by Christy Bieber | Aug. 21, 2020
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There's been some big news in the mortgage world this week. Check out how the housing industry is pushing back on new fees; Kamala Harris' plan for bridging the black homeownership gap, and more.
In today’s world, things can change quickly with respect to mortgage rates and more. Check out these top stories from The Ascent to keep up to date.
While mortgage rates are hitting record lows, home prices are going in the other direction. The median price of a sold home rose 8.5% in July compared with last year, hitting $304,100. Yet even with home prices climbing, sales haven’t slowed down. On the contrary, there was a 24.7% increase in sales of existing homes between June and July, which is the strongest monthly gain since 1968. With prices so high, some borrowers may want to sit tight before purchasing, even with mortgage rates near rock-bottom.
Last week, we brought you the news that Fannie Mae and Freddie Mac were imposing a new 0.5% fee on home refinances. This came as bad news for homeowners looking to capitalize on today’s record low rates, but the housing industry isn’t taking it lying down. Industry groups including the National Association of Mortgage Brokers and the Mortgage Bankers Association have joined forces to lobby the Federal Housing Finance Agency to walk back approval for the new costs.
Mortgage rates bounced up and down a bit this week, but have remained near around 3.00% for the popular 30-year fixed rate loan option. These rates are some of the lowest homebuyers have ever seen, and present an unprecedented opportunity to secure affordable home financing for the life of your loan.
Although mortgage rates are very low, home prices are almost 5% higher than they were just a year ago -- largely due to limited inventory. As buyers flood the market with the goal of taking advantage of today’s historic low rates, sellers are holding off on listing their homes due to COVID-19. In this seller’s market, buyers must proceed with caution to avoid overpaying.
Based on national median income and the national median home sale price, it could take the typical homebuyer a whopping 21 years to save up the recommended 20% down payment, according to U.S. Mortgage Insurers. Would-be buyers can shorten this timeline by trimming expenses, boosting their income, or considering alternative living arrangements for a period of time.
Under the CARES Act, homeowners with federally-backed mortgages are entitled to pause payments for up to 12 months by requesting forbearance. Some lenders are also allowing borrowers to suspend payments even if they don’t qualify for this relief. Better Mortgage, CitiMortgage, Bank of America, Navy Federal Credit Union, Rocket Mortgage, and PNC Bank are six mortgage lenders offering help to struggling borrowers.
Black households have the lowest homeownership rate among all racial groups, but Biden’s pick for VP has big plans to change that. Her $100 billion plan would allow prospective buyers who live or rent in redlined communities to secure federal grants worth as much as $25,000 to help them buy homes. Redlining, or denying mortgages based on community demographics, is one of the largest drivers of the ownership gap between Black and white households.
Potential buyers interested in a 15-year mortgage can make sure they score rock-bottom rates by checking their credit history to make sure it’s in good shape; saving up a hefty down payment; evaluating whether purchasing points makes sense; and shopping around for lenders.
Whether you're in the market for a new house, or hoping to refinance a mortgage, be sure to follow The Ascent's mortgage coverage. We’ll keep you updated on what you need to know throughout your journey to help you make informed choices and keep your borrowing costs affordable.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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