No doubt that 2020 was one heck of a year for real estate.  We went through a lockdown, sheltering in place, more working from home, virtual schooling, and protective measures to slow down the spread of the coronavirus.  2020 forced people to actually LIVE in their homes, and the Alexandria VA real estate market responded with higher home prices, shorter days on market, and an inventory of homes that continues to dwindle.

In the midst of the continued chaos, my Winter 2021 Homebuying Guide will give you the information you need as your prepare to buy a home in 2021. There's a good chance that you'll be facing competition this year, so to help get you prepared to enter the market, this guide gives you insights to:

• Why you shouldn't wait until Spring to buy
• A new meaning for home ownership
• How down payment assistance opens the door
• Five tips for making a successful offer

And so much more.  To calm the overwhelm of browsing the internet for endless information, my Winter 2021 Homebuying guide includes helpful graphics, national and local data, and gives you an easy-to-follow diagram of the steps to take to own a home.

Download your free copy today, there's no registration required.  If you find the information helpful, please share it with a friend.  Get in touch when you're ready, and we'll put your home purchase plan for 2021 together.

This year has demonstrated, perhaps more than ever, the importance of our family, friends, neighbors, and community in Alexandria VA. It truly “takes a village” to keep a community functioning effectively, whether that’s by keeping our waterways clean, feeding the hungry, teaching our kids, or supporting small businesses.

With the holidays right around the corner, December offers the perfect opportunity to give back to the place we call home. You might want to focus your efforts near home, expand to our larger community, or even help support the people closest to you. Whether you’re passionate about a particular cause or just want to get more involved in general, let these 10 ways, both big and small, inspire you to do good.

GIVE BACK NEAR HOME

1. Attract local wildlife. By making your neighborhood more wildlife friendly, you’re helping to  create a balanced and healthy ecosystem. Plus, many of the animals you can attract help with pest control and pollination.¹

Ideas:

●     Add a birdbath to your backyard or create a rain garden to attract wildlife (and filter out local pollutants).

●     Place bird feeders on your property to feed birds all year long.

●     Tie corncobs to tree branches to feed squirrels.

●     Hang birdhouses on your property to provide shelter.

●     Use native plants in your landscaping to provide food and shelter for birds, bees, butterflies, and other critters.

Take action: While you might not be able to “break ground” until spring, start researching native plants now to design a landscaping plan that provides food, shelter, and water for local wildlife.

2. Clean up our community. Besides beautifying the area, picking up trash keeps it out of our local waterways, which means a cleaner water supply for all of us.

Ideas:

●     Whether you make this a solo effort or join in an organized group event, pick up trash in your neighborhood, at a local park, or elsewhere in our community.

●     Depending on your community’s regulations, you can recycle many home items such as paper, glass, and aluminum.

●     And don’t forget to clean the exterior of your home, where water runoff (such as on your driveway and sidewalks) can carry debris into the local sewer system.²

Take action: Check with volunteer opportunities available in throughout the Alexandria VA area. 

3. Organize or join a neighborhood watch. According to a recent report, neighborhoods with Neighborhood Crime Watch programs experience roughly 16 percent less crime.³ Keeping an eye out for each other instills a sense of safety and security in your neighborhood by increasing surveillance, reducing opportunities, and enhancing information sharing among residents. Even if your neighborhood doesn’t have an official program, you can still share crime information via your local Facebook groups or apps like NextDoor.

Ideas:

●     Make a point of looking out for each other and being observant of what’s going on.

●     You can even make it official by joining a neighborhood watch program.

●     Don’t have one? Consider launching a neighborhood watch program with the help of other interested neighbors.

Take action: Some police forces use online mapping tools that provide crime alerts to people in neighborhoods where recent criminal activity occurred.³ Share this information with your neighbors.  Alexandria City provides information on reported crimes on the local government website.  Click here for Fairfax County's website for crime reports.

HELP OUT LOCAL ORGANIZATIONS

4. Boost your civic engagement. Regardless of your politics, you can get more involved as a citizen to make a positive difference in our community.

Ideas:

●     Sign a petition to make a needed change in our community.

●     Join a peaceful march, protest, or rally to support a cause dear to your heart.

●     Attend local school board meetings, town halls, or city council meetings to understand (and have a voice in) local issues.⁴

●     Watch (and read) a variety of local news sources to get balanced reporting on what’s happening in our community.

●     If you don’t know your neighbors very well, introduce yourself.

