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Some incentives may get home buyers into the market

Some buyers who found the market too expensive last year may find reason to get back in now

DALLAS — Maybe you looked and looked in 2022 for a place to call home…but then stopped looking because it became like a horror movie where you are running toward something, and it just keeps getting further away.

Expanding home prices and mortgage rates last year pushed many buyers out of the market. In particular, many first-time home buyers may have experienced this (and you may be in that group even if you think you are not).

As we recently reported, mortgage rates and home prices in many places have deflated some from last year’s highs…maybe enough to lure back some buyers who fled the market last year.

Broker: The time to shop for a home is now

Real Estate Broker Joe Atkins of Joe Atkins Realty has recently been talking with some people who went through that last year about the benefits of looking again now that prices and rates have cooled some. 

“They had to kind of bow out for a while," Atkins said. "Those are the people we've been calling and [saying] look I know you're paying more as far as interest, but at least now you have the ability to get in a home.”

Atkins says waiting for the usual spring start to the busy season in real estate may make buyers feel a lot like they have returned to early 2022, when inventory was low and bidding wars were common.

“We're telling our buyers just from what we're seeing first hand is…it looks like there's going to be a lot of buyers in the market come the seasonal spring market in March," he said. "And if you kind of want to get ahead of…possibly being in those multiple offer situations on almost every offer you submit, let's get out there now.”

Some mortgage fees slashed

Perhaps a more significant incentive for many is a change with Fannie Mae and Freddie Mac. Those are big government sponsored enterprises in the secondary mortgage market.

Here is how that works: In the primary mortgage market, banks want to lend money to a lot of people applying for home mortgage loans, but the banks only have so much money to lend.

In the secondary market, the bank sells mortgage loans it has already made. Fannie Mae and Freddie Mac have the funding to make that possible on a large scale. After selling those mortgages, banks then have more money to approve more new mortgage loans.

Since Fannie and Freddie are so important to the process, they (and the Federal Housing Finance Agency, of FHFA, that oversees them) get to make many of the rules about mortgage lending.

A new rule announced in October 2022 slashed loan fees for first-time home buyers. An important note: That also includes someone who has not owned a home in the past three years.

You might be able to benefit from these reduced home loan fees If you fit that description and you make at or below 100% of the Area Median Income (AMI). To see what 100% of AMI is where you live, click here and type your area into the search box at the top of the map.

Freddie Mac explains the reason for the change like this: “Freddie Mac eliminated certain upfront fees to help promote affordable and sustainable homeownership for more first-time and low-income borrowers in today’s challenging market. We would encourage homebuyers to work with their lender to see if they qualify for these new savings when obtaining a mortgage.”

A representative from Freddie Mac says home buyers should check with their individual lender for further details, including exactly how much of a difference the fee elimination can make. 

One mortgage lender, homebuyer.com, explained in a January 2023 online post that with rates being what they were at the time of their post, the fee reduction could allow some borrowers to receive a discount of up to 1.75% off the standard market rates. The site said such a discount could result in a 16% monthly savings to the borrower.

Freddie Mac says the reduction in fees applies to qualifying mortgages with settlement dates on or after Dec. 1, 2022.

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