Until recently, the vast majority of lender’s home mortgage application volume has come from home loan mortgage refinances due to the low mortgage rates. Now, lenders are seeing a rise in purchase mortgage applications despite the mortgage interest rates still being at historic lows. Mortgage lenders are choosing to offer higher mortgage rates for refinances because of their inability to sell home mortgage refinance loans to Fannie Mae and Freddie Mac. When it comes to home mortgage purchase applications it’s a different story. For the third straight week the volume of home mortgage purchase loans has increased showing how ready the American public is to re-enter the housing market.

The United States Census considers households that spend at least 35% of their monthly income on housing costs (mortgage, utilities, taxes, and other homeownership costs) to be “cost-burdened”. A decade ago, this figure accounted for 29% of homeowners in the United States. Today this number is much lower, falling to 21%. Compare this to the number of cost-burdened renters (40.6%) and the difference is nearly 19%. Many people believe that renting is the more affordable option in today’s market, but this simply isn’t the case as these numbers show.

The typical rent payment across the country has risen sharply, while the average mortgage payment has gone down making it more affordable to own your home than it is to rent. If you’ve been thinking about purchasing your own home, this could be the perfect time to make the move. Historically low interest rates combined with rising rent payments make this a logical time to purchase a home.

With mortgage rates at a three-year low, now could be a good time to refinance. The high occurrence of refinances is due directly to the low interest rates on mortgages across the country and more importantly in local markets. More than 11,000,000 homeowners nationwide stand to save an average of $268 per month if they were to refinance today. Below are the main things to consider before making the decision to refinance:

• How long do you plan on staying in your home? You want to be able to keep your loan long enough to ensure the monthly savings will exceed the closing costs.
• How much will you save? The rule of thumb is that your new interest rates needs to be 50-100 basis points (.5%-1%) lower than your current one.
• Are you paying mortgage insurance? Refinancing with 20% equity or more will give you the best deal because you avoid paying mortgage insurance.
• Is your financial house in order? Make sure you have your financials in order. One out of four refinance applications are denied because of high debt-to-income ratios or poor credit.

Depending on your personal answers to these four questions, a refinance may be the perfect move for you to be able to save some money.

A year-end report on 2019 found that foreclosure filings were down 21% from 2018 and down 83% from its peak in 2010. In the same period, bank repossessions are down 86%. Lender repossessions are down 37% and 86% from 2018 and 2010 respectively. These low numbers are likely due to the strong economy allowing borrowers to make their mortgage payments without lapse.

After the Dodd-Frank Act was passed in 2010, lending standards were at an all time high. In the years since 2010, the rules and regulations have slightly laxed leading to what would be believed to be a higher percentage of foreclosures. In reality foreclosure rates are at a recent historic low.

With the decline in foreclosure inventory and interest in the amount of inventory going up, now remains a good time for sellers with less than ideal property to find a buyer. Low mortgage rates allow more first time home buyers to enter their local markets and compete for the already low inventory causing some distressed elements to be overlooked.

It’s well known that good credit can save you money and help you get a lower mortgage rate. But just how much money can you save?

It’s estimated that over the life of a mortgage loan the average interest paid for a borrower with fair credit is $260,000. It’s also estimated that those with a very good credit score will pay closer to $220,000 over the life of a loan. That nearly $40,000 difference is a direct result of having a higher credit score and inversely, a lower mortgage rate. Monitoring your credit can help you secure a low mortgage rate and save tens of thousands when buying your home!

With this year’s rise, the loan limit has increased for the fourth year in a row after ten years of stagnation between 2006-2016. Despite no movement in the ten year period prior, the loan limit has risen $93,400 since 2016.

In 2016, the FHFA increased the conforming loan limits from $417,000 to $424,100. Then, the following year, the FHFA increased the loan limits from $424,100 to $453,100 starting in 2018. The year after that, the FHFA increased the loan limit from $453,100 to $484,350 for 2019. Mortgages originated in 2020 will have a limit of $510,400. Year-over-year this marks the 3rd highest raise since 2016.

2016-2017: 1.70% increase ; 2017-2018: 6.84% increase ; 2018-2019: 6.90% increase ; 2019-2020: 5.38% increase

There are many reasons why consumers decide to buy their own home instead of renting. Of course many factors such as housing market, whether you have a high or low interest rate, and personal timing go into account, but below are a few financial positives of being a home owner.

1. Owning your home forces you to save. Paying your mortgage and building equity in your home forces you to save money.
2. Owning your home allows you to save on taxes.
3. If you own your home, your monthly housing expenses are locked in through a consistent monthly payment based on your interest rate. If you were to rent, depending on your agreement your payment could be raised by a landlord.
4. In most parts of the country renting is more costly than owning your own home. Getting a low interest rate allows your mortgage payments to cost less than what some landlords would be charging. Local real estate markets in Lee County and Collier County are part of this trend.
5. This is the only investment you can make financially that will have increased personal connection. What other investment will you make that you will live inside of other than your primary residence? Building equity in your home while creating life long memories doubles the benefits.

According to Zillow, the rate in price increase among Florida homes will beat the nation’s average over the next year. Home values in Florida are up 4.64% this year with an expected increase of 4.09% next year. Nationally, Zillow expects the value of homes to rise 2.2% over the next 12 months. Low interest rates are causing the local real estate market to heat up substantially. Understanding the affect of  increasing home prices and low mortgage rates will allow informed investors to make sound decisions in this hot housing market.