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With all sorts of trends, signs, and predictions for what 2020 may hold for the housing market, one thing is for sure: there is no way to absolutely know what’s ahead. Today’s headlines offer a glimpse of what factors might impact the housing market this year.

While the future may be cloudy, there is a way to win in a variety of economic outcomes. How you may ask? Check out how you can benefit in 2020 whether interest rates stay the same or if they change.

If Interest Rates Stay the Same…

In this scenario, interest rates will continue to remain historically low and home prices healthy. While this could be seen as the status quo, these are favorable signs for the homebuyer and the economy. Lower interest rates provide an incentive to purchase now.

If interest rates continue to remain historically low or fall even lower, it might be time to think about a bigger purchase such as a home. Plus, with low interest rates, you can pay off your home loan faster and pay less interest over the life of your loan—allowing you to own more of your home along the way and build equity faster. If you’re renting, it may be time to consider purchasing a home or condo to take advantage of historically low interest rates and competitive terms.

If Interest Rates Rise…

If the housing market experiences higher interest rates, it often means the economy is doing well and can benefit homeowners. In such an economy, homeowners may realize an accelerated appreciation of their properties. It stands to reason that people typically spend more when they are more secure about their economic future. Thus, they are more willing to invest as homeownership rates, in turn, go higher.

If you’re a homeowner who has built up enough equity in your home, a cash-out refinance is an option to consider should interest rates increase. While an existing fixed-rate, fixed-term loan will remain unaffected in this or any scenario, an Adjustable Rate Mortgage (ARM) provides a short-term benefit during a period of continued lower interest rates.

If Interest Rates Go Down…

While a home’s value can decrease during a downturn, it can potentially still be a good time to make a bigger purchase or even consider refinancing your existing mortgage to lock in a lower interest rate.

An added benefit of a housing market that is not as overcrowded may be more homes to choose from and a bidding process that may not be as competitive. This could lead to more favorable sales prices for homebuyers and a lower monthly mortgage payment.

Other Factors to Consider

If you’re thinking about selling your home during an economic downturn to become a renter, it can actually be more incentivizing to remain in your home if you’re able to do so. By staying put, you are getting closer to owning your home with each monthly mortgage payment.

However, if you’re not in a position to buy a home, it’s a great time to work on paying down your debt and improving your credit score. With enough work, you could put yourself in a better position for future homeownership.

So are you ready for a new home loan in 2020? A New American Funding Loan Officer is happy to discuss your options with you and help you get a home loan to fit your unique situation. Let’s talk about it!

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Cheaper Construction Loans Mean More Custom Homes

Posted To: MND NewsWire

Builders are finding that acquisition, development, and construction (ADC) loans in the last half of 2019 were both easier to access and less costly. That may be, in part, behind a fourth quarter 2019 surge in custom home building. The National Association of Home Builders' (NAHB's) quarterly survey of its builder and developer members found that the average interest rate on ADC loans declined in Q4 from 6.39 to 6.13 percent on loans for land acquisition and from 6.31 to 5.94 percent on development loans. Loans for single family spec construction declined 36 basis points to 5.63 percent and from 5.63 percent to 5.38 percent for pre-sold homes. It was the second consecutive quarter in which rates for all four loan categories declined. NAHB notes that, because ADC loans are typically short term...(read more)

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MBS Week Ahead: High Gear nCov Fear Pushing Rates Toward All-Time Lows

Posted To: MBS Commentary

Coronavirus (or nCov for short) made more disconcerting headlines over the weekend and has generally proven itself to be far more capable in that regard than its long lost cousin, SARS. When the nCov market narrative first emerged in mid-January, the comparison to SARS was still unknown. Now that the virus is unequivocally spreading faster, farther, and killing more people, markets are free to express more panic. But why panic? It's not as if nCov will kill more people than the flu does each year, right? So what's the big deal? In short, the big deal is that everyone is used to dealing with the flu. There are well-established figured on how many people will probably get it and how many of those will die. There's also a vaccine that is occasionally effective and that may at least...(read more)

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