Many potential homebuyers ask us if trying to buy a home in 2022 is worth the effort. Rising interest rates, bidding wars, and higher home prices makes it seem like not a good time. Our answer – today is as good of a time as any to buy a home! If you are ready financially, buying a home even in the current market makes sense. If you have been sitting on the sidelines waiting for home prices to drop, you could be there for a while. Instead, take the time to understand the market and what you can afford. The most crucial first step right now for any homebuyer is to call a lender. Gathering the right information and getting pre-approved are key elements towards successfully buying a home today. Experts largely agree that buying a home remains a smart investment and financial move despite a volatile market. The key is to understand the solutions for the challenges today’s market presents. There will never be a time when the ideal market exists.
The good news is that the housing market is cooling a bit. Another bit of good news is that along with increased home values comes increased equity. “Homebuyers who purchase a home today are still likely to see rising property values and increased home equity. That’s because supply is still relatively low compared to buyer demand, so home prices are likely to keep rising, although at a slower pace,” explains National Association of Realtors (NAR) senior economist Gay Cororaton.
Don’t let the market dictate when you buy – you decide! Start building equity in a home you love now.
Here are a few of the most common challenges homebuyers face today and how Angel Oak has helped overcome them. We are helping many homebuyers with easy purchase transactions and we can help you too.
Challenge: Rising Interest Rates
Even though rates are higher, they are still good rates from a historical perspective. The main issue is that higher rates can lessen your buying power compared to a year ago. It’s impossible to time the rate market. If it’s not higher interest rates, it could be another factor affecting the housing market. It is possible to get a lower mortgage payment even in times of rising interest rates.
Solution: Interest-Only Loans
Angel Oak is seeing an increase in interest-only loans issued to homebuyers wanting the mortgage payment that fits their budget. Our 40 year fixed interest-only loan has been a great solution for this goal. Real estate investors benefit through a lower monthly payment and increased cash flow of the property. This option is available with many of our portfolio non-QM loan products. Available for primary, second homes and investment properties.
Challenge: Paying Cash To Win A Bid When You Don’t Want To
Inventory has been tight across the country making for a competitive housing market. All cash offers were winning bids and becoming more appealing to sellers. Many homebuyers made the decision to pay cash to avoid losing a house in a market with limited inventory even if they preferred to finance the home. It really does give a homebuyer an advantage over others. Cash buyers who worked with a lender recouped a good portion of their cash back!
Solution: Delayed Financing
Paying cash for a home is a great way to win the house, and delayed financing is a great way to get it back. If you decide to pay cash for a home, call Angel Oak regardless and find out about how delayed financing works. You can get a mortgage on a home within six months after purchase without waiting. Then you have cash back for renovations or to put back into the bank.
Challenge: Stricter Guidelines On Condos
Fannie Mae and Freddie Mac have more restrictions on condos deeming more non-warrantable. They will not issue a home loan for a non-warrantable condo. Finding out the condo you want to purchase is non-warrantable doesn’t mean the deal is over. We see these scenarios all the time. Realtors or homebuyers call very concerned that a condo is non-warrantable and then we educate them on what it means and how we can close the loan.
Solution: Angel Oak’s Non-QM Products Allow Non-Warrantable Condos
All of our portfolio non-QM loans allow non-warrantable condos. These purchase transactions close as easily as others as long as the borrower meets the guidelines for the loan product. Anyone purchasing a condo should call Angel Oak first!
Challenge: Higher Agency Fees on Second Home and High Balance Loans
As of April 1, 2022, Fannie Mae and Freddie Mac increased fees for second homes and high balance loans. Add rising interest rates to the mix and affordability becomes more of a challenge. We do not sell our non-QM loans to Fannie Mae or Freddie Mac, therefore, we do not have increased fees for these loans. As a result, many homebuyers are working with us to avoid the fees!
Solution: Angel Oak’s Non-QM Products
Our portfolio non-QM loans to the rescue again! Our non-QM loans offer flexible guidelines including lower down payment options for those who are eligible. A few popular options for second home and higher priced homes are our Bank Statement loan for self-employed, Platinum Jumbo and Portfolio Select.
The Bottom Line: Call Angel Oak Home Loans Before You Buy!
Rising home prices, interest rates and inventory challenges may be with us for a while longer. That doesn’t mean you are pushed out of the market. Determine how to navigate your path to homeownership with the right lender who has the right loan options for YOU! Be patient as a buyer – but when you find the right home – be ready. That’s where we come in. Call us today for a conversation on a plan that makes sense for you.