Understanding What is a Home Inspection and an Appraisal

When it comes to buying a home, two crucial steps in the process are the home inspection and the home appraisal. While these two terms are often used interchangeably, they actually serve different purposes. A home inspection is a thorough assessment of the home's condition, including its safety and current state, which allows the buyer to identify any potential issues or repairs that need to be addressed before finalizing the sale. On the other hand, a home appraisal is a professional evaluation of the market value of the property, which is required by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase.   An inspection helps the buyer understand the home's condition, while an appraisal helps them understand the home's value. If there are any questionable findings during the inspection, such as an old roof or a faulty HVAC system, the buyer has the option to discuss and negotiate any necessary repairs or issues with the seller before the sale is final. Working with a trusted real estate agent can help facilitate this process.   When applying for a mortgage, an unbiased appraisal is required by the lender to confirm the value of the home based on the sale price. The appraisal protects the buyer by ensuring that the bank doesn't loan them more than what the home is worth. This is particularly important in today's seller's market, where low inventory is leading to an increase in bidding wars and driving home prices upward. However, the lender will only allow the buyer to borrow based on the value of the home, which helps keep home prices in check.   In the event of any confusion or discrepancy between the appraisal and the sale price, a trusted real estate professional can help navigate any additional negotiations in the buying process. Ultimately, both the inspection and the appraisal are critical steps when buying a home, and it's important to work with a real estate professional to get the expert guidance needed to navigate the entire homebuying process.

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5 Reasons Millennials Are Buying Homes

As a member of the millennial generation in the United States, you are among 72 million individuals who may be considering homeownership. According to Zonda's 6th annual millennial survey, 98% of millennials aspire to become homeowners at some point, if they aren't already. What motivates this desire to purchase a home? Let's take a closer look at the top reasons that other millennials have cited for making this important decision.   #1 Building Equity One key factor is building equity. By owning a home, you are investing in a long-term asset that can increase your net worth and financial stability over time. Additionally, renting a property means building equity for someone else, while owning a home allows you to build equity for yourself.   #2 Changing in Lifestyle  Another common reason is a change in life stage. As a millennial, you may be reaching a point where you need more space or a different location. Perhaps you are starting a family or looking for a larger home to accommodate your lifestyle needs.   #3 Settling Down Stability and settling down are other factors that often lead millennials to purchase a home. You may be looking to establish your career or create a particular lifestyle in a specific location, and owning a home can provide the foundation for these goals.   #4 Rising Home Values Rising home values also motivate millennials to become homeowners. As a homeowner, you own an asset that traditionally increases in value over time, meaning your home may have a higher resale value if you choose to move in the future.   #5 A Place To Call Their Own Finally, many millennials simply want a place to call their own. Owning a home allows you to customize and update your living space as you see fit, creating a sense of freedom and individuality.   If any of these reasons resonate with you, it may be worth considering partnering with a trusted real estate agent to explore your options for becoming a homeowner. With so many benefits to owning a home, it's no wonder that so many millennials are choosing this path.

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Will Mortgage Rates Go Down in 2023?

