What The 2020 Real Estate Market Could Look Like

Key 2020 Takeaways: 
  • Homeowners that are contemplating selling in the new year can realistically expect a stable market
  • We can expect to see more home buyers capitalize on the relatively low rates in 2020
  • As more homeowners opt to refinance rather than sell, this will play a contributing factor in the inventory shortage
  • Buyers that may have been out of touch with the market for several years, should prepare themselves to experience rejected offers, bidding wars, and longer than anticipated home search times

It’s no secret that the real estate market frequently sees pivots, changes, and even crashes. After surviving the recent recession, many homeowners and investors are paying close attention to the market and its changes. As trends and the economy changes, so does the real estate market, so what can we expect to see in the 2020 real estate market? Freddie Mac, a government-owned entity that backs mortgages, recently released their 2020 market predictions.

Home Sales Will Increase

As with each year post-recession, home sales will continue to increase according to Freddie Mac. Both new construction and existing sales will see an overall rise. In fact, Freddie Mac predicts that home sales will rise from 6 million (2019) to 6.1 million in 2020. Increased home sales are an indicator of a strong real estate market, and homeowners that are contemplating selling in the new year can realistically expect a stable market.

There Will Still Be A Lack Of Inventory

A common real estate theme post-recession is a lack of inventory, and 2020 will be no different. According to Forbes, part of this is fueled by homeowners attempting to recover lost equity from the recession, and another factor is longer homeownership tenures–including Baby Boomers. Of course, the lack of inventory pays a big factor in real estate prices and the fierce buying competition seen in parts of the country.

Home Prices Will Increase

Although many argue home prices are already outside the affordable range, Freddie Mac predicts an increase of 2.8% in home prices. While this may be unwelcome news for home buyers, this increase is less than Freddie Mac’s prediction for 2019 of 3.3%. As the inventory of available homes remains tight, the prices will tend to increase. In summary, the common factor of supply and demand will affect pricing in 2020.

Interest Rates Will Increase…But Slightly

The real estate market is already experiencing low-interest rates which has helped to spur activity in the market. And while Freddie Mac predicts interest rates will slightly increase to around 3.8%, this still remains within the realm of appealing interest rates. The increase is still a far cry from the days of 19% in the early 1980s, and it’s almost less than half of the highest interest rate pre-recession in 2006. Having lived through the recession, most home buyers are more cognizant of the power of a good interest rate, so we can expect to see more home buyers capitalize on the relatively low rates in 2020.

More Homeowners Will Refinance

According to Freddie Mac, approximately $789 billion refinance originations occurred in 2019. As interest rates remained low, homeowners, especially those experiencing high-interest rates from the pre-recession era, opted to refinance their current mortgages and stay in place. This will remain true for 2020; however, there will be slightly less in totally refinances originations for a total of $785 billion. Of course, as more homeowners opt to refinance rather than sell, this will play a contributing factor in the inventory shortage. If you or someone you know is looking to refinance in 2020, check out the Homes.com Mortgage Hub which has information on prequalifying or applying for a mortgage as well as a mortgage calculator. 

It’s Still All About The Millennials

Just about every industry is reiterating the power of millennials, and real estate is no exception. In fact, more than 25% of millennials, the nation’s largest generation, stated they want to purchase a home in 2020. As more millennials drive the market, the demand may be greater than the supply, therefore, increasing prices and competition. Sellers in 2020 would be wise to cater to the home buying demands of this generation as they’ve proven they’re willing to pay up for certain amenities and features in a home.

