Mortgage applications for home buyers have been a cause for joy at Palm State Mortgage Company and the USA in March. The numbers are in and mortgage applications have hit the highest level in 9 years.
CNBC News reported the phenomenon last week, but we were not surprised.
If you are buying or selling a house this year, these nice numbers are your homework. Knowing them is part of knowing what is happening in the housing market.
Reasons for Surge in Mortgage Applications
Let’s examine three major thought points regarding this happy surge in mortgage applications.
1. According to the experts, the mortgage applications to purchase a home increased 1% last week. That elevated them to 7% higher than a year ago. In other words, “Purchase applications reached their highest level since April 2010.” And we’d like to add a “mic drop” to punctuate that statistic.
2. In taking a look at the big picture, we now see that the total mortgage applications actually did decrease 3.5% last week from the previous week, according to the Mortgage Bankers Association.
However, that did not take away from the fact that volume was 14% higher when you compared it to the exact week in 2018.
3. We also must add that applications to refinance home loans might have affected the statistic. In fact, we estimate those re-fi applications brought the March total down.
During the first week in March, the mortgage applications fell 8%. But the number was still 26% higher than a year ago. That is logical because a year ago we were experiencing higher interest rates.
Sympathy for Refinance Buyers
For two weeks, we have seen some rising interest rates. This is difficult for refinance mortgage seekers. However, we do not see eager home buyers holding back this spring.
Renters versus Buyers in 2019 Spring Market
You know, the longer we at Palm State watch the market, the more we believe that renting versus buying is a decision of the heart as much as the head. In the words of Joel Kan, MBA’s associate vice president of economic and industry forecasting, “The spring buying season continues to be robust.”
Before Making Your Mortgage Applications: See Our Newest Home Buying Tips
1. Hot Tip: Buy the Home and Stay for a While
Recently a Zillow survey discovered that 42 percent of buyers believe home values typically appreciate by 7 percent a year. We’d love to believe that. However, according to Zillow, “In reality, home values have historically appreciated by 2-5 percent year and over the next few years, little to no appreciation is expected in most markets.”
This fact does not really affect your spring house hunting if you simply want a special place to live, to stay and to be a family. You see, frankly, if you are going to remain there for a while, at least 2-3 years, it should not matter if home values flat-line for a little while.
We are seeing savvy house hunters on the search for a home that can grow with them. They are anticipating lifestyle changes like an expanding family or new job opportunities nearby.
2. Hot Tip: Don’t Get Caught in the Hype
Before putting in a mortgage application, we suggest you lay out a plan for your budget and affordability. It can be hard to wrap your head around understanding how a six-figure purchase can increase your monthly, weekly, and daily budget.
So, don’t fall in love with an impossible dream. Just do the math. You can calculate how much income you will have and how much you will have left over after “paying your mortgage and taxes.
It’s easy to run the numbers using the numerous affordability calculators available. Take advantage of Zillow’s mobile calculators, including the Zillow Mortgage Marketplace Android App and Zillow iPhone App, which includes a mortgage calculator.” Remember, you might be setting your self up to spend 1% to 3% for annual repairs and maintenance. However, most homeowners think having their own place is well worth it.
We know that with the good interest rates and the high number of mortgage applications, it’s easy to get caught up in house buying hype. But if you pre-plan your house buying budget, you’ll be much happier in the long run.
You should not give in to the feeding frenzy of good bargains. Nor should you listen to the fear frenzy of those experts who say you’ll never see the market this good again. Don’t worry about the high numbers of mortgage applications either. Just, make your own budget and stick to it.
Hot Tip 3: Love Thy Neighborhood
Regardless of how much you like a house, do not buy it if something or someone in the area bothers you intensely. Zillow says, “When you find a home you like, visit the home and street at various times of day and night so you can get a sense of neighborhood noise and traffic.”
Here’s your list to guide you in your home buying:
- school districts,
- and commute times.
Beyond those criteria, we hate to say it, but you are on your own. Perhaps you simply dislike a large number of dogs in the neighborhood. You would not want to move in around the corner from a neighbor with 3 giant dogs that he takes for walks every day.
(By the way, we aren’t intending to pass any judgment here. We love dogs.) Just, be observant. And we have confidence you’ll pick a home and an area that will fit your style.
Thank you once again for reading the Palm State Mortgage Company’s Blog. And we hope you won’t forget us when you find the house and make those mortgage applications of your own.