●     Then make a commitment to check in on those who might need help, such as an elderly neighbor.

●     Get plugged-in to the resources and events in our town by visiting local museums, taking historical tours, borrowing materials from our local library, and attending community festivals.

Take action: Do you know who our local leaders are, such as our mayor or city councilwoman? Get to know their names, their policies, and their stand on issues that affect our community. Subscribe to their newsletter and follow them on social media. Who are the local leaders for Alexandria City, click here.  Click here to learn about your local leaders in Fairfax County.

5. Support local businesses. Our community has been impacted by the pandemic, with many businesses being forced to limit capacity, instill social distancing efforts, and even shutter entirely in some cases. Help keep money in our local economy by shopping local instead of relying on online shopping from national chains.

Ideas:

●     From handcrafted soaps and one-of-a-kind apparel to locally produced chocolate and small-batch wines, you’ll find plenty of unique gifts at the small businesses that dot our community.

●     Consider purchasing tickets to attend live-streamed holiday concerts and shows.

●     Buy cookies and other baked goods from our local bakery.

●     Get takeout from our local restaurants.

●     Support local farmers by purchasing fresh fruits and vegetables at community farmer’s markets.

Take action: If you’re concerned about shopping in person right now, many of these businesses, though small, offer online shopping, with options for in-store pick-up, curbside delivery, and/or mail options.  Here's a list of local businesses in Alexandria VA, show them some support this holiday season.

6. Donate to local charities. Nonprofits could always use your financial support, so consider making a monetary donation to help them carry out their mission in our community. But if money is tight (or you want to support in other ways), think beyond just donating dollars.

Ideas:

●     Consider donating to a charity in someone else’s name as an altruistic gift on behalf of a friend or relative.

●     Give blood to our local blood bank.

●     Donate new or used books to our community library.

●     Send school supplies to our neighborhood elementary school.

●     Help struggling neighbors by donating blankets to the homeless.

●     Pick out toys to give to a charity that caters to families. ⁵

Take action: Many collection efforts run by charitable organizations and businesses in Alexandria VA take place during the holidays. Look to see what’s already taking place in our community and choose one or more to give to this season.  

CARE FOR YOUR NEIGHBORS 

7. Organize a holiday food drive. This year, in particular, people are struggling to pay their bills and put food on the table. The pandemic has caused many businesses to close or reduce their staff size, putting many people out of work.

Ideas:

●     If you personally know someone who needs help buying groceries, reach out and offer to help that one family.

●     If not, partner with a local food bank, soup kitchen, nonprofit or community organization that feeds people in need.

●     Round up a few friends, family, co-workers, or neighbors to collect food for a few weeks. Then deliver the bounty in time for the holidays.

Take action: Take advantage of your grocery store coupons and buy-one-get-one offers to inexpensively stock up on nonperishable goods.

8. Adopt a family or an individual. The holidays can be a struggle, especially financially, for some families in Alexandria VA. They might not be able to buy a Christmas tree or presents for their children. Maybe their holiday meal consists of boxed macaroni and cheese because they can’t afford a turkey and fresh vegetables. You can make a difference by “adopting” a particular family (or even just a child) to help make their holiday special.

Ideas:

●     If you know a family in need, help them directly.

●     If not, ask a community group for the name of a family or individual in need.

●     Some businesses even sponsor toy drives or “angel trees” where you can pick the name of a needy family off the tree and buy from their wish lists.

Take action: This works great as a family project. Get the kids in your life involved to help make holiday cards and pick out toys to give to the children in the adopted family.

9. Volunteer. Depending on your schedule and your preferences, you might be able to volunteer in Alexandria VA in-person or from home, whether it’s a one-time effort or ongoing project. It’s a great way to meet like-minded people in your community as you make a positive impact together for a shared cause.

Ideas:

●     Give your time to a cause or organization that really matters to you, such as your local school, animal rescue organization, mental health awareness group, or environmental nonprofit.⁶

●     Tap into a skill you already have, like creating videos, and offer your services.

●     Or learn a new skill (like fundraising) to benefit your cause of choice.

Take action: Start here to see where its needs are the greatest are in Alexandria VA. Make a point to help this holiday season, perhaps extending your commitment throughout 2021.

10. Perform random acts of kindness. Don’t think you need to “go big or go home” in your give-back efforts. You can make a big difference one small act at a time.

Ideas:

●     Give a generous tip to a waitress.

●     Pay for the coffee of the car behind you in the drive-through.

