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Understanding Home Prices and Raleigh Mortgage Rates: Key Questions to Consider

July 6, 2023 by Kevin Martini

Gathering reliable information about the housing market is essential if you’re looking for a home. With various sources providing insights on home prices and Raleigh mortgage rates, it can be challenging to separate facts from speculation. Let’s analyze the data and address the top two questions you should ask yourself when deciding on home prices and mortgage rates.

Where Do I Think Home Prices Are Heading?

Expert Insights on Home Price Trends

One valuable resource for understanding home price trends is the Home Price Expectation Survey (HPES) conducted by Pulsenomics. The survey gathers opinions from a panel of over one hundred economists, real estate experts, and market strategists. According to the latest release, experts foresee a slight depreciation this year. However, it’s crucial to consider the broader context.

The worst declines in home prices are already in the past, and many markets are experiencing an appreciation in prices. Contrary to earlier predictions of a market crash, the HPES indicates a mere 0.37% depreciation in 2023, which suggests a stable market.

The HPES forecasts a positive trend in home price appreciation, particularly in 2024 and beyond. Buying a home now could lead to future value growth and increased home equity. Waiting may result in higher costs down the line.

Where Do I Think Mortgage Rates Are Heading?

Evaluating Raleigh Mortgage Rate Projections

Over the past year, mortgage rates have risen due to economic uncertainties and inflationary pressures. However, recent reports indicate that inflation has moderated from its peak, which bodes well for the market and mortgage rates.

When inflation cools, Raleigh mortgage rates typically respond by falling. Some experts anticipate a slight pullback in mortgage rates over the next few quarters, potentially settling around an average of 5.5% to 6%.

It’s important to note that predicting mortgage rates with absolute certainty is challenging, as numerous factors can influence their fluctuations. Nevertheless, considering various outcomes can provide valuable insights when making a decision.

Exploring Possible Outcomes

If you buy now and Raleigh mortgage rates remain stable:

Purchasing a home now is prudent since home prices are projected to appreciate over time, enabling you to benefit from rising values.

If you buy now and mortgage rates decrease (as projected):

Buying now is still advantageous as you secure the home before prices increase. If rates drop, you can also consider refinancing for lower mortgage costs.

If you buy now and mortgage rates increase:

In this scenario, buying now becomes an excellent decision as you lock in a lower mortgage rate and avoid potential price increases.

Certified Mortgage Advisor and Raleigh Mortgage Broker Kevin Martini Conclusion

Staying informed about home prices and Raleigh mortgage rates is crucial when contemplating a home purchase. While the future remains uncertain, insights from experts can guide your decision-making process. Contact a mortgage strategist with Martini Mortgage Group because they can provide expert opinions and advice specific to your local real estate and mortgage market.

Regardless of your experience level, the first step to homeownership is the home loan, not the home. By deploying the home loan first strategy, you will not only have price and cost clarity before you fall in love with the perfect home, but you will have the certainty that you can afford it.

About Kevin Martini

Kevin Martini, empowers families to create generational wealth through real estate with the perfect mortgage strategy.

His proprietary system has revolutionized consumer-lender relationships in the mortgage industry, and as a result, he has originated over a billion dollars in home loans since 2006. Kevin’s passion and intentionality lie in constantly pursuing perfect mortgage solutions that align with clients’ fluctuating personal circumstances and market conditions. He is genuinely dedicated to helping clients make intelligent financial decisions to facilitate wealth growth, future planning, and progress toward a debt-free retirement.

Kevin has been recognized as one of the top 50 Mortgage Originators in the country. His contributions to the field have earned him features in esteemed publications such as Forbes. In addition, he frequently shares his knowledge at real estate and mortgage conferences. He also hosts the Martini Mortgage Podcast, which provides up-to-date, factual content on real estate and mortgages. His Instagram and YouTube channels serve as platforms for various content, including breaking news, emerging stories, and innovative strategies curated to provide a comprehensive understanding of the real estate and mortgage arena.

Unlocking the Power of Buydown Mortgages: A Game-Changing Strategy for Buyers and Sellers

June 27, 2023 by Kevin Martini

In today’s real estate market, having a well-planned mortgage strategy is crucial for buyers who want to stand out and increase their chances of getting their offer accepted. Logan Martini with the Martini Mortgage Group offers a game-changing mortgage strategy allowing buyers to control the transaction and set the pace. One of their advanced strategies is the buydown mortgage, which offers immediate savings and introduces a new dynamic to property transactions.