What This Means For Sellers

While low-interest rates, increasing demand, and limited inventory may all sound like great news for sellers, it’s important to remember one thing: you buy into the market you sell into. While a homeowner may be able to sell over list price due to increased demand and competition, they may also experience the same thing as a buyer. Buyers that may have been out of touch with the market for several years, should prepare themselves to experience rejected offers, bidding wars, and longer than anticipated home search times. Utilizing a licensed Realtor or real estate agent, however, can greatly ease this burden and make the process seamless. Madeline Smallwood, Realtor at Keller Williams Market Pro Realty in Bentonville, Arkansas advises buyers that, “I think a shortage is going to continue into 2020 with prices rising. Buyers will need to come into the market planning to make solid and clean offers…That shouldn’t scare them away from buying in 2020 as long as they have an experienced agent on their side who can help them make an informed decision.” Find your perfect agent on Homes.com with our Find an Agent tab. 


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

Staying Prepared in a Recession | Tips for Financially Protecting Your Home

It was one for the history books, second only to the Great Depression, the Great Recession saw countless homes foreclosed, numerous bankruptcies, and overall catastrophic distress in the housing & financial markets. In fact, during the 10 years that spanned the Great Recession, 7.8 million foreclosures happened. For those that lived through the financial turmoil, there is fear and hesitancy of history repeating itself. The real estate market has certainly recovered; however, there is chatter that a looming correction could be on the horizon. Whether it’s just an adjustment in the housing market or a full-blown recession, there are steps you can take now to hedge your bets and place you in the best place financially.

African male holding piece of paper while paying gas and electricity bills online on notebook pc. Young family calculating their expenses, planning domestic budget, sitting in kitchen interiorAfrican male holding piece of paper while paying gas and electricity bills online on notebook pc. Young family calculating their expenses, planning domestic budget, sitting in kitchen interior

Take Advantage Of Current Low Interest Rates

For much of 2019, interest rates have been low. One of the contributing factors to foreclosures during the recession were extreme or variable interest rates. There are two ways to take advantage of low interest rates to protect yourself in case of another recession:

  1. Buy A Home. Arguably one of the best ways to hedge your bets is to have affordable housing that can sustain an economic downtown. Locking in a mortgage with a low interest rate helps a buyer experience more affordable monthly payments & more money applied to the principal balance.
  2. Refinance Your Mortgage. If your original home mortgage was secured pre-recession, you probably know the impact of variable rates, interest-only loans, & balloon payments. Even if your mortgage was secured after the recession, mortgage rates have since declined and your home equity could have increased. By refinancing your current mortgage, you can lower your overall monthly payment. Decreasing your overall monthly housing budget is a critical step in recession-proofing your finances.

Create Multiple Streams Of Income

While the housing market took a downtown during the recession, the rental market remained steady and one of the ways to withstand an economic downturn is to have multiple streams of income. While demand may be less from buyers due to a recession, the demand by renters typically increases. By purchasing rental properties with lower interest rates, the additional stream of income can be a vital asset during a recession. While strategies may vary in how to acquire a cash-flowing rental property, the math is still the same: purchase low with a 20% down payment and a low interest rate will help an investor to not only maintain but cash flow the rental.

Pay Down Your Mortgage

Whether you choose to refinance your current mortgage or not, paying down your existing mortgage will not only build equity but provide freedom in the next recession. By utilizing programs such as Bi-Saver, homeowners can experience flexibility in mortgage payment schedules as well as increased equity. Programs like Bi-Saver act as a third party that collects the mortgage bi-weekly throughout the life of the loan– by the end of each year at least one additional mortgage payment is applied to the loan. This process can erase years off the life of the loan. By combining a low interest rate and additional mortgage payments each year, homeowners have the ability to experience some breathing room in their finances.

While nobody knows if, or when, the next recession will be, it’s important to make cautious and wise financial decision now that your future-self will thank you for. By taking advantage of lower interest rates, creating multiple streams of passive income, and paying down your mortgage will help you to hedge your bets!


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

COVID-19 And Its Impact On The Real Estate Market

As thousands across the globe struggle with the impacts of the Coronavirus (COVID-19), there are few industries left untouched. The U.S. real estate market is among many that have implemented changes, navigated a new normal, and worked to find solutions in this ever-changing COVID-19 climate. As investors and home buyers are re-evaluating and sellers remain unsure of what’s next, it’s important to understand how the Coronavirus has impacted the industry, but also how real estate professionals are working to mitigate the impacts.