●     Take care of a neighbor’s pet while they’re out of town.

●     Send holiday cards to deployed military personnel.

●     Deliver a plate of homemade holiday cookies to our local fire or police station.

●     Smile at a stranger.

●     Rake leaves for a neighbor.

●     Thank your child’s teacher for all their hard work this year.

●     Send an uplifting text to a friend.

●     Compliment someone.

●     Help a coworker with an unpleasant task.  

Take action: Need more ideas? Visit randomactsofkindness.org for hundreds of inspiring ways to make someone’s day a little brighter.

HOW WE CAN HELP YOU? 

As real estate experts in our local community, we’re tuned into the unique needs of the place we all call home. Reach out to us today to discuss more ways to make a positive impact in our community—this holiday season and beyond. And we want to make sure you’re taken care of, too. If you’re thinking about buying or selling a home now or in the near future, connect today and let us help you!

Sources:

1.     Redfin -
https://www.redfin.com/blog/attract-wildlife-to-your-backyard/#:~:text=Sow%20plants%20that%20provide%20essentials,these%20alternate%20natural%20food%20sources

2.     The Groundwater Foundation -
https://www.groundwater.org/action/home/raingardens.html

3.     The Globe and Mail -
https://www.theglobeandmail.com/life/home-and-garden/how-neighbours-and-online-maps-can-help-deter-break-ins/article34886427/

4.     Parade -
https://parade.com/1083640/stephanieosmanski/what-is-civic-engagement/

5.     MentalFloss -
https://www.mentalfloss.com/article/88663/15-ways-give-back-holiday-season

6.     Together We Rise -
https://www.togetherwerise.org/blog/7-ways-give-back-community/

How Down Payment Assistance Opens the Door to Homeownership
for Alexandria VA First Time Buyers

Do You Have Enough Money Saved for a Down Payment?
Buying a Home in Alexandria VA

For years now, virtual home tours have helped real estate buyers far and wide find the perfect home in Alexandria VA.  From long-distance military personnel being relocated, to investors expanding their portfolio, to homeowners looking for a vacation getaway, this technology makes finding a house that’s a bit out of driving distance much easier. And for real estate agents, virtual tours have been a useful way to help buyers with their home search and to assist sellers in creatively marketing their listings.

Because of the pandemic, virtual home showing options recently experienced a huge spike in popularity. One survey found that nearly 33% of recent home tour requests were for virtual tours, as compared to just 2% pre-pandemic.¹ And it’s easy to see why.

Buyers want to quickly find their next safe haven, one that may need to serve as their office, gym, and even classroom for months to come. And sellers want to limit the number of strangers in their home, yet still have the ability to reach enough potential buyers to get the best offer on their property.

Virtual home tours are the popular thing right now, but that doesn’t automatically mean they’re the only option for your homebuying or selling experience. In this post, we’ll reveal five important secrets behind the virtual real estate scene. Read on to learn how they impact today’s home buyers and sellers.

SECRET #1: Virtual Tours Have Evolved

Lots of real estate professionals who had never used virtual tours before were forced to quickly adapt when the pandemic struck. Because of restrictions on time and resources, not everyone is able to create what would have been deemed a “virtual tour” last year. So instead, we’ve expanded the definition of the phrase by creating innovative new ways to show homes while keeping our clients safe and socially-distanced. Here are some terms you might come across as you explore homes with virtual tours.

Traditional virtual tours use 360° Photos, which are images that allow you to see all angles of a space. These are what allow virtual tour viewers to look up, down, and all around the interior and exterior shots of a home. Using a software program, 360° photos can be stitched together to create a digital model that looks like a dollhouse. This is called a 3D Tour. Sometimes agents will also add Virtual Staging, which decorates rooms with digital furniture and accents like wallpaper or paint.

Traditional virtual tours allow you to click to move from room to room in the home, but Online Walkthroughs feature the actual action of walking around. Either the seller or the agent (depending on factors such as time and safety requirements) will create a video by holding their camera or smartphone and simply moving through the home.

Online Walkthroughs can be filmed in advance or happen live. If they are live, they can also be referred to as Virtual Showings or Online Open Houses. A Virtual Showing is often a scheduled, one-on-one event that mimics an in-person tour of the home, in which the agent and viewer start at the exterior and move their way through the property. If your agent offers to FaceTime or Skype you from a home you’re interested in, for example, that would be a type of Virtual Showing. In contrast, an Online Open House is more freeform, allowing more viewers to pop in and out of a group video call on apps such as Facebook or Zoom.

