It’s only February, but the demand for homes in Chevy Chase, Bethesda, and the surrounding D.C. area is warming up! In fact, our spring housing market may have an early thaw. This presents some opportunities, as well as challenges, for home buyers!
Mortgage Rates Rise, Mortgage Rules Change
While mortgage rates remain very reasonable, they have increased from their prior lows and are trending upward. The gradual nature of rate increases could take unwary home buyers in Chevy Chase by surprise some months down the road. For now, the weekly mortgage survey by Freddie Mac shows 30-year fixed rate mortgages going for 3.53% and 15-year fixed rate mortgages at 2.81%.
First-time home buyers in the DC Metro area will need to understand that FHA-backed mortgages have raised their mortgage insurance premiums, and that going forward, these premiums cannot be removed from the mortgage payment at any future point. Depending on the amount of your mortgage loan, the monthly mortgage insurance premium can range from $40 to $100 or more. In the past, you could win a waiver of the FHA premiums once a certain amount of home equity was achieved, but this is no longer the case.
The Consumer Protection Act is another new factor in the mortgage industry, but lenders have been following most of the practices prior to the law taking affect. The “ability to pay” rule will make obtaining, and perhaps finding, an adjustable-rate mortgage more difficult, because you can no longer qualify using the introductory interest rate. The heavy documentation requirements for mortgage underwriting is here to stay, now that banks have more pressure to prove they are not 0ver-lending to under-qualified borrowers.
Chevy Chase and Bethesda Home Inventory Lower; Buyer Demand Higher
We are looking at a classic recipe for rising home prices, if the current trends continue into the spring. The improved economy has home buyers back in the market, but new listings are coming to market slowly. Competition at the entry-level range of the market could be strong as spring brings out more home buyers – but not sellers! Many homeowners who bought during the peak of the market still lack sufficient equity to sell.
Cash buyers and investors have also influenced our home inventory, and continue to absorb distressed properties as they come to market.
If you are buying a home, be sure to have the expert guidance of a Chevy Chase real estate professional! I will be with you from the home search, through negotiations, to closing! Let me help you make the most of the opportunities we have in the Chevy Chase real estate market and the greater DC area!
Contact me today for help with your home buying plans!