Increased Interest Rates

As the stock market continues to fluctuate and unemployment claims rise due to layoffs and furloughs, interest rates have been ticking upwards. As interest rates affect buying power, this has the potential to impact the upcoming spring housing market which is typically the busiest time of year for real estate professionals. Lindsey Mahoney, Realtor with The Rigali Group With Danberry Realtors in Toledo, Ohio, says buyers are “more curious about their interest rates and how that will affect them.”

One of the most important keys to securing the best rate possible is to begin working with a lender now. Working with a seasoned and professional mortgage lender, as well providing all necessary documentation to the lender, allows you to lock-in a great rate when the rates dip again. Request that your lender stay in daily contact with you to apprise you of the daily rates and how it affects your buying power.

taxmortgage couple on computertaxmortgage couple on computer

Decreased Buyers In The Market

According to a National Association of Realtors March 2020 survey, nearly half of Realtors responded that “home buyer interest has decreased due to the Coronavirus outbreak.” Decreased buyer activity can be attributed to economic fears, furloughs, and social distancing. However, there are methods that real estate professionals can implement to calm buyer fears and promote a safe environment:

  • At the direction of NAR, provide virtual open houses rather than in-person
  • Do not drive clients to showings per NAR Coronavirus safety guidelines
  • Disinfect all surfaces- doors, handles, lockboxes, countertops, etc., before and after every showing
  • Provide disposable gloves and masks for clients to utilize during showings
  • Offer virtual tours, electronic signing, wire transfers, etc.

Tenants Unable To Pay Rent

As furloughs and layoffs continue, many hitting hourly and seasonal workers, landlords may find themselves in a situation with a tenant unable to pay rent. Lindsey Mahoney, who also owns a rental property in Toledo, says that while her tenants have not contacted her yet regarding rent, she has procedures in place to work with them. Mahoney suggests “giving a month free” to tenants and then “come up with a solution.” If landlords can’t provide a free month, she suggests coming up with a solution where tenants just pay the mortgage amount- rather than any increased cash flow amount. Other alternatives landlords should consider:

  • Remove late penalty fees
  • Allow tenants to pay in increments
  • Discuss delaying payments
  • Any changes to the lease should be put into writing

Significantly Increased Airbnb Cancellation Rates

Due to travel bans, social distancing, and fear of the pandemic spreading, many are choosing to stay at home rather than travel. For investors like Sarah Karakaian, who owns six Airbnbs and manages 20 others in the Columbus, Ohio area, this has caused a major disruption in her livelihood. The co-host of the short-term rental podcast, Thanks for Visiting, says, “Our Airbnb business has absolutely been impacted. We’ve seen about a 90% cancellation rate between March 13th and April 15th, 2020. Our occupancy rate went from 80% to 10%.”  As Airbnb issued a blanket refund policy to travelers, many hosts are concerned about what is next for their investment. Karakaian says, “Because Airbnb issued a blanket refund policy that absolutely favors the travelers, I’m thinking travelers will now trust Airbnb more than ever. When the sun comes out and everyone starts traveling again, I believe travelers will look to Airbnb to help them book their stay knowing that Airbnb had their back when times were tough. That would be excellent for hosts in the future.”

Galveston, Texas USA - November 3, 2019: The Silk Stocking Residential Historic District contains beautifully restored vintage homes of the Queen Anne architecture style.Galveston, Texas USA - November 3, 2019: The Silk Stocking Residential Historic District contains beautifully restored vintage homes of the Queen Anne architecture style.