SECRET #2: Virtual Doesn’t Mean Impersonal

All these styles of virtual tours showcase the property’s details better than static photos ever could. But for a purchase as intimate as your next home, details like a new refrigerator or the size of the master closet aren’t the only deciding factors. Luckily, virtual tours are exceptional tools for personal connection.

As a prospective buyer, virtual tours give you a feel for the property, inside and out, so you can easily picture yourself in the space and decide if the home’s flow and features work for your lifestyle. Live video walkthroughs with the real estate agent will give you insights on those crucial non-visual aspects, like creaky floors, super-fast internet speed, and neighborhood dynamics. Plus, you’ll be able to ask questions and get an insider’s perspective on what’s so great about the home.

For sellers, if your agent recommends using a virtual tour to market your home, you could attract more buyers.² And you can be sure that those interested buyers are still getting the up-close and personal look inside your home that will inspire their strongest offers.

SECRET #3: Virtual Is Just The First Step To Safe Home Sales

Even as government restrictions begin to ease in some areas, virtual tours are still recommended as a safer way to buy and sell real estate.³ Buyers don’t have to worry about exposure to anyone who previously visited the property, and sellers cut down on the foot traffic in their home. Some data even suggest that virtual tours keep agents safer as well, since they’re hosting fewer in-person showings and open houses.⁴

But despite the variety of virtual tours available, some buyers will still need to visit a home themselves in order to feel confident enough to submit an offer. In this situation, listing agents and sellers will work together to come up with a procedure that ensures everyone feels safe and comfortable. Some recommendations include requiring interested buyers to present a pre-qualification letter, conducting tours only by appointment and with essential parties, and asking buyers to self-disclose whether they have COVID-19 or exhibit any symptoms.³

The day of the in-person tour, agents might ask buyers to remain in their vehicle until they arrive at the property, and to wear protective gear such as face coverings and gloves. Many will provide hand sanitizer and will ask buyers to refrain from touching any surfaces in the home. Instead, the agent (or seller, prior to the buyers’ arrival) will turn on lights, open doors, and pull back curtains. Then, after everyone has left, the agent will return the home to its original state and disinfect it as needed.³

SECRET #4: The Speed of Closing Depends on Your Goals

Though maybe not literally, virtual tours are opening doors for both buyers and sellers in terms of options available to them. In 2019, buyers viewed an average of 10 homes over a period of 10 weeks before submitting an offer.⁵ But thanks to an increased prevalence of virtual tours saving them driving time, they’re able to peek inside that number of homes in a much shorter period to make their final choice.

With all this viewing activity, it makes sense that sellers whose listings feature virtual tours are receiving more offers on their properties. According to one study, virtual tours can add between two and three percent to the sales price of a home, in part because increased buyer interest has made sellers feel confident waiting for the exact right offer.²

So if you’re a buyer luxuriating in viewing homes from your couch, just remember that you’re not alone in your search. Your competition is virtually viewing the same properties you are, so it’s still important to work with your real estate agent to quickly submit a strong offer when you find the home of your dreams. And for sellers, if a speedy sale is important to you, carefully weigh that against the temptation to entertain more and more offers, which can keep your home on the market up to six percent longer.² Your agent can help you decide the right strategy for your priorities.

SECRET #5: Virtual May Not Always Be the Right Choice

Creating, editing, uploading, and marketing virtual tours for a listing can be pricey. Packages through popular 3D imaging platforms like Matterport and Immoviewers can cost hundreds of dollars on their own.⁶ Virtual staging will further bloat a listing’s marketing budget, and then there’s the advertising dollars needed. Even seemingly inexpensive options like video call walkthroughs still require time and energy on behalf of both the seller and agent.

These costs mean that a full virtual tour package might not always be the right choice for sellers. When you talk to your agent about marketing your home, it may be that an elaborate virtual tour, showing, and open house just don’t make sense. It could be that your potential buyers may not resonate with that type of marketing, that the investment-to-return ratio isn’t in your favor, or that there are more effective ways to get your listing seen by qualified buyers.

Buyers, you may notice that some listings within your search parameters don’t offer virtual tours. That’s because those for-sale homes might not have needed a full virtual marketing package to entice buyers to submit offers, or those homes are better marketed through more traditional tactics. Don’t close the door on your dream home because it doesn’t have virtual events and features. Stay open-minded so you can consider the wealth of home options that fit your lifestyle, needs, and budget.