A buydown mortgage involves the seller contributing funds to lower the buyer’s mortgage interest rate. This unconventional approach benefits both the buyer and the seller, satisfying the buyer’s desire for a lower cost while allowing the seller to maintain the sales price and maximize profits. It transforms the transaction into a win-win situation for both parties.

There are two types of buydowns: temporary and permanent. A temporary buydown lasts for a specific period, usually, one to three years, during which the seller pays a lump sum to reduce the buyer’s interest rate. On the other hand, a permanent buydown lowers the interest rate for the entire loan term and requires a more significant contribution from the seller.

While requesting a seller to buydown the mortgage rate may initially seem like asking them to make a financial sacrifice, it can actually be an appealing option for sellers. By avoiding a reduction in the sales price, sellers can expedite the sale process, especially in markets where lowering the price may result in a faster sale.

Four Benefit from Permanent Buydown with Seller-Paid Points

As a primer, “Seller-paid points” are where the seller pays points to reduce the interest rate on a mortgage. One point = 1% of the loan amount paid upfront to your mortgage lender at the closing. This buys you a lower interest rate on your mortgage and a lower monthly payment.

More Purchasing Power — Paying points to reduce your rate can have 2-3 times the impact on your purchasing power vs. reducing the purchase price by that same amount. For illustration:
- 2 points on a $500,000 mortgage = $10,000. You’d probably need to reduce your purchase price by $20,000 – $30,000 to have the same impact on your monthly payment.
- 2 points on a $1,000,000 mortgage = $20,000. You’d probably need to reduce your purchase price by $40,000 – $60,000 to have the same impact on your monthly payment
Less Interest Costs Over The Life Of The Loan — Your total savings over the life of the loan is likely to be significantly more with seller-paid points vs. a reduction in the purchase price. It could end up being 2-3 times the impact, depending on the specifics of your situation.
Easier to Qualify For A Mortgage — Your interest rate and monthly payment would all be lower with seller-paid points vs. a reduction in the purchase price. This means that your debt ratio would also be lower, and it would likely be easier for you to qualify for financing.
BOTH Buyer And The Seller Get A Tax Benefit — Seller-paid points are tax-deductible to the buyer if the buyer itemizes their tax deductions. Meanwhile, sellers can deduct points paid on behalf of the buyer against their capital gain when they sell the property. The seller-paid points are considered a “cost of sale.” Please see IRS Publication 936 for more details.

Here are four ways a seller can benefit from this strategy:

Their House Becomes More Affordable To a Wider Pool Of Buyers — Paying points on behalf of the buyer can have 2-3 times the impact on the buyer’s purchasing power vs. reducing your list price. That’s because most buyers use mortgage financing. In other words, instead of lowering the list price, agree to buy down the buyer’s interest rate. This increases the buyer’s purchasing power and makes your house more affordable to a broader range of buyers who may have otherwise been priced out of the market.
Seller Could Save Money Vs. Lowering Their List Price — A seller would have to reduce your list price by 2-3 times the number of points paid to have the same impact on the buyer’s monthly payment.
Seller Gain A Competitive Advantage Vs. Other homes Listed For Sale — Seller-paid points could give a seller a competitive advantage in today’s changing market. This could save you the aggravation and financial loss of significantly reducing your list price to compete with other homes that may be listed for a lower price.
BOTH Buyer And The Seller Get A Tax Benefit — For more details, please see IRS Publication 936 or consult with your tax professional.

How A Buyer Can Benefit From A Temporary Buydown

As a primer,

There are 3 types of temporary buydowns (e.g., 1-0, 2-1 and, 3-2-1).

A “1-0 Buydown” is where you or the seller pay a fee at the closing to reduce the interest rate on your mortgage by 1% in year 1. This results in temporarily lowering your monthly payment and potentially making the home more affordable to a buyer.

A “2-1 Buydown” is where you or the seller pay a fee at the closing to reduce the interest rate on your mortgage by 2% in year 1 and 1% in year 2. This results in temporarily lowering your monthly payment and potentially making the home more affordable to a buyer.

A “3-2-1 Buydown” can sometimes also be used, although a 2-1 Buydown is more common. A 3-2-1 buydown is where you or the seller pay a fee at the closing to reduce the interest rate on your mortgage by 3% in year 1, 2% in year 2, and 1% in year 3.