Mortgage rates fell to an all-time low of 2.65% in 2021. Now they’re more than double that, and everyone is asking the same question. Will mortgage rates drop in 2023? Let’s break it down.   Why are mortgage rates so high? Mortgage rates are influenced by several factors, the foundation of which is the overall state of the economy. When the economy is doing well and moving fast, rates are typically higher. When the economy is sluggish, rates are usually lower. Seem backward? Here’s why it works that way:   The Fed Many people think that the Federal Reserve (also known as “the Fed”) sets mortgage rates, but that’s not quite true. The Fed sets the federal funds target rate, which guides the amount that banks charge each other to borrow money and impacts the rates they charge consumers, too. That’s because it changes the amount banks must charge to cover their own costs. Why does the Fed ever raise rates? Everyone likes a lower interest rate—right? The Federal Reserve has two jobs, called its “dual mandate,” as assigned by Congress. It must act to keep prices stable in the economy and to support maximum employment. One of the ways it does this is by moderating interest rates to support a stable financial system (O’Connell, 2023).    For example… When the economy is slow—like it was during the initial COVID-19 crisis—the Fed lowers its rates to increase cash flow and encourage consumer spending. But when the economy is doing well and moving fast, borrowing, consumer spending, and demand are all elevated—which can cause inflation. A major problem with inflation is when prices rise at a rate with which salaries don’t keep pace, people suddenly can’t afford to buy things, and the economy grinds to a halt. For that reason, when the economy is moving too quickly and inflation is growing unsustainably, the Fed increases the federal funds rate to constrict cash flow. The idea is that higher rates—while uncomfortable—will slow spending to a sustainable pace while preventing an economic crash down the road. Since the housing market, consumer spending, and inflation all hit peaks in late 2022, the Fed pumped the brakes with interest rate hikes in an effort to divert a full-blown recession.   Will mortgage rates drop in 2023? Now that we know why rates are so high, we can make an educated guess about their future. Many experts suggest that 2023 will see a slowdown in the U.S. economy, and if that’s true, mortgage rates will drop as well. Will mortgage rates go down in 2023? Here are the detailed answers from top industry experts:   Mortgage Bankers Association The Mortgage Bankers Association has stated that “long-term rates have already peaked. We expect that 30-year mortgage rates will end 2023 at 5.20%.” As of this writing, the average APR for the benchmark 30-year fixed-rate mortgage is over 7%, so that prediction represents a significant drop by 2023’s end.   National Association of Realtors The NAR Director of Forecasting, Nadia Evangelou, predicts that “mortgage rates likely will settle below 6% and experience less volatility this year.” She continued by saying that “Although rates remain more than double a year ago, they will likely stabilize as inflation will continue to slow down in the coming months.”   Goldman Sachs Analysts at Goldman Sachs are less optimistic, predicting that mortgage rates will average 6.5% in 2023. Why this rate? The investment bank expects a “significant decline in U.S. inflation,” but also notes “that the rapid decline in mortgage origination, especially refinances, has caused some lenders to exit or scale back lending. This has the potential to allow the remaining lenders to expand their margins by pushing mortgage rates higher” (Lambert, 2023).   Freddie Mac In its most recent forecast, Freddie Mac predicted that the 30-year fixed-rate mortgage will average 6.4% in 2023, with a lower average of 6.2% in the fourth quarter. The financial company cited the job market, moves from the Fed, and the decelerating housing market.   Morgan Stanley In its U.S. housing market outlook forecast, Morgan Stanley predicts that 30-year fixed mortgage rates will average 6.2% in 2023. In a best-case scenario, the investment bank writes that mortgage rates could fall below 6%, but that would require the Fed to successfully tame inflation sooner than expected (Lambert, 2022).   Bankrate Bankrate’s chief financial analyst, Greg McBride, CFA, forecasts mortgage rates to fall to 5.25% by the end of 2023. He explained that “we should see a notable pullback in mortgage rates as inflation pressures ease and as the economy slows” (Ostroski, 2023).   Final thoughts Financial and real estate industry experts agree that mortgage rates will fall in 2023. By how much? That’s still up for debate, with some experts forecasting a nearly 2% drop and others one of less than 1%. No matter the number, lower mortgage rates represent relief for buyers struggling with affordability. If you’ve been waiting to buy due to high home prices and high mortgage rates, 2023 is shaping up to be a good year for you. But even as rates come down, they’re not likely to hit 2021 levels—so you’ll want to do everything you can to reduce your rate on your own. That means working on your credit score, looking into a rate buydown, and shopping around to find the lender with the best terms for you.    Let’s buy your dream home in 2023 If falling mortgage rates are music to your ears and you’re ready to buy in 2023, get in touch. Not quite sure about the next steps? Our expert team can help. Click the button below so we can help you make your homeownership goals a reality.

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