 Take a look at our recent 360 Virtual Tours:

• 6844 Brian Michael Court in Springfield VA
• 3949 Taney Avenue in Alexandria VA

Sources:

1. Rocket Mortgage - https://www.rocketmortgage.com/learn/evolution-of-home-showings-during-covid-19
2. Radio Iowa - https://www.radioiowa.com/2020/07/28/trying-to-sell-a-house-ui-study-finds-virtual-tours-will-bring-more/
3. NAR Showing Guidance During Reopening - https://cdn.nar.realtor/sites/default/files/documents/Showing-Guidance-During-COVID-05-14-2020.pdf
4. NAR 2020 Member Safety Report - https://cdn.nar.realtor/sites/default/files/documents/2020-member-safety-report-08-31-2020.pdf
5. NAR 2019 Profile of Home Buyers and Sellers - https://cdn.nar.realtor/sites/default/files/documents/2019-profile-of-home-buyers-and-sellers-highlights-11-21-2019.pdf
6. Realtor.com - https://www.realtor.com/advice/sell/how-to-host-virtual-home-tours-almost-as-good-as-the-real-thing/

In July, the average 30-year fixed-rate mortgage fell below 3% for the first time in history.¹ And while many Americans have rushed to take advantage of this unprecedented opportunity, others question the hype. Are today’s rates truly a bargain?

While average mortgage rates have drifted between 4% and 5% in recent years, they haven’t always been so low. Freddie Mac began tracking 30-year mortgage rates in 1971. At that time, the national average was 7.31%.² As the rate of inflation started to rise in the mid-1970s, mortgage rates surged. It’s hard to imagine now, but the average U.S. mortgage rate reached a high of 18.63% in 1981.³

Fortunately for home buyers, inflation normalized by October 1982, which sent mortgage rates on a downward trajectory that would bring them as low as 3.31% in 2012.³ Since 2012, 30-year fixed rates have risen modestly, with the daily average climbing as high as 4.94% in 2018.⁴

So what’s causing today’s rates to sink to unprecedented lows? Economic uncertainty.

Mortgage rates generally follow bond yields, because the majority of U.S. mortgages are packaged together and sold as bonds. As the coronavirus pandemic continues to dampen the economy and inject volatility into the stock market, a growing number of investors are shifting their money into low-risk bonds. Increased demand has driven bond yields—and mortgage rates—down.⁵

However, according to National Association of Realtors Chief Economist Lawrence Yun, “the number one driver of low mortgage rates is the accommodating Federal Reserve stance to keep interest rates low and to buy up mortgage-backed securities.” According to Yun, “we will see mortgage rates stay near this level for the next 18 months because of the significance of the Fed’s stance.”⁶

HOW DO LOW MORTGAGE RATES BENEFIT CURRENT HOMEOWNERS?

Low mortgage rates increase buyer demand, which is good news for sellers. But what if you don’t have any plans to sell your home? Can current homeowners benefit from falling mortgage rates? Yes, they can!

A growing number of homeowners are capitalizing on today’s rock-bottom rates by refinancing their existing mortgages. In fact, refinance applications have surged over the past few months—and for a good reason.⁷ Reduced interest rates can save homeowners a bundle on both monthly payments and total payments over the lifetime of a mortgage.

The chart below illustrates the potential savings when you decrease your mortgage rate by just one percentage point. When it comes to refinancing, the bigger the spread, the greater the savings.

Estimated Monthly Payment On a 30-Year Fixed-Rate Mortgage

Be sure to factor in any prepayment penalties on your current mortgage and closing costs for your new mortgage. For a refinance, expect to pay between 2% to 5% of your loan amount.⁸ You can divide your closing costs by your monthly savings to find out how long it will take to recoup your investment, or use an online refinance calculator. For a more precise calculation of your potential savings, we’d be happy to connect you with a mortgage professional in our network who can help you decide if refinancing is a good option for you.

HOW DO LOW MORTGAGE RATES BENEFIT HOME BUYERS?

We’ve already shown how low rates can save you money on your mortgage payments. But they can also give a boost to your budget by increasing your purchasing power. For example, imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 30-year mortgage at 5.0%, you can afford a loan of $279,000.

Now let’s assume the mortgage rate falls to 4.0%. At that rate, you can afford to borrow $314,000 while still keeping the same $1,500 monthly payment. That’s a budget increase of $35,000!

