Home Buying Probability Rises 23% For Renters After Cash Gifts Of This Amount
Buyers should see fewer new homes for sale this fall; current mortgage rates and the 5-day trend; and, what to do when you receive a cash gift for down payment.
Builders Break Ground On Fewer Homes
Buyers should expect fewer new homes for sale through fall, and into 2019.
According to a joint report from the U.S. Census Bureau and the U.S. Department of Housing & Urban Development, home builders pulled back on new home construction last month, pressuring an already-tight supply of new homes for sale nationwide.
The New Residential Construction shows housing starts down 9 percent in June as compared to the month prior.
A housing start is when a home builder begins construction on a new home, and June’s reading is the fewest housing starts for any calendar month this year.
As builders build fewer homes, the supply of new homes drops, too, which means that buyers can expect new homes to come with higher price tags later this year.
Today, though, home supply is stable. Buyers have a window.
The government’s New Residential Construction dataset also showed that home builders finished 76,000 homes in June, and put them for sale. It’s the most new homes that builders have listed for sale in a month since late last year.
There are also a half-million homes in various stages of completion nationwide, which helps to stabilize the national supply of new homes.
Once builders complete those homes, though, home supply should fall; builders are starting fewer new homes.
For buyers whose plans include a new construction purchase later this year, consider moving up your timeline. You’ll likely find more homes available for sale, at lower prices overall.
Today’s Mortgage Rates & Interest Rate Trends
Mortgage rates are higher today.
Rates for all loan types are deteriorating, with conventional mortgage rates moving with more force than rates for FHA, USDA, and VA products.
Fixed-rate mortgage rates including the 15-year fixed and the 30-year fixed are higher; and, rates for adjustable-rate loans such as the 5-year ARM and 7-year ARM have ticked up, too.
Today’s mortgage rates action follows:
- Conforming mortgages: Higher
- FHA mortgages: Higher
- VA mortgages: Higher
- USDA mortgages: Higher
- Jumbo mortgages: Higher
Exact mortgage rates vary by loan size, credit score, and about a dozen other factors including your choice in loan product, and your choice in lenders.
Your preferred mortgage product matters, too.
Mortgage rates for USDA mortgages and VA mortgages are typically lowest, followed by FHA mortgage rates, and then conventional rates.
However, there are times when borrowers should not shop based on rates, like when deciding between an FHA mortgage and a conventional mortgage.
FHA rates are often lower than comparable conventional rates, but conventional loans can benefit borrowers with a specific credit score range and can be a more sensible choice.
Don’t self-select your home loan.
Talk with a mortgage lender about your options. A good mortgage lender will help you save money and make better home loan decisions.
Get A Free Mortgage Rate Now!
Renters Put Extra Cash Toward Homeownership Goals
A Fannie Mae research project links the receipt of cash gifts to an increase in homeownership.
According to the National Association of REALTORS®, 13 percent of home buyers use cash gifts to assist with the purchase of a home.
Cash gifts can come from almost anywhere, too — friends, family, employers, and even local governments.
You can crowdfund your down payment. You can use cash wedding gifts. You can use rewards from a credit card.
There are tens of ways to receive a cash gift for down payment on a home, and a study published via Fannie Mae shows that renters who receive cash gifts of at least $5,000 are 23 percent more likely to become homeowners within twenty-four months than renters who didn’t.
The study also found that the reason for the cash gift was irrelevant to renters. When renters are gifted cash, they’re inclined to use it to buy a home.
If your home buying plans include using a cash gift, then, take steps to keep your future mortgage lender happy.
Keep a proper, identifiable paper trail for your cash and your gift.
- Ask the giver to write a check and to scan the check into an image
- Deposit the check into your account in a separate deposit transaction
- Get a mortgage gift letter signed by all parties
Mortgage gift letters should include verbiage that states the gift is actually a gift and not a loan, and that repayment’s not necessary. It should also include the name of the giver and receiver, everyone’s addresses, and the exact amount of the cash gift.
Instead of writing a letter from scratch, download a fill-in-the-blank cash gift for down payment letter here.
Cash gifts are common among home buyers, and lenders use a specific process to validate and verify the money into a transaction.
Ask about your lender’s process when you get pre-approved because when you’re lucky enough to get a cash gift for down payment from your parents or anyone else, you want to make sure you’re able to use it.