Prospective Columbia SC homebuyers hoping to buy a home during the winter months say the lack of inventory is their biggest challenge, but many believe winter is a good time to buy because sellers are motivated to sell and more willing to negotiate.
A survey recently conducted by realtor.com found that 45 percent of buyers in the market said there's not enough inventory in their price range. The survey also found that a surprising number of prospective Columbia SC homebuyers are planning to do all-cash deals.
Most of the Columbia SC homebuyers surveyed said they'll need a mortgage to finance their home purchase. Among that group, most did not have the 20 percent down payment that would allow them to qualify for a conventional loan backed by Fannie Mae or Freddie Mac without having to also purchase mortgage insurance.
Reasons Most Columbia SC Homebuyers Cite for Buying in Winter:
- 26 percent said they believe that sellers are more motivated to sell and willing to negotiate.
- 24 percent indicated they think home prices will be better.
- 24 percent revealed they were unable to buy a house during spring or summer.
- 20 percent shared that they think there will be less competition between buyers.
This past spring and summer Columbia SC homebuyers were particularly challenged, especially first-time homebuyers trying to compete with all-cash offers and bidding wars because of reduced inventory. A quarter of the winter Columbia SC homebuyers revealed they are in the market now because they were unable to find a home during this last homebuying season.
Although there continue to be "significant supply shortages," inventories are "stabilizing" compared to the dramatic year-over-year declines seen earlier this year.
Inventory shortages will continue into the spring buying season, which could keep a lid on sales. NAR is forecasting that when all the numbers are in, 2013 sales of existing homes will finish up 10 percent from last year, at 5.13 million. But similar gains aren't expected next year. NAR predicts existing-home sales will hold steady at 5.12 million in 2014.
If you're among the potential Columbia SC homebuyers looking for a bargain this winter, contact us for the latest inventory updates, and stay connected by bookmarking this site. For more tips and articles to help you when buying Columbia SC real estate, click on the Columbia SC Homebuying Tips link to your right under Columbia SC Real Estate Categories.
More and more homeowners who were once underwater and unable to move are now seeing home equity levels improve. As these equity levels improve, more people are getting in position to become "move-up Columbia SC homebuyers" once again.
These move up Columbia SC homebuyers are now able to provide a substantial down payment on a new home after gaining value on rising equity.
Rising Mortgage Rates Encouraging Move Up Columbia SC Homebuyers
Much of the desire for move up Columbia SC homebuyers lies behind rising mortgage rates. They know if they don't move now, they might be kicking themselves all over again in three to six months. Historically, rates remain very low, and even though trending down slightly recently, experts predict they will continue to gain steam as we move into 2014.
More move-up Columbia SC homebuyers are in a better position to move now than they were a year ago. Forty percent of all home owners now have at least 20 percent or more of equity in their homes now, according to RealtyTrac data.
8.3 million additional home owners are expected to have at least 20 percent equity within the next 15 months if home prices continue to appreciate at the same pace, says Daren Bloomquist, vice president of RealtyTrac. Bloomquist adds that if 5 percent of these home owners decide to sell their homes, that would amount to an additional 415,000 homes for sale in the coming months.
This rising trend of move up Columbia SC homebuyers reflects a market that is fully transitioning from investor purchases of distressed homes to primary home purchases by households. The market continues to improve as more previously underwater homes gain equity due to recent upward movements in price.
An important sign of a healthy and sustainable recovery is increased housing turnover driven by trade-up buying, which is more or less discretionary spending. These buyers tend to be more responsive to market conditions and financial incentives as opposed to first time homebuyers.
To stay on top of the Columbia SC housing recovery, check out our other articles and tips by clicking on the Columbia SC Real Estate News link to your right under Columbia SC Real Estate Categories.
Nearly half of all potential Columbia SC homebuyers can afford the median-priced home in the area, but that’s not much help if they can’t get a mortgage.
Six years after the subprime mortgage meltdown, banks remain tight-fisted, even with solid borrowers — a fact they attribute to shifts in government regulation and demands that they buy back bad loans. Mortgage credit has not eased much since 2007, according to Federal Reserve surveys of loan officers, even while low rates and the housing recovery have borrowers lined up looking for financing.
Which Columbia SC Homebuyers Are Having Problems With Lenders?
First time Columbia SC homebuyers and those who are self-employed find themselves jumping through especially complex hoops. Even would-be borrowers with crystal clear credit are having to justify even the smallest quirks in their finances, and the application process can take months.
This is all in sharp contrast to 2006 when just 12% of Columbia SC homebuyers could afford the median-priced home, but seemingly anyone could get a mortgage to buy one. The turnabout highlights a cruel fact of the housing crash: Many who were crushed by lost home values — or other economic pain related to the housing meltdown — may now miss out on record low prices and interest rates if they want to become Columbia SC homebuyers again.