If the rate falls even further to 3.0%, you can afford to borrow $355,000 and still pay the same $1,500 each month. That’s $76,000 over your original budget! All because the interest rate fell by two percentage points. If you’ve been priced out of the market before, today’s low rates may put you in a better position to afford your dream home. 

On the other hand, rising mortgages rates will erode your purchasing power. Wait to buy, and you may have to settle for a smaller home in a less-desirable neighborhood. So if you’re planning to move, don’t miss out on the phenomenal discount you can get with today’s historically-low rates.

HOW LOW COULD MORTGAGE RATES GO?

No one can say with certainty how low mortgage rates will fall or when they will rise again. A lot will depend on the trajectory of the pandemic and subsequent economic impact. 

Forecasters at Freddie Mac and the Mortgage Bankers Association predict 30-year mortgage rates will average 3.2% and 3.5% respectively in 2021.^{9, 10} However, economists at Fannie Mae expect them to dip even lower to an average of 2.8% next year.¹¹

Still, many experts agree that those who wait to take advantage of these unprecedented rates could miss out on the deal of a lifetime. “With rates now at all-time historic lows, it’s hard to imagine that people may be holding out for something even better," warns Paul Buege, president and COO of Inlanta Mortgage.¹² Positive news about a vaccine or a faster-than-expected economic recovery could send rates back up to pre-pandemic levels.

HOW CAN I SECURE THE BEST AVAILABLE MORTGAGE RATE?

While the average 30-year mortgage rate is hovering around 3%, you can do a quick search online and find advertised rates that are even lower. But these ultra-low mortgages are typically reserved for only prime borrowers. So what steps can you take to secure the lowest possible rate?

1. Consider a 15-Year Mortgage Term

Lock in an even lower rate by opting for a 15-year mortgage. If you can afford the higher monthly payment, a shorter mortgage term can save you a bundle in interest, and you’ll pay off your home in half the time.¹³

2. Give Your Credit Score a Boost

The economic downturn has made lenders more cautious. These days, you’ll probably need a credit score of at least 740 to secure their lowest rates.¹⁴ While there’s no fast fix for bad credit, you can take steps to help your score before you apply for a loan¹⁵: 

• Dispute inaccuracies on your credit report.
• Pay your bills on time, and catch up on any missed payments.
• Hold off on applying for new credit.
• Pay off debt, and keep balances low on your credit cards.
• Don’t close unused credit cards (unless they’re charging you an annual fee).

3. Make a Large Down Payment

The more equity you have in a home, the less likely you are to default on your mortgage. That’s why lenders offer better rates to borrowers who make a sizable down payment. Plus, if you put down at least 20%, you can avoid paying for private mortgage insurance.

4. Pay for Points

Discount points are fees paid to the mortgage company in exchange for a lower interest rate. At a cost of 1% of the loan amount, they aren’t cheap. But the investment can pay off over the long-term in interest savings.

5. Shop Around

Rates, terms, and fees can vary widely amongst mortgage providers, so be sure to do your homework. Contact several lenders to find out which one is willing to offer you the best overall deal. But be sure to complete the process within 45 days—or else the credit inquiries by various mortgage companies could have a negative impact on your credit score.¹⁶

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

Sources:

1. CNN Business -
   https://www.cnn.com/2020/07/16/success/30-year-mortgage-rates-record-low/index.html
2. Freddie Mac -
   http://www.freddiemac.com/pmms/pmms30.html) 
3. Value Penguin -
   https://www.valuepenguin.com/mortgages/historical-mortgage-rates
4. Federal Reserve Bank of St. Louis -
   https://fred.stlouisfed.org/graph/?g=NUh
5. Bankrate -
   https://www.bankrate.com/mortgages/how-interest-rates-are-set/
6. Washington Post -
   https://www.washingtonpost.com/business/2020/06/25/mortgage-rate-remains-historic-low/
7. Yahoo! Finance -
   https://finance.yahoo.com/news/mortgage-refinancing-makes-big-comeback-151500346.html
8. Bankrate -
   https://www.bankrate.com/mortgages/is-no-closing-cost-for-you/
9. Freddie Mac June 2020 Quarterly Forecast -
   http://www.freddiemac.com/fmac-resources/research/pdf/202006-Forecast.pdf
10. Mortgage Bankers Association Mortgage Market Forecast July 15, 2020 -
    https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary
11. Fannie Mae July 2020 Housing Forecast -
    https://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_071420.pdf
12. Washington Post -
    https://www.washingtonpost.com/business/2020/06/25/mortgage-rate-remains-historic-low/
13. Investopedia -
    https://www.investopedia.com/articles/personal-finance/042015/comparison-30year-vs-15year-mortgage.asp
14. Money -
    https://money.com/mortgage-rates-below-three-percent/ 
15. Experian -
    https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/
16. Equifax -
    https://www.equifax.com/personal/education/credit/report/understanding-hard-inquiries-on-your-credit-report/

