As 2022 ends, we look forward to 2023 and hope the mortgage world is a little calmer than it was in 2022! There are a few things to look for if you are thinking about buying a home this year.
Are you looking to buy in Bloomington? And are you a first time homebuyer? If you are, and your income is under 80% of the median income (currently $94,240), you can get $10,500 in down payment assistance.
This can be used for your down payment or closing costs. There isn’t any interest charged on the assistance and if you stay in your home until at least January 1, 2027, the loan is forgiven. You do need to pay it back if you sell the home prior to that date or if it is no longer your primary residence. You need to complete a first time homebuyer class (Home stretch or Framework are two that will work for the program) and you need to meet with a financial counselor before you can get the funds. The meeting with the financial counselor must take place at least 30 days prior to closing on the home.
Conforming loan limits for conventional financing are now at $726,200.
So if you are buying a home that is just over that limit, you can put as little as 3-5% down on the home. This can help make it easier to purchase a home.
One more change from Fannie Mae and Freddie Mac, until recently they were charging a loan level price adjustment that affected interest rates on many programs. Effective immediately, they have removed that adjustment for first time homebuyers with income under 100% of the median income limit.
This could help you with interest rates. For example, if your income is under $117,800 and you are a first time homebuyer, it will help you! So in an example, if your credit score is 700 and you are buying a condo with 5% down, the LLPA was 1.75%, now it’s zero. That can help immensely with interest rates! This was in effect for the past month with loans that were under 80% of the median income and using Home Possible or Home Ready conventional loans. If you have questions on this, please reach out!
Bottom line for 2023?
The housing market will be defined by mortgage rates and home prices. Mortgage rates will vary based on inflation, as inflation comes down so will mortgage rates. Home prices are predicted to be fairly flat, again it will depend on inventory and the reports this week show inventory is dropping. However that can be normal for this time of year. Forecasts for home prices vary depending on who you are looking at. Realtor.com shows an increase of 5.4%, Zeiman shows a decrease of 5.1% and NAR, Freddie Mac and Fannie Mae are all in between those numbers. So in realty, the average of several forecasts shows an increase of 0.1% – so fairly flat.
I hope you have a wonderful holiday season! Please reach out with any questions or if I can help you with anything!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
