How to get a home equity loan with bad credit

By Ralph Dibugnara December , 2024 By Mia Taylor and Michele Petry November 19, 2024 Key takeaways iBuyers are online companies that buy homes directly from the owner, typically in a quick all-cash transaction. Selling to an iBuyer speeds up the home-sale process considerably, making it a good choice if you’re in a rush or need the cash fast. However, they usually offer a much lower price for your home than you might make in a traditional home sale. Homeowners who want to sell quickly and skip the hassle of showings, repairs and wading through a lengthy closing can speed up the process by using an iBuyer. These speedy sale platforms — the “i” stands for instant — are online tech companies that purchase homes from sellers directly, without any third-party involvement (like a lender or a real estate agent). An iBuyer company can make an all-cash offer on your home within 24 hours, or sometimes even faster, and can typically close within two or three weeks. They can often schedule closing dates at your convenience as well. But, if this all sounds too good to be true, be aware that iBuying transactions do come with financial drawbacks. Read on to learn more. What is iBuying? The iBuying approach to selling a house has roots that predate the internet. Years before real estate websites came along, local companies would put up signs around town offering to pay cash for homes — they’d then flip the properties for a higher price, making a tidy profit. Today these companies can be easily found online, following the same general approach: making quick cash offers for homes and reselling them. “The iBuyer is typically a company whose business model is to buy properties from homeowners, do minor, usually cosmetic repairs, and then sell at a profit,” says Rick Sharga, founder and CEO of CJ Patrick Company, a market intelligence firm. “For the home seller, the benefits are speed — the transaction typically happens very quickly once the offer has been accepted — and certainty, as the deal closes immediately, as opposed to putting a property on the local multiple listing service and waiting for offers.” This approach can be very attractive to sellers who need to close a sale quickly, whether for lifestyle or financial reasons. If you need to relocate ASAP for work, inherited an elderly relative’s home and don’t want to keep it, or simply need the cash from the sale as quickly as possible, for example, an iBuyer can be a good choice. Popular iBuyer companies While iBuying grew amid the highly competitive post-pandemic housing market, it has receded since and represents a very small share of the overall real estate market. According to data from CoreLogic, iBuyers accounted for less than 0.5 percent of all home purchases in 2023, buying approximately 1,000 homes per month over the course of the year. In 2021 and 2022, that number ranged as high as 9,000 homes per month. “iBuying represents a pretty minuscule percentage of overall home sales,” says Sharga. Historically, just four companies have accounted for the lion’s share of iBuying business: Opendoor, Offerpad, Redfin and Zillow. Combined, they made up more than 95 percent of iBuyer purchases from 2017 to 2021, according to another CoreLogic study. However, while Opendoor and Offerpad remain two of the biggest players in the industry, Redfin and Zillow have since bowed out of this sector of real estate. Other popular companies offering iBuyer-like services include Clever, HomeLight, Orchard and Knock. How iBuyer companies work The iBuying process itself is very straightforward. In most cases, a seller provides some basic information about their home, or sometimes even just a street address, and within a short period of time, the iBuyer makes an offer — sight unseen. These companies use algorithms to base their valuations on a property. “Then, an iBuyer makes a cash offer, sometimes as quickly as within 24 to 48 hours,” says Jade Lee-Duffy, a San Diego–based Realtor. “This process is meant to streamline buying and selling property, essentially cutting out the middlemen of banks and real estate agents.” The process is indeed streamlined — iBuying transactions close much more quickly than traditional ones do. However, the convenience of this process comes at a price for sellers. Because iBuyers need to make a profit, they typically purchase homes for much less than their estimated market value. “Keep in mind iBuyers are not going to pay premium prices for homes, so the offer will most likely be low,” says Ralph DiBugnara, president of Home Qualified and vice president at mortgage company New American Funding. In addition, while an iBuyer’s offer is made sight unseen, if the seller accepts, the next step is typically an in-person home evaluation. If any unexpected or costly issues are discovered during the in-person visit, that will likely impact the initial offer. “It could cause them to lower the offer, or cancel it,” says DiBugnara. These types of companies can often be picky about what types of homes they’re willing to buy, as well. Since they need to make a profit on each transaction, they are not likely to be interested in homes that need major amounts of work or that don’t meet other specific criteria. iBuyers vs. other homebuying companies If you want to sell your home fast but are unsure whether iBuyers are the best approach, there’s another option: companies that proclaim, “we buy houses.” Similar to iBuyers, these operations will make a quick, all-cash offer for your home and can close the deal very quickly. And also similarly, the offer you’re likely to get could be far less than fair market value. Unlike most iBuyers, though, cash-homebuying companies will typically purchase homes as-is, meaning you won’t need to do any sprucing up or make any repairs at all, even if it’s in very poor condition. This can make them a good option for sellers whose property needs more work than they are willing, or able, to put into it. iBuying pros and cons The iBuying process is different from a traditional home sale in many ways. Here are the main benefits and downsides: Pros More certainty: In addition to closing more quickly than a typical transaction, which involves real estate agents and lenders and scheduling hassles, there are fewer uncertainties associated with iBuying. “There are [less] little headaches from a seller’s standpoint: no showings, no open houses and fewer potential contingencies to deal with,” says Bill Gassett, a RE/MAX Realtor and owner of Massachusetts-based Maximum Real Estate Exposure. No financing: Selling to an iBuying company means an all-cash deal that is not contingent on a buyer successfully securing financing. This eliminates the waiting time of the underwriting process, as well as the possibility that the loan won’t be approved. Greater efficiency: In these transactions, sellers deal directly with just the one company throughout, rather than a succession of mortgage lenders, real estate agents and others. Most importantly, the speed with which the deal goes through means the seller gets their money that much faster. Cons Lower profit: The flipside, however, is that a seller will net less money when working with an iBuyer than they likely would if selling the traditional way. In addition to the lower offer price, you could get hit with fees that can add up to the same amount you would have paid in real estate commissions, or even more: iBuyers can charge fees that amount to 6 to 8 percent of the home’s purchase price, says Gassett. You may still have to pay closing costs as well. More selectiveness: iBuyers don’t operate everywhere, so depending on your location, selling to one may not be an option. And even if an iBuying company does buy homes in your area, your home may not qualify — they tend to have very specific, and sometimes narrow, criteria for what types of properties they are looking for. Less personal attention: In iBuying, much of the process is done online with very little human contact. Sellers typically get less personal service or one-on-one attention than they would with a traditional sale, in which a real estate agent spends time consulting with and advising the homeowner over the entire course of the sale process. Is selling my house to an iBuyer worth it? Selling your home this way may be worth it if you have to relocate quickly, need the money fast, or don’t want to deal with the hassle of showings and a lengthy closing process. Selling to iBuyers also does away with any uncertainties about when your home will sell, and because they pay in cash, you don’t need to worry about a buyer’s financing potentially falling through. However, if your main goal is to earn top dollar for your property, iBuyers are not the best choice. If getting the best possible price for your home sale is more important to you than speed or convenience, the best option is selling the traditional way, with the help of a real estate agent who knows your local market well.