If hosts are looking to recoup lost revenue, Karakaian suggests:

  • Updating cleaning procedures and informing guests
  • Include a picture of the cleaning team and cleaning products so guests can feel assured
  • Caption photos with what you are doing to keep the space sanitary
  • Diversify your advertising outside of Airbnb. Make use of social media, VRBO, Facebook, etc.
  • Consider providing cleaning materials for guests to utilize during their stay
  • Offer discounted prices or incentives

Disrupted Business-as-Usual for Banks

As many banks are locking their doors, they are having to get creative in meeting the needs of consumers and the real estate industry, while keeping people safe and healthy. Natalie Bartholomew, Chief Administrative Officer at Grand Savings Bank in Northwest Arkansas and the voice behind The Girl Banker says, “We are in uncharted territory and we’ve been preparing for the impending threat of the coronavirus for several weeks. We closed all branch lobbies on March 17th.” Even as the pandemic continues to sweep across the globe, the banking world doesn’t stop. When asked how COVID-19 might affect the mortgage loan process, Bartholomew says “Depending on the impact to staffing, third parties such as appraisers, title companies, etc., delays are highly likely as this situation progresses.” She assures borrowers that lenders are working to do their part to help: “We have created a payment deferral program for our consumer installment borrowers and in-house home mortgage borrowers and are willing to revisit as the situation progresses.”

The situation with COVID-19 is fluid and changes daily, if not hourly. As more shelter-in-place mandates are issued, the impact on the real estate industry may continue to grow. And while the unknown may be overwhelming, it’s important to remember whether you’re buying, selling or investing that the real estate industry is prepared. Blair Ballin, a real estate agent with Conway Real Estate in Phoenix says “We will get through this. Yes, there will be losses (employment) but that does not mean the real estate market will crash.”

Read more:

Be safe, everyone! Stay tuned for more helpful tips from your resource for all things home.


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

The Housing Affordability Crisis and Proposed Changes That Can Help

If you ask just about anyone trying to buy a home, they’ll probably tell you homes aren’t affordable. This is especially true in highly competitive markets where we have seen double digit price growth in one quarter alone which leads to housing affordability declines in many areas. It’s not uncommon for buyers to experience multiple-offer situations that spur bidding wars and over-appraisal purchase prices, and with over 15 million millennials experiencing monumental student loan debt, the combination of rising home prices and debt has created a housing affordability crisis that many have taken note of across the nation.

In fact, Lawrence Yun, Chief Economist for the National Association of Realtors expresses his concern“If homeownership isn’t rising, the wealth divide will expand between the haves and have-nots and if [the homeownership rate] continues to lag behind historical norms one has to wonder, ‘Are we turning into a renter nation?” Yun said. As more and more homebuyers struggle to compete in today’s market, many are urging solutions that will curb the crisis and provide relief for many first-time homebuyers.

houses in a neighborhoodhouses in a neighborhood

Proposed Changes To Ease The Affordability Crisis

The recent policy forum from NAR focused solely on the housing affordability crisis and their suggestions were aimed at easing the burden on first-time homebuyers. Many of these proposed changes require government intervention, but NAR believes there would be widespread relief from their proposals.

Yes, In My Backyard Movement

NAR supports the incentivization of ‘Yes in My Backyard’ markets to encourage states and localities receiving federal dollars to reform high-density zoning.” By promoting “YIMBY,” real estate developers can offer a critical solution that helps neighborhood growth as well as redesigning under-performing or unused real estate. Multi-family housing, such as condos, can be a more affordable entry into homeownership for some, and an emphasis on such developments can be one method to easing the housing affordability crisis.

Improved FHA Underwriting Criteria

Almost 1 in 5 homebuyers utilized an FHA loan in 2019 and for many first-time homebuyers, an FHA loan is a popular choice if you get approved because of its minimal down payment. The National Association of Realtors continues to champion for improved FHA underwriting which would allow more future homebuyers to get FHA loan approval. In fact, due in large part to NAR’s advocacy, HUD announced in the 4th quarter of 2019 that they have improved FHA loan regulations for condo purchases. However, NAR continues to advocate for even more improved FHA underwriting, including for single-family home purchases.

