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Today’s Home Buyers Have 26 Days To Decide

By Dan Green

The National Association of REALTORS® reports that the typical home now sells in 26 days, the fastest number of days of all-time; an update on today’s mortgage rates and a look at the 5-day trend for interest rates; and, rapidly dropping mortgage rates have put FHA refinances in focus and increased the purchasing power of today’s buyers of homes.

All-Time Low For Median Days On Market

National Association of REALTORS® Median Days On Market - April 2018 - Growella
National Association of REALTORS® Median Days On Market – April 2018

U.S. homes are now selling at the fastest pace in recorded history.

According to the National Association of REALTORS®, Median Days On Market for listed homes for sale dropped to 26 days nationwide in April 2018.

Days on Market is defined as the number of days it takes for an MLS-listed home to go into contract and the reading for April is less than half what it was a year ago, and is also the lowest recorded value of all-time.

NAR started tracking such data in 2011.

Current Days on Market data puts to numbers what today’s active buyers have learned the hard way: homes for sale aren’t “for sale” for very long. It’s move fast, or move on.

For buyers of homes, mortgage pre-approvals are now a necessity.

A mortgage pre-approval is a written statement from a lender stating that a person would be approved for a mortgage for a particular home at a specific price, assuming no change in job status or patterns of managing credit.

Mortgage pre-approvals are dry runs for an actual mortgage approval. Everything required for approval is checked and verified, save for the details on the house.

Pre-approvals are sturdy and more trusted than pre-qualifications, which are approval letters based on zero verifications whatsoever. It’s why buyers with pre-approvals hold an advantage over buyers without, and why sellers won’t accept offers unless from non-pre-approved buyers.

Pre-approved buyers are legitimate and serious, and in a market where homes are selling in less than a month, it’s strategically smart to be ready to move quickly.

Talk to a mortgage lender about getting approved. Do it by phone or do it online — just do it as early in your decision-making tree as possible.

You have to know how much home you can afford.

Today’s Mortgage Rates & Interest Rate Trends

Today's mortgage rates and the most recent 5-day trend - Growella
Today’s mortgage rates

Mortgage rates are rising today, breaking a nine-day win streak for U.S. mortgage interest rates.

There are two drivers of today’s pricing. The first is a pullback linked to the Italeave storyline; the talk that Italy may vote to leave the Eurozone as the U.K. did in 2016.

The second driver is the release of the April Non-Farm Payrolls report which showed stronger-than-expected U.S. job growth and a drop in the national Unemployment Rate, both of which can lead to inflation. Inflation lead to higher mortgage rates overall.

Here’s how today’s mortgage rates are moving:

These are not actual mortgage rate quotes.

The specific rate quote you get from a lender will depend on more than a dozen factors including your credit score, your loan size, and the state in which you live.

Whether your comparison shop affects your final price, too.

A recent Freddie Mac study showed that, statistically, buyers who ask for loan estimates from two mortgage lenders saves approximately $2,000 as compared to buyers who ask for just one; and savings increase as the number of comparisons increase.

It’s not necessary to compare five lenders or more. Just be sure to compare at least two.

Get Today’s Mortgage Rates

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Homeowners Back In The Money To Refinance

Maximum Home Purchase Price climbs with drop in rates - Growella
Home buyers can afford more home

Mortgage rates are on a roll, boosting purchasing power for today’s buyers and making millions of homeowners now eligible to refinance.

Over the last nine days, 30-year fixed-rate mortgage rates have dropped close to three-eighths of a percentage point. The shift boosts buyers’ price ranges by $5,000 for every $100,000 borrowed and creates interesting refinance opportunities for existing owners of homes.

The economics of refinancing from a 30-year mortgage into a 15-year mortgage are more obvious; and, there’s reason to pursue cash-out refinancing when money can be borrowed more cheaply on a first mortgage as compared to a home equity loan.

The group that might benefit most, though, is existing FHA homeowners.

Homeowners often choose FHA-backed financing because FHA loans allow for low down payment with comparably low mortgage rates. However, FHA loans require mortgage insurance and FHA MIP doesn’t go away when a home’s equity stake reaches 20 percent.

This is where the refinance opportunity arises.

Today, in many U.S. markets, home values are up sharply from a few years ago, and many FHA-backed homeowners have at least ten percent equity.  Their FHA loan may be less suitable than a new conventional mortgage backed by Fannie Mae or Freddie Mac.

Refinancing from FHA to conventional can generate big monthly savings while also canceling FHA MIP.

Get with your mortgage lender and see how today’s low rates can affect your budget. Low- and no-closing cost mortgage options are generally available, too.

With mortgage rates down over nine straight days, explore what’s possible.

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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