By Ralph Dibugnara November 14, 2024 By Homes.com Buying down your interest rate involves paying an upfront fee to your lender to reduce the interest rate on your loan. The key advantages of a buydown are that it increases your purchase power and reduces your total cost over the life of the loan. However, you must consider your long-term goals and if the expense is worth the cost. How Does Buying Down Your Rate Work? When you apply for a mortgage, you’ll be offered an interest rate that’s influenced by factors like market conditions, your credit score and the mortgage type. If you want to lower your rate, you can buy it down by paying a one-time fee at closing in exchange for a rate cut. “Buying an interest rate down is also known as paying discount points,” says Ralph DiBugnara, a mortgage banker and president of Home Qualified in New York City. “This is a way to get a lower interest rate upfront and it will give the applicant a lower rate than market rate or that they qualify for.” Understanding Points: The Cost of Buying Down When you buy down the interest rate on a mortgage, you’re buying mortgage points, which are also referred to as discount points. Points are essentially prepaid interest that can be purchased at closing to lower your mortgage interest rate for the life of the loan. One point, or 1% of the loan amount, typically reduces the interest rate by about 0.25%. How Much Will I Save If I Buy One Mortgage Point? “On a $500,000 loan amount, a 1% point discount buydown will cost $5,000,” explains DiBugnara. “And as an example, if this reduced the interest rate from 6.75% to 6.5%, the principal and interest mortgage payment would be reduced from $3,242.99 to $3,160.34.” That represents a savings of roughly $83 per month, which is about $992 per year and $29,754 over the course of a 30-year mortgage. If you buy down a mortgage with these terms, you will recoup the upfront cost of purchasing a discount point in a little more than five years. Lender Credits vs. Mortgage Points Some mortgage lenders may offer lender credits, which represent cash paid by the lender to cover some of your out-of-pocket closing expenses. However, lender credits will increase your monthly payments while buydowns will reduce them. You’ll typically be locked into a higher interest rate with a lender credit. Does Buying Down Make Sense with Current Mortgage Rates? Mortgage rates have made buying a home more challenging in recent years. Amid the current market, rates are ticking upward once again. The average interest rate for a 30-year conventional mortgage is currently 6.9%, while 10-year fixed-rate mortgages are offered at around 6.17%. There’s a similar trend with adjustable-rate mortgages (ARMs), where the average rate is currently 6.18%. For context, the average rate for a 30-year conventional loan in January 2021 was 2.65%. When combined with record-high home prices, some prospective homebuyers find that these interest rates have potentially priced them out of the market. Moreover, many homebuyers seek ways to make their monthly mortgage payments more affordable. The advantage of buying down your mortgage rate is that you can potentially reduce the total cost of your home over the life of the loan. What Is a 3-2-1 Buydown Mortgage? A 3-2-1 buydown mortgage is a home loan where the borrower receives a lower interest rate over the first three years. The interest rate is cut by 3% in the first year, 2% in the second year and 1% in the third year. After the buydown period ends, the borrower pays the full interest rate for the remainder of the loan. This type of mortgage is different from the process of buying down your rate. A lender, homebuilder, or seller typically covers the cost of a 3-2-1 buydown to make a home more affordable to potential buyers. How Much Should I Buy Down My Interest Rate? The decision to buy down your rate will depend on several factors, including your down payment and closing costs, the purchase price of the home, the interest rate you qualify for, and how long you plan to keep the home. Long and Short-Term Benefits There are two benefits to buying down your interest rate. The short-term benefit is an increase in buying power, and the long-term benefit is paying less interest over the life of the loan. Short-Term Benefits A reduced rate lowers the cost of monthly mortgage payments, which can make it easier to qualify for a home loan. A buydown can also help you qualify for a larger mortgage, allowing you to buy a more expensive home. Long-Term Benefits Over the long term, a mortgage buydown means you’ll spend far less on interest. “The long-term savings from a lower interest rate can be substantial,” says Carl Holman of A&D Mortgage. “Even a small reduction, like 0.25%, can result in thousands of dollars in interest savings over the life of the loan. For example, on a $300,000 loan with a 30-year term, lowering the interest rate from 6% to 5.75% could save you over $15,000 in interest payments.” A lower interest rate also has another benefit: It allows you to build equity in your home more rapidly than you would with higher interest payments. “Lowering your interest rate means that more of your monthly payment will go toward the principal balance you owe. This will build your equity more quickly,” says Rose Krieger, a home loan specialist for Churchill Mortgage, a national mortgage lender. Determining the Break-Even Point Another important factor to consider when buying down your mortgage rate is the “break-even” point for the money you’re spending to secure a lower rate. In other words, how long will it take for you to recoup the expense associated with the buydown? “The break-even point is when the amount you save on your monthly mortgage payments equals the upfront cost of buying down the rate,” explains Holman. For example, if it costs you $4,000 to buy down the rate and you save $50 a month on your mortgage, your break-even point would be 80 months into the mortgage, or just over six and a half years. If you stay in the home longer than the break-even point, the money saved will outweigh the upfront cost you paid to buy down your mortgage rate. The Opportunity Cost of Buying Down Buying down a mortgage interest rate can be costly. Before spending a large sum of money, it’s important to consider the expense in light of your overall financial plans and goals. You should determine if a reduced interest rate is the best use of your