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Housing Mess Creates Realistic Options for HomeownersSalem-News.com
Real estate will remain in a dynamic, changing market.
(SALEM, Ore.) - In an extremely competitive real estate market, there is a lot of confusion and uncertainty for both home buyers and homeowners looking to rent or sell.
Any type of decision can be an expensive, life-altering choice that must be carefully considered to make the best of the present scenario.
As inflation has an immediate impact on Americans across the country, the ability to access home equity might seem like an appealing option to provide short-term or long-term relief.
Of course, this is no time to be shortsighted and try to make rash decisions without personal research and proper guidance by professionals.
Across the United States, there is a shortage of homes available, so the supply and demand of the overall market has been extremely eruptive. Besides the consistent underbuilding trend that left many markets with inadequate available housing, there was record-low borrowing rates during the Covid-19 era.
As noted by Joel Kan, VP President of Economic and Industry Forecasting at Mortgage Bankers Association, in a media statement:
“The 30-year fixed mortgage rate hit the six percent mark for the first time since 2008 – rising to 6.01 percent – which is essentially double what it was a year ago. Higher mortgage rates have pushed refinance activity down more than 80 percent from last year and have contributed to more home buyers staying on the sidelines.”
The average home price in the US is slightly under $370,000, with the market slowing down compared to earlier in the year. However, the unstable inflation and high interest rates are making the market sluggish, with prospective owners unable to put up to 40 percent dedicated towards paying for a mortgage.
To pile it on, mortgage rates are the highest in more than a decade, while the cost of available houses are near record pricing highs on the market.
Now that it's likely buyers are done paying premium prices for overvalued houses, sellers must adjust their approach to the market – whether it's to lower the intended sale, or to remove currently listed property from the market.
As the housing market cools, 1 in 5 sellers dropped their asking price, a whopping increase over the 11 percent that did the same in August 2021, according to reports from Realtor.com. Potential buyers no longer have as much interest in paying top dollar and outbidding one another, so home equity can become a bit more constrained.
Anyone considering a reverse mortgage should absolutely do their homework and speak with financial advisors and real estate agents. At a high level, homeowners can receive a one-time payment in a lump sum, line of credit, monthly payments, and is only designed for older homeowners.
The money is required to be paid back if the homeowner moves out of the house, including relocating to a nursing home or elderly care facility – or if the house is sold.
In addition, death of the homeowner doesn't get family off the hook, as the new bequeathed property owner is responsible for paying back the loan to the reverse mortgage lender.
Commonly, retirees can use funds from a reverse mortgage for whatever they like, whether it's common everyday activities or to supplement their retirement income or Social Security.
Keep in mind, homeowners should not borrow against their home if they are unable to pay taxes and cover insurance for the house – all those responsibilities remain with the homeowner.
A reverse mortgage requires a home title owner be at least 62 years old, with at least 50 percent ownership equity, owning a single-family home, condo, owner-occupied multi-unit property that is acknowledged by the Department of Housing and Urban Development (HUD).
Real estate is a complex topic that can be extremely confusing, so homeowners should always seek advice from qualified sources – and then even double check that information once it's been discovered.
This is even more true when it comes to taking out a reverse mortgage, as the numerous benefits come with a wide assortment of various drawbacks that could be dangerous.
In SummaryThe real estate market will remain in a dynamic market that will be changing based on consumer demand and government interaction.
The thought of a looming recession and real estate market volatility presents extremely pressing concerns that compound the problem with rising inflation and mortgage rates to the economy.
For current homeowners looking to cash in on home equity, there are options available to take advantage of. However, it's important to show due diligence and make sure something like a reverse mortgage or another option is the right option.
Source: Salem-News.com Special Features Dept.
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