As usual, the buzzwords this week are “spring homebuying season,” “low mortgage rates” and “competitive housing market.” Here’s what you need to know about the latest in all those realms.
1. Rising mortgage rates probably won’t affect current homeowners
Although industry-watchers are wringing their hands about rates trending upward this year and what that means for borrowers, if you already have a mortgage you’re happy with, you need not fret. Rising rates only affect new mortgages and adjustable-rate loans, which are fairly uncommon in this low-rate environment. If you have a standard, fixed-rate mortgage, you’re protected from movements in the market.
2. Is a crash coming? Probably not.
Although there are aspects of 2021 that look a lot like 2007 when it comes to real estate, the likelihood of another burst housing bubble is small at the moment. The factors driving froth in the property market are different this time, and the foundations seem more stable. Of all the things there are to panic about this year, a real estate-fueled recession should be quite low on your list.
3. COVID relief is available, but is it accessible?
The federal government has authorized billions of dollars in aid for homeowners and renters over the last few months. but it’s been tricky in many cases for people to get the funds they’re entitled to. Distribution of this money is left to state and local authorities, which has led to a patchwork of different systems and unclear guidance for many.
4. Maybe you should consider an ARM after all
As mentioned in section 1, adjustable-rate mortgage are unpopular right now, thanks to the low interest environment for traditional fixed-rate loans. But that doesn’t mean ARMs are a bad choice for everyone. Especially people preparing to move in the foreseeable future, an even lower rate ARM could be a steal.
5. All new homes not are created equal
With the mad dash for housing currently underway, builders are struggling to keep up, and that’s leading some to take shortcuts in order to sell properties off more quickly. If you’re buying a newly-built home, you still need to do your due diligence to make sure it’s been constructed solidly.