- Buy now before mortgage rates climb higher.
- Homebuyers report they can afford more than expected.
- First steps for self-employed people seeking a mortgage.
- Stimulus and pandemic recovery could supercharge the 2021 economy.
- Millennial generation driving home sales.
Read on for more coverage.
Mortgage Rates Climb
Rates climbed to 2.81%, their highest point since November. Historic low mortgage rates contributed to a frenzy of home-buying and refinancing, but the coming months could see a steady rise back above 3%. Some observers worry that fast economic growth coming out of the pandemic might lead to inflation, making homes less affordable.1
More Home for the Money
More than two-thirds of first-time homebuyers surveyed by realtor.com are surprised at how much home they can afford. Experts credit mortgage rates, which fell a full point during the past year, for improved affordability. Additionally, half of respondents saved up for their down payment in under three years, with just over half receiving down payment assistance from parents.2
Home-Buying for the Self-Employed
Self-employed people can qualify for the same mortgages as traditional W-2 workers but may run into challenges documenting regular and reliable monthly income. Lenders look for taxable income, so watch out for excess deductions. Approach a loan officer early for instructions on needed documentation. Usually, lenders scrutinize company balance sheets and two years of personal and business taxes.3
Economists Predict Post-Pandemic Boom
Fannie Mae’s Economic and Strategic Research (ESR) Group expects the economy to grow at a whopping 6.7% rate in 2021. Look for surging growth as the coronavirus pandemic subsides and Congress injects nearly $2 trillion in stimulus money. Beware of rising inflation and interest rates later this year, though, with the result that the Fed could tighten policy and cause a slowdown in 2022.4
Millennials Lead the Market
First-time homebuyers made up one-third of all sales in January, as the millennial generation begins to flex its muscles on the housing market. Sales rose 23.7% over this time last year, but could have been even higher if available inventory had not been down nearly 26%. The crunch should ease this spring as home building accelerates and more owners think about selling to take advantage of high prices.5
Sources: 1 marketwatch.com; 2 magazine.realtor; 3 themortgagereports.com; 4 fanniemae.com; 5 housingwire.com
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