Housing: ‘People can’t expect’ a return to 3% mortgages, experts say.

William Raveis Mortgage Regional Vice President Melissa Cohn talks to Yahoo Finance Live about the current state of mortgages and why home buyers shouldn’t expect low rates. as soon as possible.

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DAVE BRIGGS: Let’s talk more about mortgage rates with Melissa Cohn, William Raveis Mortgage regional vice president. Melissa, nice to see you. Thank you for coming. Where do you see these prices settling? And what do you think will be enough to shake up what has become an ice house market?

MELISSA COHN: Well, I think the good news is, we’re looking at the weather that’s warming and cooling as we saw this morning in the CPI numbers. And other signs of economic weakness are being seen, namely falling bond yields. The 10-year Treasury was at 3.45 the last time I looked at it, and the mortgage is down almost a full percentage point since peaking in November.

And I think we can expect mortgage rates to go down in the next quarter or even more than half a percent over the course of the next month. It’s the beginning of 2023. Everyone is back to zero in terms of meeting their goals. And everyone should get loans at the door. And I think the banks will sharpen their pencils. They will tighten their grip and do whatever they can to get the voice in the door. And lower prices will bring more real estate transactions. We also saw another number of refinancing that is on the high level since due to the decrease in prices.

DAVE BRIGGS: I want to follow up on that refinance in a second. But what do you tell those traders who are sitting on the line, waiting for prices to return to the middle to low 3 levels in order to come back on this market ?

MELISSA COHN: Well, I don’t think people can expect us to go back to 3% 30-year fixed rates. Now it happened because of the COVID and the disease. And we don’t want to find ourselves in that situation again. If interest rates could get back to where they were before COVID, call anywhere from 3 and 3/4% to 4 and 1/2% would be a house.

But customers need– my favorite show is that you get married at home, and you date the recipe. So they want to find a way to get into the house today. You usually know when mortgage rates go up—please–home prices tend to be a little softer, and when interest rates go down–and what more below. just a quarter or a half percent over the course of the next year, year and a half–real estate prices will start to go up again. And there will be more competition for houses on the market.

SEAN SMITH: Melissa, for a first time home buyer, I think applying for a mortgage can seem intimidating. Many people do not know where to turn. What advice would you give to that first time home buyer in terms of what they should know when doing that?

MELISSA COHN: Well, I think they should, first of all, be willing to consider looking at an adjustable rate mortgage, looking at a five or seven year adjustable rate, meaning that rate is fixed for the first five or seven. year, and the same thing with a fixed rate for that first period. But the price will be lower, and the house will be more affordable.

They should also make sure they do everything to keep their credit score high because in most banks, the rates are based on one’s credit score, and make sure they have enough money. for the down payment and savings. . We get a lot of first time home buyers who are stuck because they may have enough money for the down payment, but they haven’t considered all the closing costs and stuff. you need for savings.

And the last thing is to look at your credit, make sure you have enough credit. Most people today, especially younger people, tend to live with a debit card or maybe just one credit card. And most banks with higher rates will want to see someone with three to four different transaction lines on their history.

DAVE BRIGGS: Those freely adjustable arms definitely come with a bottom. What is your word of warning to people who pass that way?

MELISSA COHN: Well, I think that the risk that you have in a ratio is that there was some kind of bad performance, where you are no longer eligible to refinance, for whatever reason, if it goes bust. If that house is worth the price, you may not have the money to refinance it. But if you lock in for– I would say the seven-year adjustment is a safe period, you will reduce those risks.

Now, really, the goal is what you can do to get into a home today, and then be ready to refinance when rates drop to a certain point. it is more acceptable if you think you will be in that house for a long time. Most first-time home buyers won’t be in their home for 10 or 15 years. The average occupancy of that house is probably closer to seven or eight years.

SEAN SMITH: Now, going back to that advice here for first time home buyers, you mentioned the down payment, that’s very important. People should consider not only what they are putting down, but also budget for what they will pay each month moving forward. 20%, usually the number sent out. Is this the best number, other than, obviously, an all-cash offer for someone who is buying a house to put it down?

MELISSA COHN: Well, I mean, the benefit of putting down 20% is not having to get mortgage insurance. This will save you on the monthly payment. If you are a first time home buyer for a standard loan, which is now up to $726,000, except for the higher priced units, above $1,000,000, you can put down about 3%. But of course, the less you put down, the higher the payment and the higher the mortgage insurance you have to pay on the mortgage payment – the insurance, the taxes.

SEAN SMITH: Melissa Cohn, William Raveis Mortgage regional vice president, thank you very much for joining us here this afternoon.

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