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First-Time Home Buyers Now 1/3 Of The Housing Market

By Dan Green

First-time home buyers now account for one-third of all buyers, according to the National Association of REALTORS® and its Existing Home Sales report; an update on today’s mortgage rates and the 5-day trend for interest rates; and, the FHFA reports home values up 6.9% from last year nationwide.

Low-Down Payment Loans Helping First-Time Home Buyers

Pent-up housing demand among Millennial home buyers is unleashing - Growella
Millennial home buyers unleash pent-up demand for homes

First-time home buyers represent a growing share of the U.S. housing market.

According to the National Association of REALTORS® and its April 2018 Existing Home Sales report, first-time home buyers accounted for one-third of all home buyers nationwide.

A first-time home buyers is defined as a person who has not owned a home within the prior 36 months. The definition includes renters buying their first home, and former homeowners who rented or lived rent-free for the last three years.

April’s 33 percent market share for first-time buyers is below long-term averages for the demographic, and also the largest percentage of first-time since July of last year.

There is pent-up housing demand among Millennials buyers, and with home values rising, wage income lifting, and mortgage rates on the move, that demand may be unleashing.

Buyers have found that the biggest stretch to get into homeownership isn’t making the monthly mortgage payment. It’s making the down payment on the home.

And, now, they’re finding help.

Today’s buyers are using a combination of cash gifts for down payment; down payment assistance programs from state and local governments; and, low- and no-down payment loans to help make homeownership possible.

Programs like Fannie Mae’s HomeReady and Freddie Mac’s HomePossible both offer 3 percent down payment options with ultra-low rates. The FHA mortgage allows for 3.5 percent down on most homes in the country. And, the USDA mortgage gives 100 percent financing in less-dense areas nationwide.

There are plenty of ways to get into homeownership so if your plans for 2018 or 2019 include buying a home for the first time, get with a mortgage lender and make a flexible plan for your future.

Homeownership may be closer than you think.

Today’s Mortgage Rates & Interest Rate Trends

Today's mortgage rates and the most recent 5-day trend - Growella
5-day trend for U.S. mortgage rates

Mortgage rates are rising today, for the first time in a week. Costs for home buyers and refinancing households are higher today as compared to before the long weekend.

Rates are relatively excellent, however. It’s been eight straight days of interest rate drops which has lowered pricing to its best levels in six weeks.

Here is a look at what pricing is doing today:

When you’re shopping for an actual rate quote from a lender, your individual rate will vary based on more than dozen factors including your loan size, your credit score, and the mortgage program you opt to use.

Your interest rate is also affected by how you pay your closing costs.

Borrowers who choose to pay full fees and discount points get access to slightly lower interest rates as compared to the general public; and, borrowers who opt for their lender’s zero-closing cost option tend to get slightly higher rates.

There’s no best way to structure your mortgage loan so ask good questions of your lender and find out which programs work best for you.

Get Today’s Mortgage Rates

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Government: Home Values Up 6.9 Percent This Year

The FHFA House Price Index shows 6.9% annual growth - Growella
The FHFA House Price Index shows 6.9% annual growth

Home values are rising nationwide and, depending on where you live, home values may be rising by a lot.

Each month, the Federal Housing Finance Agency (FHFA) publishes its House Price Index, which measures how quickly home values change nationwide. The group’s most recent report puts home values up 6.9 percent from a year ago.

In some areas, however, values are up much more.

The House Price Index separates the country into regions, into states, and cities. We find that changes in valuations vary depending on where we look.

We can look at Las Vegas as an example.

The more we drill down, the more than values vary from the national figure for U.S. housing; and, it a terrific reminder that national real estate data isn’t particularly useful to buyers and sellers of homes.

Buyers and sellers focus on one house, on one street, in one neighborhood. Values for individual homes are influenced on the local level. National data can’t go that deep.

So, when you’re looking to buy a home or sell one, look local. Talk to a real estate agent and find what’s driving prices in your area of interest.

You’ll be less likely to overpay on your home, too. Data like the FHFA House Price Index is interesting to read, but it can’t help you negotiate best prices on a home.

Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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