What is a Pre-emptive Rate Lock, and How Long Should I Wait to Get One?

Industry authorities agree: interest rates are expected to gradually keep climbing, despite recently passing the federal budget deadline. Borrowers that are getting ready to apply for home loans shouldn't wait for a change in the tide, according to a recent article in the New York Times.

It is in your best interest to buy now while rates are relatively low.  According to Keith T. Gumbinger, the vice president of the HSH, "The likelihood is that rates will move higher rather than lower in the coming weeks."  Trying the market is not advisable, especially if it is currently at a place that you can make a transaction work.

Your best option is to establish a pre-emptive rate lock sooner rather than later, to ensure you are getting the best rate.

So, what is a "Pre-emptive Rate Lock"?

Inventories Have Returned to Normal - But What is Normal?

While housing inventories are still 13.4% lower than they were list year, it is still much closer to what is considered a balanced 6-month-supply market, according to Real Estate Economy Watch and the recent RE/MAX report.

In September, home sales were up 10.7%, and the median price of these homes ($185,000) was 12.2% above the median price of homes last September.  This makes 20 consecutive year-to-year increases for the month of September.

These moves mark a shift towards stabilization, and normality.  However, if you are a homeowner waiting for the market to return to normal, we would like to note that based on historical and currnet trends, this is "normal".  What we can remember, in our recent memory of the real estate market over the last 10 years, is an anomaly relative to how the market operates.  Waiting is not likely to be more beneficial in the long run, as the market is now at a stable place for most to begin exploring opportunities.

What Increased FHA Loans Mean For Homebuyers

The Federal Housing Administration is set to increase their loan limits, which should give a large helping hand to U.S. home buyers.

The loan limits now span up to $729,750 in a good portion of U.S. counties.  This is great move forward from the FHA, especially considering their loan reduction back in 2011.

Here are some FHA tips, courtesy of Ron Euliano over at Bridgeview Bank Mortgage. 

What can an FHA mortgage do for home buyers?

An FHA mortgage provides a few advantages that loans by Freddie Mac or Fannie Mae do not.

• Buyers can have as low as a 3.5% downpayment
• "Looser" mortgage underwriting standards, in comparison to other loan backers
• FHA loan can be acquired 12 months after a foreclosure, short sale, or bankruptcy
• You can borrow more money from your bank with an FHA loan than with a conventional one