free cash. “The funds used to buy points could instead be invested elsewhere, like in retirement savings or paying down higher-interest debt,” says Holman. “It’s important to weigh the potential returns from those other uses against the long-term savings from buying down your mortgage rate. Sometimes, those other goals might offer a better return on your investment.” Additionally, it’s wise to speak with a lender to determine if there is a better way to use the money as part of your home purchase. For example, using the funds to provide a more substantial down payment could have a bigger financial benefit. “Putting a larger down payment on the home may reduce the mortgage interest rate anyway and depending on the amount, it may eliminate the requirement for mortgage insurance, which would in turn, lower your overall monthly payment,” says Krieger. When to Buy Down Points There are indeed times when buying down mortgage points can be beneficial. A mortgage buydown is generally worth it if you plan to stay in the home for a long time since a lower interest rate means you’ll recoup the upfront cost. If you plan to sell in a few years or refinance to obtain a lower interest rate, a mortgage buydown is much less likely to pay off. It’s also important to ensure that you have sufficient cash reserves to handle emergencies as a homeowner before depleting savings in pursuit of a lower interest rate. Review your financial picture and establish a firm understanding of your cash flow, savings and homeownership goals. If you have questions about the best approach, consult a mortgage professional for personalized advice. Is it Worth it to Buy Down Your Rate? Buying down the interest rate on a mortgage can reduce monthly mortgage payments and allow you to qualify for a larger mortgage. However, you should weigh the expense against your long-term goals before spending the money to bring your rate down a quarter-point or more.

By Ralph Dibugnara November 7, 2024 By Brian OConnell Home insurance seems to be a low priority for new homeowners, but adopting that mindset could be a serious mistake. Why? Because of costs related to home insurance and the reasons homeowners need insurance in the first place. You're going to want to protect yourself and your assets. Do you think you need home insurance? If so, you're going to want to evaluate your personal finances and determine how to budget for home insurance payments. Before you get out your wallet, here's what you need to know. How much does home insurance cost? Price-wise, new home buyers can expect to tack on $1,200 to the cost of a new home, in the form of proper home insurance. That cost, however, depends on several key factors including: Age and price of the home Amount of cash put down via a down payment State or municipality where the home is located Since real estate is primarily about location, where you buy your new home largely dictates how deeply you’ll have to dig in your pocket for home insurance payments. For example, homeowners in Louisiana face the highest home insurance rates in the U.S., at $1,958 (on average) per year. Compare that to $677 in Oregon or $692 in Utah. RECORD-LOW MORTGAGE RATES WON'T LAST — REFINANCE BEFORE IT'S TOO LATE What does a typical homeowners policy cover? No matter where you live home insurance shares some basic commonalities. "Good home insurance policies will mainly cover two types of liabilities - loss of personal property as well as liability for any other damages," said Ralph DiBugnara, president at Home Qualified, a digital platform for home buyers, sellers, and investors. "Yet every carrier has some common standards as well as items and scenarios that they deem to be high risk or low risk." That’s why it’s important a shopper should get at least three quotes because costs and coverages will vary from carrier to carrier. The idea is for shoppers to compare different rates from different companies, and the best way to accomplish that is by going online. To get the best home insurance policy at the best price, DiBugnara advised asking – and answering – three key questions before signing on the dotted line: How much insurance coverage do you actually need? What exactly does that coverage protect me from happening? How much of a deductible should I take and still be safe? "Answering these questions correctly can help you avoid major issues in case of disaster or damage to your home," he said. HOW TO FIND THE BEST MORTGAGE RATES AND FASTEST CLOSINGS What type of home insurance coverage do you need? Some home insurance experts say homeowners put too much emphasis on monthly payments and not enough on getting the right coverage. In that scenario, costs escalate in the form of high out-of-pocket expenses when a disaster strikes and the house incurs major damage. "Just like auto insurance, there can be great variance in the cost from one home insurance company to another," said Jeff Zander, founder of Zander Insurance, in Nashville, Tenn. "In many cases, people have paid less attention to their home insurance cost since it is often included in the escrow payment portion of the mortgage." "For most people, a home is their greatest asset, but the bank is only concerned about getting them their money and not about any of their contents, personal property, or liability risks that arise from owning a home," Zander said. Homeowners looking for quality home insurance at a decent price also need to make a distinction between covering select risks or covering all risks. Fortunately, home insurance policies have you covered. "There are really two types of home insurance policies," Zander noted. A "named perils" policy: This lists the perils that are covered. "If the peril is not listed, then it is not covered," he said. An all-risk policy: "This is the most preferred homeowner insurance policy since it lists the exclusions," Zander added. "Basically, if it is not excluded then it is covered. An all-risk policy is a much broader policy form and includes better protection." The takeaway on getting good home insurance for the best price? Think value and not cost. "Don’t cut corners when purchasing home insurance," said Orlando Frasca, an insurance specialist at Rogers Insurance Services in Danville, Cal. "Consumers often look at the lowest price as opposed to what they are getting for that price, only to find out certain coverages they thought they have were not included on the policy."