Additional Community Development Block Grants

While the federal government can create legislation that promotes and eases homeownership, some of the existing challenges are specific to the municipal level and require unique solutions. This is where HUD has created the Community Development Block Grant program. While there are currently several programs under the CDBG umbrella, NAR believes more incentive programs will help spur homeownership at the local level while also solving complex or unique community hurdles. These programs focus on providing grants that will specifically help “the most vulnerable in our communities,” the group potentially most in jeopardy of never being able to afford a home.

More Investors Utilizing The Opportunity Zone Program

A semi-new program created by the government, Opportunity Zones, offers tax incentives to real estate investors that revitalize in designated distressed areas. The goal of the Opportunity Zone program is “to spur economic development and job creation in distressed communities” which could increase buying power among residents in those designated zones. While this program was created in 2017, some investors may still be unaware of potential tax benefits associated with this program. As always, it’s important to consult a tax professional to learn more about this program.

Current Options Available To Homebuyers

If you’re finding yourself experiencing this housing affordability crisis, there are existing programs and options available. From programs that help with down payments,  options designated for veterans, to programs that assist with closing costs. To learn more about programs that are available near you, find a Realtor in your area and consult a loan officer to better explore your options.

If you’re looking to buy, sell, or rent, visit Homes.com where there’s free, step-by-step guides that will walk you through the entire process. You can also visit our blog for any questions you might have about being a homeowner, renter, or seller.


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

How Low Mortgage Rates are Making Housing Shortages Even Worse

Perhaps the most damaging aspect of the chronic drought of homes for sale is the destructive way shortages are concentrated on the least expensive properties on the market– the starter homes that are the gateways to homeownership.

When I worked at the National Association of Realtors, I learned about the homeownership ladder.  Here’s how it works: First-time buyers purchase the least expensive homes on the market; this transaction makes it possible for a young, growing move up to the next price level. The proceeds from the sale of their starter home get a good start on a more expensive home with a sizeable down payment, then the ladder continues until the kids are on their own and a large family home costs too much to maintain. Then it’s time for the retiring couple to sell, cash in their equity and either purchase or rent a retirement home. This phenomenon continues as the family moves from one town to another.

At each rung of the housing ladder, except the first and the last, each family moving up the ladder generates two transactions, a sale, and a purchase. Should large numbers of owners get stuck at a certain level and they do not move up, the housing ladder slows down. This creates problems for homeowners that are above and below the problematic level to suffer.

buyers marketbuyers market

The housing ladder works best when all generations are roughly the same size, housing inventories at all levels remain constant, and new home construction replace tear-downs. At local levels, many events ranging from natural disasters, economic disasters, exceptional growth or population decline may cause local housing to break down. At the national level, only events that impact large numbers of the nation, like national disasters, recessions, depressions, crises that cripple the nation’s housing finance system, significant changes in the nationwide housing inventory or substantial changes in the sizes of generations.

Today several of these factors are creating a chronic national crisis in inventories of homes for sale. Housing ladders are slowing down as problems affecting one level impact others.

These problems are:

  • The successive coming of age of two of the largest generations in history, the Millennials followed by Generation Z;
  • The conversion of 6 million of the lowest-level homes into rentals;
  • The inability of new home construction to relieve these shortages;
  • New construction cannot meet the demand from first-time buyers, about one out of three buyers,
  • Prices generated by shortages of homes for sale are creating widespread unaffordability at lower levels of the housing ladder; and
  • The generation at the top level of the housing ladder is choosing to age in place rather than sell their homes.

The housing ladder makes it easier to understand how an event that impacts one tier will also affect adjoining tiers. For example, the decision by millions of Boomers to “age in place” is reducing the available inventories today but will increase supplies as Boomers die off in the next decade. Prices of large homes will drop, encouraging move-up buyers. The increase in Boomer homes for sale will work down the hosing ladder and may eventually increase the number of homes available to move-up buyers and reduce prices.