What Are the Benefits Of A 2-1 Buydown With The Martini Mortgage Group?

A 2-1 Buydown reduces your interest rate and monthly payment during the first few years of homeownership, making the home more affordable for you. It can also allow you to benefit from owning a home now so you can start to build equity vs. waiting a few more years and continuing to rent. If the seller pays for the 2-1 Buydown, it would have a much greater impact on your monthly payment than asking the seller to reduce the list price of the home. This could be a great negotiating tool because a greater percentage of homes listed for sale in today’s market are seeing price reductions.

What Happens When The Interest Rate Goes back To Normal?

In year 3 of a 2-1 Buydown, your interest rate would adjust to its normal “note rate.” If market interest rates are the same or higher than they are today, you would just keep the loan and pay the normal payment. However, if a recession happens, as is being predicted by many economists, mortgage rates may come down again. In that case, you may be able to refinance at the then-current rates. Keep in mind that interest rates are cyclical. They tend to go up when the economy is doing well, and they tend to go down when the economy is doing poorly.

How A Seller Can Benefit From A Temporary Buydown?

When a seller offers to pay for a 2-1 buydown it could give the transaction a competitive advantage vs. other homes listed for sale in today’s changing market. That’s because interest rates have more like riding a roller coaster than a merry-go-round in recent years, creating an affordability crisis for many potential buyers. A 2-1 buydown could also save you the aggravation and financial loss of having to significantly reduce your list price in order to compete with other homes that may be listed for a lower price.

Utilizing a mortgage strategy such as buydown mortgage, can be a powerful tool for both buyers and sellers. By understanding and effectively communicating the benefits, buyers can enhance their purchasing power, while sellers can attract more potential buyers and potentially save on costs. Working with a Mortgage Strategist like Logan Martini from the Martini Mortgage Group can provide valuable insights and help buyers and sellers navigate the complexities of the real estate market.

A 4.3 Million Home Deficit

June 27, 2023 by Kevin Martini

The gap between homes and households is expanding. The variance between household formation and available homes in the U.S. is 4.3 million.

The Widening Abyss: A Closer Look

Between 2015 and 2021, the U.S. witnessed a growth of approximately 6.3 million units in its housing stock, which comprises all houses and apartments. Conversely, the population saw an expansion of 7.9 million during the same period, creating 7.1 million new households. This population growth has exceeded the increase in housing supply, instigating an extreme scenario of dwindling availability and intensified competition for available homes. The effect is a dramatic escalation in housing costs.

Recent reports from Zillow underscore the harsh reality: The U.S. is currently grappling with a 4.3 million housing deficit. This deficiency impacts an escalating number of “missing households”— families compelled to live in homes owned or rented by others. The severe lack of housing, especially affordable options, is rendering millions of American households without a place they can truly call their own.

The Concept of Household Formation: Demystified by the Martini Mortgage Group

Household formation is a pivotal demographic phenomenon that entails creating new households. A household is typically described as an individual or group of people sharing a living space and common living arrangements.

Several scenarios illustrate household formations:

A young adult branching out from their parent’s home to start an independent life.
A couple embarking on their marital journey and beginning to live together.
A roommate vacating a shared apartment, leading to the remaining individual living alone.
A separated couple establishing separate households post-divorce.

The Raleigh Real Estate Market: A Projection

Predictions suggest that Raleigh’s population will grow 25% by 2030. Correspondingly, an upsurge in household formations is anticipated, driven by an increase in young adults establishing new households. Zillow’s research indicates a need for an additional 17,000 homes in the Raleigh metro area, based on data from 2015 to 2021. The City of Raleigh predicts an even more significant need, forecasting a requirement for an extra 57,000 homes by 2030.

The most opportune moment to invest in real estate is when you’re prepared to take the plunge. If that moment is now, the timing might be right for you. Given that the inventory of homes for sale is at its lowest level since 1982, and new construction isn’t keeping pace with demand, it could take a decade for the housing inventory to achieve balance in the U.S. This heightened demand for housing could potentially spur home appreciation.

Whether you’re a first-time or repeat homebuyer, the journey to homeownership begins with securing a home loan. Once you are approved, not just pre-qualified, you can then proceed to find your dream home. If you’re considering buying a home now or in the future, it’s advisable to consult with a Mortgage Strategist from the Martini Mortgage Group. They can assist you in securing your options and providing clarity on price and cost.