By Ralph Dibugnara November 7, 2024 By Brian OConnell Home insurance seems to be a low priority for new homeowners, but adopting that mindset could be a serious mistake. Why? Because of costs related to home insurance and the reasons homeowners need insurance in the first place. You're going to want to protect yourself and your assets. Do you think you need home insurance? If so, you're going to want to evaluate your personal finances and determine how to budget for home insurance payments. Before you get out your wallet, here's what you need to know. How much does home insurance cost? Price-wise, new home buyers can expect to tack on $1,200 to the cost of a new home, in the form of proper home insurance. That cost, however, depends on several key factors including: Age and price of the home Amount of cash put down via a down payment State or municipality where the home is located Since real estate is primarily about location, where you buy your new home largely dictates how deeply you’ll have to dig in your pocket for home insurance payments. For example, homeowners in Louisiana face the highest home insurance rates in the U.S., at $1,958 (on average) per year. Compare that to $677 in Oregon or $692 in Utah. RECORD-LOW MORTGAGE RATES WON'T LAST — REFINANCE BEFORE IT'S TOO LATE What does a typical homeowners policy cover? No matter where you live home insurance shares some basic commonalities. "Good home insurance policies will mainly cover two types of liabilities - loss of personal property as well as liability for any other damages," said Ralph DiBugnara, president at Home Qualified, a digital platform for home buyers, sellers, and investors. "Yet every carrier has some common standards as well as items and scenarios that they deem to be high risk or low risk." That’s why it’s important a shopper should get at least three quotes because costs and coverages will vary from carrier to carrier. The idea is for shoppers to compare different rates from different companies, and the best way to accomplish that is by going online. To get the best home insurance policy at the best price, DiBugnara advised asking – and answering – three key questions before signing on the dotted line: How much insurance coverage do you actually need? What exactly does that coverage protect me from happening? How much of a deductible should I take and still be safe? "Answering these questions correctly can help you avoid major issues in case of disaster or damage to your home," he said. HOW TO FIND THE BEST MORTGAGE RATES AND FASTEST CLOSINGS What type of home insurance coverage do you need? Some home insurance experts say homeowners put too much emphasis on monthly payments and not enough on getting the right coverage. In that scenario, costs escalate in the form of high out-of-pocket expenses when a disaster strikes and the house incurs major damage. "Just like auto insurance, there can be great variance in the cost from one home insurance company to another," said Jeff Zander, founder of Zander Insurance, in Nashville, Tenn. "In many cases, people have paid less attention to their home insurance cost since it is often included in the escrow payment portion of the mortgage." "For most people, a home is their greatest asset, but the bank is only concerned about getting them their money and not about any of their contents, personal property, or liability risks that arise from owning a home," Zander said. Homeowners looking for quality home insurance at a decent price also need to make a distinction between covering select risks or covering all risks. Fortunately, home insurance policies have you covered. "There are really two types of home insurance policies," Zander noted. A "named perils" policy: This lists the perils that are covered. "If the peril is not listed, then it is not covered," he said. An all-risk policy: "This is the most preferred homeowner insurance policy since it lists the exclusions," Zander added. "Basically, if it is not excluded then it is covered. An all-risk policy is a much broader policy form and includes better protection." The takeaway on getting good home insurance for the best price? Think value and not cost. "Don’t cut corners when purchasing home insurance," said Orlando Frasca, an insurance specialist at Rogers Insurance Services in Danville, Cal. "Consumers often look at the lowest price as opposed to what they are getting for that price, only to find out certain coverages they thought they have were not included on the policy."

By Ralph Dibugnara October 17, 2024 By Tribune News Service | Tribune News Service UPDATED: September 27, 2024 By Erik J. Martin, Bankrate.com Leaves aren’t the only things falling this autumn: Mortgage rates are finally heading down, too. And that, combined with a seasonal dip in home prices, is causing some end-of-year excitement among homebuyers and sellers. The median existing-home price was $416,700 in August, per the National Association of Realtors — a record high for August, but still down from $422,600 a month earlier. And average rates for the benchmark 30-year fixed-rate mortgage loan have dropped from a high this year of 7.39% in May to 6.24% in late September. With rates already down more than a full percentage point and more Fed interest-rate cuts on deck, many market-watchers are asking, what do the final three months of 2024 have in store for sellers and buyers? We reached out to a panel of pros for their real estate trends and forecasts. Q4 2024 housing market trends: What to expect The last quarter of the year is usually a slowdown period for real estate markets across the country. Typically, home sales tend to decrease in the fourth quarter and stay subdued until spring. During this period, there are usually fewer buyers, the number of homes for sale declines and properties are more likely to see price cuts compared to other times of the year. Molly Boesel, principal economist for CoreLogic, seconds those sentiments. “Many buyers have been waiting on the sidelines to purchase, and many will now purchase quickly,” she says. “Therefore, we most likely won’t see the typical slowdown in the last three months of the year.” Ralph DiBugnara, president of Home Qualified, says these factors, combined with the presidential election, should ensure sharp movement in favor of buyers between October and December. “It should make the fourth quarter of 2024 probably the busiest of the year,” he predicts. Q4 mortgage rate projections As of September 25, the rate for a 30-year fixed mortgage averaged 6.24% versus 5.43% for a 15-year fixed home loan, per Bankrate’s latest survey of large lenders. And housing experts envision rates dipping even lower over the rest of the year. “During the next three months, we’re probably going to see average 30-year fixed mortgage rates in the low 6% or perhaps the high 5% range,” says Ted Rossman, senior industry analyst for Bankrate. “The path forward for mortgage rates will depend on the state of the economy, the job market, what the Fed does and more. Consider that last fall, the average 30-year fixed mortgage rate briefly hit 8% for the first time since 2000. Now, we’re moving in the right direction — although today’s rates are still much higher than they were for most of the past 15 years.” Bugnara anticipates 6.25% and 5.625% average rates, respectively, for 30-year and 15-year mortgage loans this quarter. But Boesel expects the 30-year mortgage rate to average 6.0% this quarter. Sharga mirrors that prediction, with a caveat: “There’s an outside chance it could dip below 6% and settle in the high 5% range,” he says. Where home prices are heading Housing prices have been on the rise for quite some time, and that doesn’t look to change in Q4: Buyers should not expect to see a significant drop in prices before the end of the year. “Home prices should