Buying A Home In Alexandria VA

The Top Reasons People Are Moving This Year

Lowest Mortgage Rates in History: What It Means for Homeowners and Buyers

In July, the average 30-year fixed-rate mortgage fell below 3% for the first time in history.¹ And while many Americans have rushed to take advantage of this unprecedented opportunity, others question the hype. Are today’s rates truly a bargain?

While average mortgage rates have drifted between 4% and 5% in recent years, they haven’t always been so low. Freddie Mac began tracking 30-year mortgage rates in 1971. At that time, the national average was 7.31%.² As the rate of inflation started to rise in the mid-1970s, mortgage rates surged. It’s hard to imagine now, but the average U.S. mortgage rate reached a high of 18.63% in 1981.³

Fortunately for home buyers, inflation normalized by October 1982, which sent mortgage rates on a downward trajectory that would bring them as low as 3.31% in 2012.³ Since 2012, 30-year fixed rates have risen modestly, with the daily average climbing as high as 4.94% in 2018.⁴

So what’s causing today’s rates to sink to unprecedented lows? Economic uncertainty.

Mortgage rates generally follow bond yields, because the majority of U.S. mortgages are packaged together and sold as bonds. As the coronavirus pandemic continues to dampen the economy and inject volatility into the stock market, a growing number of investors are shifting their money into low-risk bonds. Increased demand has driven bond yields—and mortgage rates—down.⁵

However, according to National Association of Realtors Chief Economist Lawrence Yun, “the number one driver of low mortgage rates is the accommodating Federal Reserve stance to keep interest rates low and to buy up mortgage-backed securities.” According to Yun, “we will see mortgage rates stay near this level for the next 18 months because of the significance of the Fed’s stance.”⁶

HOW DO LOW MORTGAGE RATES BENEFIT CURRENT HOMEOWNERS IN ALEXANDRIA VA?

Low mortgage rates increase buyer demand, which is good news for sellers. But what if you don’t have any plans to sell your home? Can current homeowners benefit from falling mortgage rates? Yes, they can!

A growing number of homeowners are capitalizing on today’s rock-bottom rates by refinancing their existing mortgages. In fact, refinance applications have surged over the past few months—and for a good reason.⁷ Reduced interest rates can save homeowners a bundle on both monthly payments and total payments over the lifetime of a mortgage.

The chart below illustrates the potential savings when you decrease your mortgage rate by just one percentage point. When it comes to refinancing, the bigger the spread, the greater the savings.

Estimated Monthly Payment On a 30-Year Fixed-Rate Mortgage

Be sure to factor in any prepayment penalties on your current mortgage and closing costs for your new mortgage. For a refinance, expect to pay between 2% to 5% of your loan amount.⁸ You can divide your closing costs by your monthly savings to find out how long it will take to recoup your investment, or use an online refinance calculator. For a more precise calculation of your potential savings, we’d be happy to connect you with lending partners who can help you decide if refinancing is a good option for you.

HOW DO LOW MORTGAGE RATES BENEFIT HOME BUYERS IN ALEXANDRIA VA?

We’ve already shown how low rates can save you money on your mortgage payments. But they can also give a boost to your budget by increasing your purchasing power. For example, imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 30-year mortgage at 5.0%, you can afford a loan of $279,000.

Now let’s assume the mortgage rate falls to 4.0%. At that rate, you can afford to borrow $314,000 while still keeping the same $1,500 monthly payment. That’s a budget increase of $35,000!

If the rate falls even further to 3.0%, you can afford to borrow $355,000 and still pay the same $1,500 each month. That’s $76,000 over your original budget! All because the interest rate fell by two percentage points. If you’ve been priced out of the market before, today’s low rates may put you in a better position to afford your dream home.

On the other hand, rising mortgages rates will erode your purchasing power. Wait to buy, and you may have to settle for a smaller home in a less-desirable neighborhood. So if you’re planning to move, don’t miss out on the phenomenal discount you can get with today’s historically-low rates.