Complaints about tight-fisted lenders have emanated not just from potential Columbia SC homebuyers and industry sources, but from Federal Reserve Chairman Ben S. Bernanke, who at least twice in the last year has remarked on how the pendulum has swung too far.
In November, Bernanke said, “Overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery.” There is no indication that things have improved since he made those comments.
Despite the problems, there have been some improvements since the mortgage market tightened up during the financial crisis. For instance, refinancing of certain underwater mortgages — those that borrowers owe more on than their homes are worth — has become more available for homeowners who have stayed current on payments under an Obama administration program that offers incentives to banks. And jumbo loans, those for more than $625,000, nearly disappeared after the crash, but now are widely available at rates less than a half a point higher than traditional loans.
The tighter mortgage market is all the more reason not to try to become a Columbia SC homebuyer alone. You need a professional to help you through the mortgage maze. Talk to us. We have a lot of experience dealing with lenders, and between our experience and the expertise of some of our preferred lenders that we work with on a regular basis, we can help you get through it all.
For more tips on getting through the mortgage maze, visit our Columbia SC Mortgage Info under our Columbia SC Real Estate Categories to your right.
More Columbia SC homebuyers should be able to qualify for a mortgage without the increasing risk to lenders that caused the big credit crunch. All of this should come about through more sophisticated credit risk scoring that uses alternative data, such as unsecured credit and property history in consumer credit report analysis.
Traditional credit data and analytics continue to be relevant, but are not sufficient to satisfy the consumer credit reformation of today. As a result of the changes in consumer behavior, lenders cannot revert back to their prior mortgage underwriting policies. Too much damage has already been done to the market, consumers, shareholders and investors.
Consumers used to pay mortgage debts first, but because of the recent financial crisis some consumers now treat paying other debts, such as credit card bills and car payments, as a higher priority to maintain personal financial liquidity.
Why More Columbia SC Homebuyers May Qualify
According to a new report by the CEB TowerGroup, data from a joint analysis conducted by CoreLogic and FICO that compares the FICO® Score used by most lenders today with a new score launched in July was evaluated. The traditional credit data from national credit data repositories and the unique alternative credit data contained in the recently launched CoreScoreTM credit report shows the analysis of 300,000 mortgage applications found that 3,100 more applicants would receive a qualifying credit score of 700 and approximately 70 percent of a sample population saw their credit score improve.
The new FICO/Corelogic score is more accurate than the prior FICO® Score in identifying the riskiest loans improving lenders ability to discern consumer credit risk at origination. For applicants identified as the riskiest 10 percent of the lending population (those most likely to become past due on their mortgage loan), it identified 10 percent more seriously delinquent mortgage loans – loans 90 days or more past due.
This new credit risk scoring should help more Columbia SC homebuyers qualify for a mortgage than with the old scoring system. Alternative credit information can support Columbia SC homebuyers with newly established credit files with good credit, those with minimal information in their traditional credit files but with good alternative credit payment histories, and long-time renters with no serious payment issues.
Columbia SC homebuyers need to know the rules of credit reporting in this marketplace where lenders are demanding record-high FICO scores.
Given the importance of maintaining high scores, we thought it would be helpful to go over the key rule concerning inquiries that affect Columbia SC homebuyers, since Fannie Mae and Freddie Mac are now averaging around 760 scores on approved mortgages this year.
FICO Inquiry Rules Affecting Columbia SC Homebuyers
Racking up large numbers of inquiries can lower your score. The FICO models consider such numbers significant because extensive behavioral research has shown that “consumers who are seeking new credit accounts are riskier,” more prone to defaults. Statistically, people with six or more inquiries on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports, so inquiries do matter.
This doesn’t mean if you’re shopping for a mortgage or looking to refinance that your score will drop if you have 6 lenders pull your credit reports. The FICO models ignore all mortgage-related inquiries during the 30 days immediately preceding the computation of the score. All mortgage inquiries during the 45 days preceding your loan application count as no more than a single inquiry. The same goes for shopping for auto loans and student loans, but no other forms of credit fall under this buffer zone.
Fannie Mae and Freddie Mac have begun requiring lenders to pull a second set of credit reports immediately before closing to ensure that applicants’ FICO scores haven’t changed significantly. Depending on when the first reports were pulled, you could be hit with two inquiries for the same loan. That could cost you 5 to 10 points on your score.
Columbia SC homebuyers need to keep in mind, if you’re shopping for a mortgage, avoid all other credit-related shopping until your mortgage is approved and closed. Avoid shopping for furniture, home improvements, credit cards, you name it, in the weeks before your home closing. A string of inquiries can mount up and knock your home purchase right out of the water.
If you’re checking your own credit, either through AnnualCreditReport.com (where they are free once a year) or by buying them from Equifax, Experian or TransUnion, your FICO score goes untouched.