increase this quarter by 3.9% year-over-year,” says Boesel. “Continued homebuyer demand bumping up a still-limited supply will push prices up.” Bugnara concurs, predicting that we’ll see home prices jump 3% to 5% over the quarter. Dennis Shirshikov, an adjunct professor of economics at City University of New York, also foresees prices remaining high — “however, you might see slight cooling in certain overvalued markets,” he says. Housing inventory predictions for Q4 “We’re unlikely to see a huge wave of homeowners listing their properties for sale until mortgage rates come down significantly — probably below 5.5%,” says Sharga. However, he notes that inventory levels are up about 40% from last year. “The inventory of new homes for sale is actually back to pre-pandemic levels, so overall there’s more to buy,” he says. But Shirshikov does not think inventory will grow much more this year, particularly for entry-level homes. “Many homeowners locked into low mortgage rates will continue holding off on selling, restricting supply,” he says. Boesel anticipates the inventory that does arrive on the market to sell fast. “As new supply enters the market, it should quickly exit as homebuyers waiting on the sidelines act quickly,” she says. For-sale inventory should trend around 15% to 20% above 2023 levels, she forecasts. Strategies for homebuyers and sellers Now that the tea leaves have been read on real estate trends for Q4, how should consumers proceed? If you’re hoping to buy, be sure your finances are in order. “Don’t buy a home before you’re ready,” says Rossman. “Make sure you have a cushion for transaction costs, repairs and maintenance. It’s better to rent for longer than to buy before you are ready.” Still, be prepared to pounce if a great opportunity arises. “Competition for properties should remain brisk in quarter number four, so buyers should be ready to act when they find the home they want to purchase,” Boesel says. “I’d recommend considering less competitive markets where your purchasing power can go further,” says Shirshikov. And if fewer buyers than expected enter the market this season, “you might find some good deals, especially from sellers who are more motivated to close before the end of the year.” Sellers, meanwhile, should consider the following factors: Local market conditions: “Know what’s happening in your local market,” says Sharga. “If homes are selling quickly and prices are rising, it’s probably a good time to list. On the other hand, if you see inventory levels increasing, homes remaining on the market longer and prices weakening, it might make sense to wait until spring to list your home for sale.” Competitive pricing: “Even in a seller’s market, buyers are sensitive to high mortgage rates,” Shirshikov says. “Overpricing your property could lead to it sitting longer on the market. Consider offering incentives, such as covering closing costs, to make your listing more attractive, if necessary.” Where you will live next: “You can probably get a good price for what you’re listing, but you may have to pay more than you want for what’s next,” says Rossman. “And your mortgage rate could be a lot higher than you are used to, even as rates have begun to come down. Sweet spots are empty-nesters downsizing and people leaving higher-cost markets for lower-cost markets. On the flip side, trading up in a similar market is pricey.”

By Ralph Dibugnara October 10, 2024 By Christy Biebe October 1, 2024 Home equity loans have long been one of the more affordable ways for property owners to borrow and, unlike alternatives such as a home equity line of credit (HELOC), home equity loans typically offer borrowers a fixed interest rate and predictable payments. Unfortunately, home equity loan rates have soared in the post-pandemic era as the Federal Reserve raised the benchmark interest rate to fight inflation. While home equity loans and HELOCs remained cheaper than credit cards, borrowing costs hit the highest levels in years. The good news is, the tide may be turning. Driven by anticipation of a Fed rate cut, expert predictions of falling rates in the summer of 2024 proved accurate. With the latest inflation report showing just a 2.5% year-over-year increase in the all-goods index, the Fed rate cut announced in September and the Fed strongly signaling more cuts are coming, predictions of additional rate drops this fall have many owners hoping cheaper loan options will soon be on the table. But, will rates drop in October or should homeowners hold on for further rate declines? We asked some experts where they think rates are trending. Here's the home equity loan interest rate forecast for October Looking to access your home equity this month? Here's what could happen to interest rates: A rate reduction could be on the table Homeowners eager to tap into their equity as soon as possible may have some new opportunities to borrow at a lower rate this October. "Home equity loan rates will be reduced by .50% in October," predicts Melisa Cohn, Regional Vice President at William Raveis Mortgage. Cohn indicates that rates will drop because of the Federal Reserve's recent rate cut at the September meeting. Borrowers who currently have home equity loans won't see their costs decline, unlike those with variable-rate HELOCS that often move directly with the prime rate which is heavily influenced by the Fed. Although HELOC rates fluctuate over time, home equity loan rates are fixed. Anyone who already borrowed is locked in at the rate they were initially offered unless they refinance. New home equity loan borrowers, however, could benefit from more affordable loan options coming on the market. The Fed's benchmark rate is just one factor affecting how much banks charge homeowners looking to tap equity, but when it costs banks less to borrow, they often respond by lowering rates on home equity and other consumer loans. Bigger rate cuts are coming While loans should become more affordable in October, those who can hold on for a little longer may be rewarded for their patience. "I don't think we'll see much change in home equity rates in October; however, pretty sizable drops are coming," predicts Aaron Gordon, Branch Manager and Senior Mortgage Loan officer at Guild Mortgage. "The Fed dropped rates 50 basis points in September so that was great news for home equity loans but the next Fed meeting isn't until early November. With inflation getting closer to the Fed's 2% stated target, I believe we'll see steady drops over the next year." Ralph DiBugnara, President of Home Qualified, also believes rate drops are imminent but not necessarily immediate, although he predicts the rate decline will start in October. "With overall mortgage rates coming down because the Fed has started lowering the borrowing rate, home equity loan rates will come down as well," he says. "This reduction should happen over the fourth quarter of 2024 and into 2025." DiBugnara explained that reduced consumer spending, higher unemployment rates and high levels of consumer debt will prompt the Fed to continue rate cuts, which will lead to further reductions in home equity loan costs for property owners. The bottom line Of course, not everyone can delay their borrowing date indefinitely if they have pressing financial needs now and those looking for home equity loans in October should still see some good opportunities out there. The key will be finding them. "It's important to shop home equity rates as there may be a pretty big difference between your favorite bank or credit union and other lenders," Gordon says. By exploring multiple loan offers and comparing rates and fees, borrowers who need to tap their equity can find the best deals in the current market -- while homeowners who aren't on the clock can sit back and wait for even better offers in November and beyond.