HOW LOW COULD MORTGAGE RATES GO?

No one can say with certainty how low mortgage rates will fall or when they will rise again. A lot will depend on the trajectory of the pandemic and subsequent economic impact.

Forecasters at Freddie Mac and the Mortgage Bankers Association predict 30-year mortgage rates will average 3.2% and 3.5% respectively in 2021.^9,10 However, economists at Fannie Mae expect them to dip even lower to an average of 2.8% next year.¹¹

Still, many experts agree that those who wait to take advantage of these unprecedented rates could miss out on the deal of a lifetime. “With rates now at all-time historic lows, it’s hard to imagine that people may be holding out for something even better," warns Paul Buege, president and COO of Inlanta Mortgage.¹² Positive news about a vaccine or a faster-than-expected economic recovery could send rates back up to pre-pandemic levels.

HOW CAN I SECURE THE BEST AVAILABLE MORTGAGE RATE?

While the average 30-year mortgage rate is hovering around 3%, you can do a quick search online and find advertised rates that are even lower. But these ultra-low mortgages are typically reserved for only prime borrowers. So what steps can you take to secure the lowest possible rate?

1. Consider a 15-Year Mortgage Term- Lock in an even lower rate by opting for a 15-year mortgage. If you can afford the higher monthly payment, a shorter mortgage term can save you a bundle in interest, and you’ll pay off your home in half the time.¹³

2. Give Your Credit Score a Boost - The economic downturn has made lenders more cautious. These days, you’ll probably need a credit score of at least 740 to secure their lowest rates.¹⁴ While there’s no fast fix for bad credit, you can take steps to help your score before you apply for a loan:¹⁵

●     Dispute inaccuracies on your credit report.

●     Pay your bills on time, and catch up on any missed payments.

●     Hold off on applying for new credit.

●     Pay off debt, and keep balances low on your credit cards.

●     Don’t close unused credit cards (unless they’re charging you an annual fee).

3. Make a Large Down Payment - The more equity you have in a home, the less likely you are to default on your mortgage. That’s why lenders offer better rates to borrowers who make a sizable down payment. Plus, if you put down at least 20%, you can avoid paying for private mortgage insurance.

4. Pay for Points - Discount points are fees paid to the mortgage company in exchange for a lower interest rate. At a cost of 1% of the loan amount, they aren’t cheap. But the investment can pay off over the long-term in interest savings.

5. Shop Around - Rates, terms, and fees can vary widely amongst mortgage providers, so do your homework. Contact several lenders to find out which one is willing to offer you the best overall deal. But be sure to complete the process within 45 days—or else the credit inquiries by multiple mortgage companies could have a negative impact on your credit score.¹⁶

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

Sources:

1.     CNN Business -
https://www.cnn.com/2020/07/16/success/30-year-mortgage-rates-record-low/index.html

2.     Freddie Mac -
http://www.freddiemac.com/pmms/pmms30.html)

3.     Value Penguin -
https://www.valuepenguin.com/mortgages/historical-mortgage-rates

4.     Federal Reserve Bank of St. Louis -
https://fred.stlouisfed.org/graph/?g=NUh

5.     Bankrate -
https://www.bankrate.com/mortgages/how-interest-rates-are-set/

6.     Washington Post -
https://www.washingtonpost.com/business/2020/06/25/mortgage-rate-remains-historic-low/

7.     Yahoo! Finance -
https://finance.yahoo.com/news/mortgage-refinancing-makes-big-comeback-151500346.html

8.     Bankrate -
https://www.bankrate.com/mortgages/is-no-closing-cost-for-you/

9.     Freddie Mac June 2020 Quarterly Forecast -
http://www.freddiemac.com/fmac-resources/research/pdf/202006-Forecast.pdf

10.   Mortgage Bankers Association Mortgage Market Forecast July 15, 2020 -
https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary

11.   Fannie Mae July 2020 Housing Forecast -
https://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_071420.pdf

12.   Washington Post -
https://www.washingtonpost.com/business/2020/06/25/mortgage-rate-remains-historic-low/

13.   Investopedia -
https://www.investopedia.com/articles/personal-finance/042015/comparison-30year-vs-15year-mortgage.asp

14.   Money -
https://money.com/mortgage-rates-below-three-percent/

15.   Experian -
https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/

16.   Equifax -
https://www.equifax.com/personal/education/credit/report/understanding-hard-inquiries-on-your-credit-report/