HousingWire reported that last December, the inventory of mid-tier housing houses priced below $200,000 declined 18.1% year-over-year. In the next tier, houses priced between $200,000 and $750,000 fell 10.2%. Listings of homes priced over $1 million shrank by 4.4% year over year. The shortfall originated at the entry-level and worked its way up the housing ladder from bottom to top, declining in strength at each level like an echo.

However, an event at one level may not produce the expected result at the next. Mark Fleming, the Chief Economist at First American, recently suggested that falling mortgage rates can incentivize homeowners to sell their home and buy a different one, but persistently low mortgage rates can have the opposite effect.

“While historically low rates increase buying power and make it more affordable for potential buyers to purchase a home, they also discourage many existing homeowners from selling,” he wrote.

“There is little to no house-buying power benefit for homeowners with an already low mortgage rate, so the only way existing homeowners can increase their house-buying power is through household income growth. This helps explain why more and more homeowners have decided to stay put, reducing the inventory of homes for sale and increasing the length of their tenure,” he said.

While historically low rates increase buying power and make it more affordable for potential buyers to purchase a home, they also discourage many existing homeowners from selling. This helps explain why more and more homeowners have decided to “stay put,” reducing the inventory of homes for sale.


Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.

Source: homes.com

Why It’s Suddenly Harder to Get a Mortgage

With COVID-19 making it incredibly difficult to buy a home, or even to get a mortgage, home buyers and homeowners trying to refinance their mortgage have something new to keep them awake at night.
In response to increased risk to lenders from the coronavirus, in mid-April, JPMorgan Chase raised standards for mortgages and stopped approving mortgages with down payments lower than 20%. It also increased its minimum FICO credit score to 700.

Lenders Raise Scores

Flagstar raised its minimum credit score for new Federal Housing Administration (FHA), Veterans Affairs (VA), and U.S. Department of Agriculture (USDA) purchase loans to 680. For cash-out refinances, the bank now requires that borrowers have at least a minimum credit score of 700.

US Bank and Wells Fargo both raised their minimum credit score to 680 for FHA, VA, and USDA loans, and 640 for conventional loans. LoanDepot requires 620 minimum FICO score for VA and FHA loans and a higher score, 660+, for cash-out or streamline refinancing. Now, the bank requires borrowers to have a minimum FICO score of 700 with a maximum debt-to-income (DTI) ratio of 43% when any funds used for closing costs or down payment are not borrower’s funds or gift funds, according to HousingWire.

Serious millennial man using laptop sitting at cafe table, looking up mortgage related resourcesSerious millennial man using laptop sitting at cafe table, looking up mortgage related resources

Fannie Mae and Freddie Mac are adding to the new hurdles facing borrowers by asking lenders to take additional steps to verify employment status. Instead of verbal verification, lenders may obtain an email directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment, a year-to-date pay stub from the period that immediately precedes the note date. When a borrower is using self-employment income to qualify, the lender must verify the existence of the borrower’s business within 120 calendar days before the note date from a third party, such as a CPA, regulatory agency, or the applicable licensing bureau, if possible.

Homeowners Rush to Refinance

With millions of breadwinners out of work and unemployment payments delayed, a surge of applications for home equity loans and lines of credit jumped 30% or more from a year earlier in recent weeks before stay-at-home orders cut application volumes.

Happy adult man having a video call with a laptopHappy adult man having a video call with a laptop

Bank of America significantly tightened its standards for loans to homeowners wanting to borrow against their equity, ratcheting up an internal gauge that measures market conditions from the company’s lowest level to its highest. Its minimal credit score is now 720, up from 660.

Wells Fargo cut the maximum amount homeowners can borrow and reduced how much the bank will lend relative to a property’s value. The bank is applying stingier valuations to homes due to a lack of inspections and appraisals resulting from the pandemic.