By Ralph Dibugnara October 4, 2024 By Christy Bieber Edited By Angelica Leicht September 24, 2024 On September 18, 2024, the Federal Reserve announced a 50 basis point cut to the federal funds rate. For homebuyers faced with record-high mortgage rates in the post-pandemic era, this was welcome news. Many had been prepping for a rate cut in hopes mortgage rates would fall after the September Fed meeting. Those readying themselves for cheaper home loans were given reason for optimism about September's mortgage rate forecast when the Fed delivered a larger-than-anticipated rate cut. Still, the big question for most buyers is whether the Fed's moves will push current mortgage rates low enough so they can finally buy a home with affordable monthly payments. Mortgage costs had already begun dropping in anticipation of the Fed's actions and are down over a point from the post-pandemic highs — but are still higher than during the pandemic and in the years leading up to it. Buyers looking at loan offers in the 6% range are likely wondering if there's a chance rates could decline further in October, even though the Fed doesn't meet again until November. If you're considering staying on the sidelines in hopes that will occur, here's what experts say about your chances. Will mortgage rates drop in October without a Fed meeting? For would-be homeowners focused on the Fed, it's important to realize the central bank doesn't play as big a role in driving borrowing costs as some buyers might think. "The Fed funds rate is not directly tied to mortgage rates, so we don't need the Fed to announce another rate cut in October to see rates continue to decline," says Sarah Alvarez, vice president of mortgage banking at William Raveis Mortgage. The Fed sets the overnight rate at which banks borrow from each other. It doesn't impact mortgage rates directly. "Mortgage rates can and do move without a big decision by policymakers," says Ali Wolf, the chief economist for Zonda. "Mortgage rates move on a day-to-day basis based on economic data and investor sentiment." Wolf believes that since economic data is likely to come in muted, rates are likely to continue trending downward in October. Both inflation and employment numbers are key factors to watch. "If inflation continues to show signs of cooling we will likely see rates continue to decline," Alvarez says. While Alvarez warns election uncertainty and an escalation of global wars could potentially have a negative impact, there's also plenty of evidence suggesting economic trends will favor further cuts. "Prices have reached a point where Americans have stopped buying. Unemployment has also continued to increase," says Ralph DiBugnara, founder of Home Qualified. "The combination is bringing inflation down, and with that mortgage rates will continue to fall next month." October's rate cuts still may not be as substantial as borrowers hope, though, unless conditions worsen. "Right now, the economy is running pretty strong but if labor market conditions weaken considerably, that could lead to a more sizable drop in interest rates," says Lisa Sturtevant, PhD and chief economist at Bright MLS. Anticipation of future Fed action could cause rates to fall While some would-be homebuyers saw the long-awaited September rate cut as crucial to declining mortgage rates, the reality is that borrowing costs had already started to fall in anticipation of the Fed's actions — and this is a pattern likely to repeat. "The expected Fed rate cut this week has already been largely baked into mortgage rates, which have been falling since July," Sturtevant says. "An expectation of a rate cut by the Fed in November could actually cause mortgage rates to fall in October in anticipation." Alvarez agrees that when the Fed is hawkish about future rate cuts, this positively impacts the mortgage market. That's good news as the central bank signaled another half-point rate decrease is likely this year. With the Fed's intentions made clear, lenders can act sooner rather than later. "The Fed has changed their sentiment to one of reducing the borrowing rate," DiBugnara says. "The markets now understand that the Fed has no choice but to lower rates." Investors and banks will react accordingly. Buyers shouldn't wait for a rate cut to act While all available evidence suggests rate cuts are likely outcome in October, there are no guarantees — and there are some risks worth considering. "Many homebuyers have been waiting on the sidelines for rates to fall. If there is a surge in mortgage demand in October, mortgage rates could actually be pushed up a bit as lenders respond to that increased demand," Sturtevant warned. An increase in buyer demand could also put upward pressure on home prices, leaving would-be borrowers in the unfortunate position of facing a more competitive market and higher purchasing costs just as mortgage loans become more affordable. Since buyers can refinance a home loan if rates decline, but can't buy at today's prices if home costs surge, those who have been sitting on the sidelines may want to take advantage of opportunities available now. Today's rates aren't the most competitive in history, but they're down considerably from recent highs. Borrowers who are financially ready can get in at a reasonable cost before home prices rise and consider refinancing later if rates continue to decline. The bottom line While a Fed meeting won't happen in October, potential home-buyers could still see important changes in the mortgage and housing market — including a reduction in loan rates. Still, the downside risks of delaying a home purchase in anticipation of future rate cuts may outweigh the upside. Would-be borrowers should seriously consider taking action before a potential home price surge — especially with the Fed signaling rate cuts could continue into 2025. Future opportunities to refinance are likely to become more plentiful over time, but the home prices of today may be gone for good tomorrow.

