Mortgage Talk - 2018: The Year in Review

A fast paced housing and mortgage market...
Frank Merola is Executive Mortgage Banker for William Raveis Mortgage LLC.

Cape Cod saw a fast paced housing and mortgage market. Homes were moving so briskly at one point that we had a critical “inventory shortage” of homes. Buyers who were not prepared or had their financing in order, missed out to cash buyers and multiple offer situations. If you’re thinking of buying a home, at the very least you will want to have a Pre-Approval Letter from your mortgage banker.

Interest rates started the year close to 4%, peaked at 5% and ended the year in the mid 4% range. There was a lot of volatility in both the stock market and mortgage interest rates. Many “experts” are predicting further increases in 2019 due to the Federal Reserve indicating that It may raise rates 2-3 more times in 2019. It’s not uncommon to see many so called experts or websites predicting a 30 year fixed rate to be in the mid 5% range sometime in 2019.

Mass Housing announced a new Down Payment Assistance Loan or “DAP” product called the Mass Housing 100. How does a mortgage with a 1% interest rate sound? First time home buyers may qualify for 97% financing at current interest rates and a 2ndloan for 3% of the purchase price (to a maximum of $12,000) at a 1% fixed rate mortgage over 15 years. Several of my First Time Home Buyer clients have already taken advantage of this loan in 2018.

This past year we saw the return of borrowers paying points (discount points) to lower their interest rate. A point costs 1% of the loan amount or $1,000 for every $100,000 borrowed. With the expectation that rates are heading higher, paying points can make sense in certain situations.

Surprisingly with interest rates on the rise, refinances made a comeback this year. Many clients had Adjustable Rate Mortgages that were heading into higher territory or high interest installment debt that needed to be consolidated. There are many pieces to a refinance besides the interest rate. Even in our current higher rate environment, a monthly payment can be lowered depending on a client’s debt mix or number of years left on a mortgage. Payment is really everything that matters to most folks.

Lastly, Fannie Mae and Freddie Mac came out with some great tools to try to simplify the mortgage process. Some files this past year saw PIW’s or Property Inspection Waivers, meaning no appraisal was needed. We also saw the introduction of “Day One Certainty” which has simplified the verification of income and assets for borrowers.

Thanks to all the CapeCodToday.Com readers that read, shared and enjoyed these mortgage talk articles throughout the year. See you in 2019!

Frank Merola

Executive Mortgage Banker

NMLS Mortgage Loan Originator ID: 1020051

William Raveis Mortgage LLC NMLS ID #2630

Cell 508-740-5922

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