It’s easier than you think

by Steven Plaisance (splaisance@arvest.com) 301 views 

While housing market headlines can warn of inventory shortages, harder access to financing and higher mortgage rates, the opportunities are still plentiful for Northwest Arkansans.

In fact, the most recent Skyline Report, a biannual analysis of the latest property markets in Benton and Washington counties conducted by the University of Arkansas’ Center for Business and Economic Research, showed inventories for residential homes in the two counties at about a 90- to 100-day supply.

Today, 30-year fixed rate home loans rates are in the 4% to 4.5% range. These are considered “higher” rates after a decade of sub-4% rates. However, people who don’t remember might be surprised to know in 1981 it reached 18.6%. The prior year, the prime lending rate — the rate tied to most consumer loans — reached 21.5%, an all-time high.

As for mortgage rates, this is the time when we pull out those historical rate charts and help explain some perspective of current rates versus those eye-popping ’80s rates.

In short, the slow return to normalcy may be causing some premature worry in the housing market. There’s no question that higher rates can impact affordability as financing costs chew into your buying power and overall monthly payment obligation. But we are not seeing rates severely impact buying and borrowing. Why?

Rising rates are generally offset with positives on the wage and wealth front. That’s why you see the Fed jump in and clarify their position as one of deliberation in terms of rate hikes if they see some erratic results in economic data.

Since the U.S. Census Bureau began tracking homeownership rates in 1964, 65.2% of Americans have owned a home. Today, that rate is 64.8%. We’ve owned homes through all sorts of economic ups and downs. It’s still a major decision, a major goal and part of the American dream for so many.

So, thinking about buying your first home, moving up, downsizing or just moving in general? Here are a few helpful hints in the event this is your first mortgage loan or if you have not applied for a loan in several years.

A big misunderstanding is that you need to put down 20% to buy a home. That’s not true, as there are a wide variety of low to even no down payment options available to those with qualifying credit and employment.

The better prepared you are with personal financial documentation and information will greatly increase your chances of having a smoother home loan process.

You’ve probably filed your taxes or are preparing to file, so the good news is you should have on hand some current key financial information, which will make things easier. Knowing our liabilities from credit cards to installment loans, such as vehicle loans, personal loans and other mortgage loans, is a must.

Now, if you’re selling an existing home and purchasing a new one based on a contingency offer that introduces a whole new layer of complexity. These are not unusual situations, but it does require a symphony of sorts between all parties involved to bring it together at the right time.

When you contract to buy a home, it could be as short as 20 days or as long as 45 to 60. What seems like an eternity actually moves quickly, and there’s much to do once the contract is signed. Many other parties go to work: title companies, appraisers, surveyors, inspection companies and others have key duties to perform. Time is of the essence, and everyone’s commitment to good communication and prompt responsiveness will help keep things on track.

If a new home is not in your near future, a mortgage checkup may still be just what the financial doctor ordered. Reviewing your financing terms and considering how your home may provide further value is worth a small amount of time.

If you’re looking to make a move, right now is as good a time as ever, especially in Northwest Arkansas. Buying your first home, moving up, downsizing or just moving is understandably scary. But the first step should be talking to your preferred lender about your options, which might surprise you and make things a lot easier than you think.

EDITOR’S NOTE: Steven Plaisance is president and CEO of Arvest Bank’s mortgage division and its subsidiary, Arvest Central Mortgage Co. Arvest is an Equal Housing Lender. The opinions expressed are those of the author.

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