting November 1, 2016 through November 30, 2016, but the transaction may close at any time within 90 days of application. Loan must close to receive discount. DD-214/Certificate of Eligibility may be required. This discount may not be combined with any other discount offer.