Where to find down payment money

 Residential Mortgage  Comments Off on Where to find down payment money
Jun 032019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Recent studies have shown that 30% to 40% of prospective homebuyers think they need a 20% down payment to buy a home. The prevalence of this myth makes the results of a recent Freddie Mac study even more interesting.

Freddie’s researchers looked at lender-reported data to the Consumer Financial Protection Bureau on homebuyers’ sources for down payment funds. The data covers a period from 2013 to 2016.

The results show homebuyers still overwhelming rely on their own money with 70% reportedly using savings, retirement funds, or inheritance money for their down payment. However, this is 9 points lower than in 2013.

Repeat buyers were more common in 2016 with 31% reporting they used proceeds from the sale of another property. This is 8 points higher than in 2013.

The share who used money from family or friends remained constant at 25%, but the share using grants or loans from non-profit or government agencies doubled to 10%. (Note that some homebuyers used multiple sources of funds, so the total percentage doesn’t add up to 100.)

One interesting result of the study was the percentage of homebuyers who used a co-borrower to purchase a home. Typically, a buyer uses a co-borrower to afford a more expensive home than the buyer could afford alone. The share for first-time homebuyers with co-borrowers rose from just over 1% before the Great Recession to over 4% in 2015 and 3.2% last year.

Rate update: Rates are heading lower

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Rates are heading lower
Jun 012019
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Interest rates have had an impressive rally the last couple weeks as investor sentiment has become decidedly dour. The rally began in earnest when the Chinese blew up the trade deal, but it’s taken on renewed life as talking heads have started tossing around the “R” word again.

Unfortunately for economic growth, now they have something on which to hang their hats. While employment growth and consumer sentiment still appear strong, some economic activity indicators are pulling back.

This may be a manifestation of the trade war, which means it could reverse if negotiators are able to craft a deal soon. However, other economies, particularly those of China and Germany, are slowing even more quickly. We may already be past the point of no return in terms of the next recession overseas.

So, what does this mean for mortgage rates? If you like lower rates, it’s all positive. It’s quite likely we haven’t seen the lowest rates of the year yet.

That said, it may take a while before that happens. It’s long-term Treasury rates, which readily respond to economic conditions, that have fallen so much recently. Mortgage rates are lagging behind for reasons that aren’t likely to change soon.

Even so, investor sentiment is such that traders may ignore a positive economic report, such as next week’s jobs report, and keep rates in their current, lower range, and over time, mortgage rates will catch up.