Breaking Down Mortgage & Lending Changes With Our Preferred Lender

There are a lot of changes surrounding the lending world as we head into 2017. I'm joined today by our team's preferred lender to discuss how these changes affect buyers and sellers in southern California.

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What does the mortgage interest rate look like as we start 2017? I'm joined today by our preferred lender Brandon Moss of Prime Lending to help me explain this topic more in depth.

As you probably know, interest rates have gone up over the last couple months and they're up to levels we haven't seen since 2014. While rates are higher than they've been in the past couple years, they are still historically low—in the 4% to 4.5% range depending on your down payment, credit score, and some other factors. 

The interesting thing, Brandon says, is an increase in interest in non-conforming products like ARMs (adjustable rate mortgages) that have a much lower starting rate for five, seven, or even 10 years, which helps keep monthly payments lower in a higher rate environment. Brandon added that these ARMs are not the same kind people had back in 2000—they are a much safer product that is harder to qualify for and requires more cash reserves in the bank before closing. They're solid products that are a good alternative for buyers to get into a home with a lower payment.

These ARMs are not the same kind people had back in 2000—they are a much safer product.

With prices going up here in the the southern California market, the federal government has raised the conforming loan limits for 2017. As Brandon points out, the nationwide standard conforming loan limit has risen from $417,000 up to $424,000. In higher cost areas like Los Angeles, Ventura County, and Orange County, loan limits have gone up from $625,000 to $634,000. This helps buyers get a loan without having to qualify for a jumbo loan, which comes with more restrictions and tougher guidelines. Buyers can actually get a larger loan amount going into 2017, and it's really opening up doors.

If you have any questions for Brandon, you can give him a call at (818) 256-4330 or shoot him an email at BMoss@PrimeLending.com.

If you have real estate questions, give us a call or send us an email. We look forward to hearing from you.

What Does 2017 Hold for Our Market?

Today, we're taking a look back at how buyers and sellers were affected in the 2016 market and looking ahead to how they might fare in this year's market.

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Happy New Year! Today, I wanted to take a look back at the market from 2016 and look ahead to predictions for what we will see from the Porter Ranch market in 2017.

This year, we saw a lot of price gain throughout California. Many neighborhoods in the San Fernando Valley saw values rise close to pre-recession levels. However, inventory was quite low throughout most of the year; 10% to 30% less than 2015 depending on the neighborhood. This really made 2016 the year of the seller.

The amount of sales actually decreased despite high demand, but that's because of the low inventory. There's also not many places to build new homes. The big issue for buyers now is making sure they can remain in the market with prices having gone up exponentially over the past few years and affordability dropping below 30% in our state.

We definitely want to keep an eye on interest rates in 2017.

These are things we'll need to keep an eye on this year, especially considering that toward the end of the year, interest rates increased by about 0.5%. This actually affects the amount of money buyers can afford to spend on a home. We even had a few instances in November where the buyer had to bring in more money because they didn't lock their rate in before the increase.

The Fed is expected to raise rates multiple times throughout 2017. If they do, it will obviously continue to affect the purchasing power of buyers. We're seeing that when many homeowners buy a new home, they keep their current property due to the fact that if they purchased in the last seven to eight years, there's a good chance they have an interest rate under 4% that they don't want to give up. This is more inventory that's not coming on the market. 

In 2017, interest rates will be the big thing to keep an eye on. Again, rates continuing to go up would slow down the market because it would affect buyers' purchasing power. Demand is still high and inventory is still very low. We'll certainly keep you updated on the market throughout the year.

If you have any questions about our market or you're thinking about buying or selling a Porter Ranch home, give me a call or send me an email. I'd be happy to help.