By Ralph Dibugnara October 4, 2024 By Christy Bieber Edited By Angelica Leicht September 24, 2024 On September 18, 2024, the Federal Reserve announced a 50 basis point cut to the federal funds rate. For homebuyers faced with record-high mortgage rates in the post-pandemic era, this was welcome news. Many had been prepping for a rate cut in hopes mortgage rates would fall after the September Fed meeting. Those readying themselves for cheaper home loans were given reason for optimism about September's mortgage rate forecast when the Fed delivered a larger-than-anticipated rate cut. Still, the big question for most buyers is whether the Fed's moves will push current mortgage rates low enough so they can finally buy a home with affordable monthly payments. Mortgage costs had already begun dropping in anticipation of the Fed's actions and are down over a point from the post-pandemic highs — but are still higher than during the pandemic and in the years leading up to it. Buyers looking at loan offers in the 6% range are likely wondering if there's a chance rates could decline further in October, even though the Fed doesn't meet again until November. If you're considering staying on the sidelines in hopes that will occur, here's what experts say about your chances. Will mortgage rates drop in October without a Fed meeting? For would-be homeowners focused on the Fed, it's important to realize the central bank doesn't play as big a role in driving borrowing costs as some buyers might think. "The Fed funds rate is not directly tied to mortgage rates, so we don't need the Fed to announce another rate cut in October to see rates continue to decline," says Sarah Alvarez, vice president of mortgage banking at William Raveis Mortgage. The Fed sets the overnight rate at which banks borrow from each other. It doesn't impact mortgage rates directly. "Mortgage rates can and do move without a big decision by policymakers," says Ali Wolf, the chief economist for Zonda. "Mortgage rates move on a day-to-day basis based on economic data and investor sentiment." Wolf believes that since economic data is likely to come in muted, rates are likely to continue trending downward in October. Both inflation and employment numbers are key factors to watch. "If inflation continues to show signs of cooling we will likely see rates continue to decline," Alvarez says. While Alvarez warns election uncertainty and an escalation of global wars could potentially have a negative impact, there's also plenty of evidence suggesting economic trends will favor further cuts. "Prices have reached a point where Americans have stopped buying. Unemployment has also continued to increase," says Ralph DiBugnara, founder of Home Qualified. "The combination is bringing inflation down, and with that mortgage rates will continue to fall next month." October's rate cuts still may not be as substantial as borrowers hope, though, unless conditions worsen. "Right now, the economy is running pretty strong but if labor market conditions weaken considerably, that could lead to a more sizable drop in interest rates," says Lisa Sturtevant, PhD and chief economist at Bright MLS. Anticipation of future Fed action could cause rates to fall While some would-be homebuyers saw the long-awaited September rate cut as crucial to declining mortgage rates, the reality is that borrowing costs had already started to fall in anticipation of the Fed's actions — and this is a pattern likely to repeat. "The expected Fed rate cut this week has already been largely baked into mortgage rates, which have been falling since July," Sturtevant says. "An expectation of a rate cut by the Fed in November could actually cause mortgage rates to fall in October in anticipation." Alvarez agrees that when the Fed is hawkish about future rate cuts, this positively impacts the mortgage market. That's good news as the central bank signaled another half-point rate decrease is likely this year. With the Fed's intentions made clear, lenders can act sooner rather than later. "The Fed has changed their sentiment to one of reducing the borrowing rate," DiBugnara says. "The markets now understand that the Fed has no choice but to lower rates." Investors and banks will react accordingly. Buyers shouldn't wait for a rate cut to act While all available evidence suggests rate cuts are likely outcome in October, there are no guarantees — and there are some risks worth considering. "Many homebuyers have been waiting on the sidelines for rates to fall. If there is a surge in mortgage demand in October, mortgage rates could actually be pushed up a bit as lenders respond to that increased demand," Sturtevant warned. An increase in buyer demand could also put upward pressure on home prices, leaving would-be borrowers in the unfortunate position of facing a more competitive market and higher purchasing costs just as mortgage loans become more affordable. Since buyers can refinance a home loan if rates decline, but can't buy at today's prices if home costs surge, those who have been sitting on the sidelines may want to take advantage of opportunities available now. Today's rates aren't the most competitive in history, but they're down considerably from recent highs. Borrowers who are financially ready can get in at a reasonable cost before home prices rise and consider refinancing later if rates continue to decline. The bottom line While a Fed meeting won't happen in October, potential home-buyers could still see important changes in the mortgage and housing market — including a reduction in loan rates. Still, the downside risks of delaying a home purchase in anticipation of future rate cuts may outweigh the upside. Would-be borrowers should seriously consider taking action before a potential home price surge — especially with the Fed signaling rate cuts could continue into 2025. Future opportunities to refinance are likely to become more plentiful over time, but the home prices of today may be gone for good tomorrow.

By Ralph Dibugnara September 12, 2024 By Sandy John, Andrew Pentis, Katie Lowery, CNN Underscored Money If you have a 30-year home loan, refinancing to a 10-year mortgage allows you to pay off your loan decades earlier and score a lower interest rate. But these savings come at the expense of a considerably higher monthly payment, making it easy to outrun your budget. Here’s a look at today’s 10-year refinance rates: Current 10-year refinance rates You may not see 10-year refinance rates advertised widely, but many mortgage lenders offer conventional, decade-long terms, said Ralph DiBugnara, a veteran mortgage industry executive based in New York. “Ninety-five percent of the time, it’s the same rate as the 15-year fixed-rate mortgage,” which are “usually the most advantageous rates in the market,” DiBugnara said. Like other mortgage rates, 10-year refinance rates fluctuate based on factors such as the state of the economy and the overall credit market. The Federal Reserve has maintained the federal funds rate after an unprecedented rate-hike cycle with 11 increases between March 2022 and November 2023 to fight post-pandemic inflation. How 10-year refinance rates are trending After reaching their highest point in more than 20 years in late 2023, mortgage refinance rates have generally been trending downward. “If the economy starts to cool and the Fed signals a shift toward lowering rates, we might see a bit of a dip in refinance rates,” said Mike Roberts, a Utah-based mortgage broker. “That would be great news for homeowners looking to lock in a lower rate.” In mid-2024, Fannie Mae’s Economic and Strategic Research Group forecasted that 30- year mortgage rates will average 6.4% in 2025. Following that estimate, we may see (10- and) 15-year rates around 5.75% next year. (That’s because the 15-year rate has been 66 basis points lower on average than the 30-year rate over the past five years, according to our analysis.). 