{"id":3801,"date":"2023-11-06T22:03:59","date_gmt":"2023-11-06T22:03:59","guid":{"rendered":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2023\/11\/06\/looking-for-a-4-mortgage-heres-where-home-buyers-can-find-one\/"},"modified":"2023-11-06T22:03:59","modified_gmt":"2023-11-06T22:03:59","slug":"looking-for-a-4-mortgage-heres-where-home-buyers-can-find-one","status":"publish","type":"post","link":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2023\/11\/06\/looking-for-a-4-mortgage-heres-where-home-buyers-can-find-one\/","title":{"rendered":"Looking for a 4% Mortgage? Here\u2019s Where Home Buyers Can Find One."},"content":{"rendered":"

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Aspiring homeowners put off by current mortgage rates can still find newly built homes that come with a 4% mortgage rate, one real-estate expert says.<\/p>\n

With the 30-year mortgage averaging 7.76% as of Nov. 2<\/a>, many home buyers find that borrowing costs\u2014and high home prices\u2014make it too expensive to purchase a home. To buy a median-priced $400,000 home<\/a>, a homeowner would need to make at least $120,000 to afford the monthly payments.<\/p>\n

When mortgage rates were at 6%, buyers needed to make a little over $100,000 to cover their housing costs. Experts generally advise that buyers spend no more than 30% of their income on housing.<\/p>\n

With so many buyers priced out of the market, demand has fallen and existing-home sales have cratered. The pace of home sales for 2023 is expected to be the\u00a0lowest since 2008<\/a>,\u00a0during the Great Recession.<\/p>\n

Yet sales of newly built homes have \u201cdefied gravity<\/a>.\u201d In September, sales of new homes were up 34% compared with last year.<\/p>\n

Why the contrast? The increase is partly due to home builders offering two specific kinds of sales incentives to sweeten the deal for buyers: Mortgage rate buydowns, and price cuts.<\/p>\n

Home builders are paying points for home shoppers to reduce their mortgage rate and their monthly payments to make buying more affordable.<\/p>\n

\u201cPaying points,\u201d or mortgage rate buydowns, refer to home builders paying a sum of money up front to lower the mortgage rate that a buyer will get for their loan. The rate decrease is sometimes permanent, but it can also be temporary, meaning that the rate may rise to the prevailing rate after a period of time.<\/p>\n

\u201cWe\u2019re seeing them today in the high 4s,\u201d said John Burns, CEO of John Burns Real Estate Consulting, referring to the lowest rate he\u2019s seen offered by a home builder,\u00a0in a recent episode of\u00a0Barron\u2019s Live<\/a>.<\/p>\n

Consider Lennar\u2019s effort to drum up sales: In Austin, Texas, in early November, the builder was offering a rate as low as 4.99% on a 30-year Federal Housing Administration home loan for buyers who get financing from the builder\u2019s affiliated mortgage company, Lennar Mortgage. In Orlando, Fla., the company was offering an adjustable-rate mortgage with a rate as low as 3.99% in the first year. After that, the mortgage adjusts to the prevailing rate, which could be as high as over 7%.<\/p>\n

Pulte Homes,\u00a0another publicly-traded home builder, is offering 30-year mortgage rates at 4.875% for some of its communities.<\/p>\n

Lennar and Pulte did not respond immediately to requests for comment.<\/p>\n

Builders are paying for the difference between the prevailing rate and the rate they are offering, Burns said, yet it\u2019s not necessarily at a huge cost for the big players. While the buydowns are \u201cstraight out of their profit margins,\u201d Burns said, \u201cthey bought the land, most of it, three or four years ago, when they were anticipating selling the home for say $500,000. And now it\u2019s worth $700,000. So they have a lot of profit built up and they\u2019re giving some of it back to the home buyer.\u201d<\/p>\n

Builders are also dropping asking prices on homes in some cases to boost demand. In September, the price of a median-priced newly built home fell to $413,000 from $433,000.<\/p>\n

Burns said that he heard more chatter about price cuts in a recent survey of hundreds of home builders. \u201cAnd this was the first month in a long time where more builders told us we\u2019re actually dropping prices too,\u201d Burns said, and that\u2019s on top of rate buydowns.<\/p>\n

But price cuts can come at a cost for the home buyer, he added. Builders are bringing costs down by constructing smaller homes, Burns said.<\/p>\n

In an April report, Burns\u2019s company surveyed 290 residential architects, designers and design-oriented builders and learned exactly how much homes are shrinking: A third of detached homes now being planned and built are expected to be under 2,000 square feet, and 70% will be under 2,500 square feet, the company found.<\/p>\n

The median size of a typical single-family home sold in 2022 was 2,383 square feet, according to the\u00a0U.S. Census Bureau.<\/a><\/p>\n

MarketWatch, the place where you can find the latest stock market, financial and business news. Cryptocurrency<\/a> is trending now, get the latest info on Bitcoin<\/a>, Ethereum<\/a>, and XRP<\/a>.<\/em><\/p>\n

The post Looking for a 4% Mortgage? Here\u2019s Where Home Buyers Can Find One.<\/a> appeared first on Real Estate News & Insights | realtor.com\u00ae<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

Getty Images Aspiring homeowners put off by current mortgage rates can still find newly built homes that come with a 4% mortgage rate, one real-estate expert says. With the 30-year mortgage averaging 7.76% as of Nov. 2, many home buyers find that borrowing costs\u2014and high home prices\u2014make it too expensive to purchase a home. To…Read More→<\/a><\/p>\n","protected":false},"author":0,"featured_media":3802,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3801","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/3801","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/comments?post=3801"}],"version-history":[{"count":0,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/3801\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media\/3802"}],"wp:attachment":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media?parent=3801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/categories?post=3801"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/tags?post=3801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}