6 tips for scoring competitive 10-year refinance rates 1. Check your budget. The payments on a 10-year term will be much higher than you’re currently paying if you have a 30-year loan, and you’ll need to have documentation to verify that your income will cover the payments. Calculating your monthly dues — and double-checking affordability via your budget — is a wise first step. 2. Check your credit scores. You’ll likely need a 620 score to get a conventional loan, but a higher score can result in a lower interest rate. Pay all of your bills on time, make sure all your accounts are up to date and try to pay down debts before applying for a refinance. 3. Figure your loan-to-value ratio. For a refinance, you may need to have at least 20% equity in your home to get the best mortgage rates. So, if your home is worth $400,000, you’d need to have $80,000 in equity (.20 x $400,000 = $80,000). 4. Shop around. Compare interest rates, closing costs and other expenses, which the lender will list on a loan estimate document. By comparing the annual percentage rate, or APR, via preapprovals, you can compare all the refinance costs, not just the interest rate. 5. Consider discount points. Some lenders allow you to purchase mortgage discount points in exchange for a lower interest rate. One point typically costs 1% of the loan amount and may lower the interest rate by, say, 0.25 percentage points — but the actual discount amount varies by lender. 6. Choose a loan. Select the lender you want to work with and lock in your interest rate. Here are examples of reputable mortgage refinance lenders that offer some of the best 10-year refinance rates: How do refinance rates work? While the overall economy and the rates set by the Federal Reserve influence mortgage refinance rates, lenders also set rates based on the strength of your application. “It’s a combination of factors — the overall economic climate, the Fed’s policies, your credit score, your loan-to-value ratio and the demand for loans in the market,” said Roberts. “Typically, refinance rates are a bit lower than purchase rates, but the gap has been narrowing lately.” For example, if you have high credit scores, you’ll be offered a lower rate than someone with fair credit scores. You can also lower your interest rate by having more home equity before refinancing. The state where the property is located can also affect the rate you pay, as can the loan program you choose. Related >> How mortgage rates are determined Like new home loans, shopping around for the right refinance lender and choosing a shorter term loan can also result in a lower mortgage rate. Factors affecting individual 10-year refinance rates  Credit scores and history  Loan program  Rate type (fixed or adjustable)  Borrowing amount  Equity amount  Loan term length  Location Getting a lower mortgage rate will help to lower your monthly payment. Even a slightly lower mortgage rate can result in substantial savings over the 10- to 30-year loan period. Example: Say you refinance $300,000 on your mortgage. Here’s how changing the term of your home loan could affect your monthly payment and total costs. (The mortgage payments here cover principal and interest only.) Term Fixed interest rate Monthly payment Total repayment 10 years 6.500% $3,406 $408,794 15 years 6.500% $2,877 $470,438 20 years 6.875% $2,303 $552,946 30 years 7.125% $2,021 $727,755 Pros and cons of a 10-year fixed-rate refinance Pros Cons  Lower rates and higher overall savings (if you’re refinancing from a longer term)  Accrue equity at a faster clip  Increase your odds of a mortgage-free retirement  Less commonly available among lenders  Stricter eligibility requirements  Closing costs (2% to 6% of the loan amount)  Higher monthly cost (than longer loan terms)  Can get in a financial bind if income drops  Less payment flexibility Should you refinance your home loan to a 10-year term? Refinancing to a 10-year term can save you many thousands of dollars compared to a longer term loan. In exchange, you must commit a lot of money every month to paying off your mortgage. “If you can swing the higher monthly payment and you really want to be mortgage-free faster, it’s definitely worth considering,” said Roberts. “The interest savings can really add up over time.” Some homeowners prioritize a mortgage-free future, but before committing to a 10-year term, be sure your budget can handle the higher payment without being stretched too far. “The danger I see is, people take a 10-year fixed and then struggle with the higher payment — it’s about 70% [more expensive on average] than a 30-year fixed,” said Steve Hill, a California-based mortgage broker. “If you think your mortgage payment is expensive now, try almost doubling it. It’s not for everyone.” When it might be wise to refinance to a 10-year term When it might be unwise  You have a high, steady income  You’re preparing for retirement and will have a fixed income within 10 years  You want to be mortgage-free faster to focus on other financial priorities  Your income could change or is unpredictable  You need more room in your budget for other obligations, such as high-interest debt or investing goals  You have an ultra-low mortgage rate  You want flexibility to pay off your mortgage on time or ahead of schedule, as possible  Your current mortgage has a prepayment penalty How to apply for a 10-year mortgage refinance Applying for a 10-year mortgage refinance is a lot like applying for a mortgage with other terms, but some specific considerations are involved. Here are six steps to help you through the mortgage refinance process. 1. Do the math. Use a mortgage calculator to estimate your monthly payments with a 10-year mortgage refinance. If you’re not confident that you can afford 120 straight months of that payment, consider keeping a longer loan term and instead paying extra toward the principal each month. “That way, if an emergency strikes, you're not stuck [with] the higher payment,” said Hill. 2. Check your eligibility. Make sure your credit scores are the best they can be. You’ll also want to check your home equity. The more equity you have, the less risky you are to the lender, which could mean a better interest rate. Although it can be possible to refinance a mortgage with bad credit, you’ll pay higher rates, potentially negating any savings you’d see from refinancing. 3. Research lenders. Ten-year refinance loans aren’t as common as 15- and 30-year terms, so narrowing your list of prospects should be easy. Get preapproved with at least one bank, credit union and online lender each to compare rates — and choose the right mortgage lender. 4. Gather your documentation and apply. Each lender has unique requirements, but they’ll also require documentation to show proof of income, assets and debts. You’ll likely be asked to hand over recent pay stubs and bank statements, for example. 5. Get a home appraisal. Before the mortgage underwriting process can begin, your lender will need a new appraisal of your home to determine its current value. 6. Close on the loan. Your refinance loan will have a closing process and closing costs just like your original mortgage. Like with your original home loan, you’ll have a right of rescission, or a special grace period — until midnight of the third business day after the transaction — to cancel the loan contract. If you have doubts about your ability to afford the high payments of a 10-year term, this is your last chance to back out.