Mortgage Credit Supply is Low

With mortgage rates at a historically low level and applications to refinance exploding, the Mortgage Bankers Association reported that the supply of available mortgage credit fell 16% in March, reaching the lowest level it has been since June of 2015.
“Mortgage credit supply decreased 16% in March to the lowest level since June 2015, with declines in availability across all loan types. There was a reduction in the availability of loans with lower credit scores and higher LTV ratios, and the largest pullback came from the jumbo and non-QM space,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

If you’re looking for more resources as a homeowner, renter, or seller during the coronavirus outbreak then visit our COVID-19 Resources page where you can find everything from DIY projects to tackle during a weekend to seller and buyer tips during the pandemic.


Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.

Source: homes.com

Why It’s Suddenly Harder to Get a Mortgage

With COVID-19 making it incredibly difficult to buy a home, or even to get a mortgage, home buyers and homeowners trying to refinance their mortgage have something new to keep them awake at night.
In response to increased risk to lenders from the coronavirus, in mid-April, JPMorgan Chase raised standards for mortgages and stopped approving mortgages with down payments lower than 20%. It also increased its minimum FICO credit score to 700.

Lenders Raise Scores

Flagstar raised its minimum credit score for new Federal Housing Administration (FHA), Veterans Affairs (VA), and U.S. Department of Agriculture (USDA) purchase loans to 680. For cash-out refinances, the bank now requires that borrowers have at least a minimum credit score of 700.

US Bank and Wells Fargo both raised their minimum credit score to 680 for FHA, VA, and USDA loans, and 640 for conventional loans. LoanDepot requires 620 minimum FICO score for VA and FHA loans and a higher score, 660+, for cash-out or streamline refinancing. Now, the bank requires borrowers to have a minimum FICO score of 700 with a maximum debt-to-income (DTI) ratio of 43% when any funds used for closing costs or down payment are not borrower’s funds or gift funds, according to HousingWire.

Serious millennial man using laptop sitting at cafe table, looking up mortgage related resourcesSerious millennial man using laptop sitting at cafe table, looking up mortgage related resources

Fannie Mae and Freddie Mac are adding to the new hurdles facing borrowers by asking lenders to take additional steps to verify employment status. Instead of verbal verification, lenders may obtain an email directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment, a year-to-date pay stub from the period that immediately precedes the note date. When a borrower is using self-employment income to qualify, the lender must verify the existence of the borrower’s business within 120 calendar days before the note date from a third party, such as a CPA, regulatory agency, or the applicable licensing bureau, if possible.

Homeowners Rush to Refinance

With millions of breadwinners out of work and unemployment payments delayed, a surge of applications for home equity loans and lines of credit jumped 30% or more from a year earlier in recent weeks before stay-at-home orders cut application volumes.

Happy adult man having a video call with a laptopHappy adult man having a video call with a laptop

Bank of America significantly tightened its standards for loans to homeowners wanting to borrow against their equity, ratcheting up an internal gauge that measures market conditions from the company’s lowest level to its highest. Its minimal credit score is now 720, up from 660.

Wells Fargo cut the maximum amount homeowners can borrow and reduced how much the bank will lend relative to a property’s value. The bank is applying stingier valuations to homes due to a lack of inspections and appraisals resulting from the pandemic.

Mortgage Credit Supply is Low

With mortgage rates at a historically low level and applications to refinance exploding, the Mortgage Bankers Association reported that the supply of available mortgage credit fell 16% in March, reaching the lowest level it has been since June of 2015.
“Mortgage credit supply decreased 16% in March to the lowest level since June 2015, with declines in availability across all loan types. There was a reduction in the availability of loans with lower credit scores and higher LTV ratios, and the largest pullback came from the jumbo and non-QM space,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

If you’re looking for more resources as a homeowner, renter, or seller during the coronavirus outbreak then visit our COVID-19 Resources page where you can find everything from DIY projects to tackle during a weekend to seller and buyer tips during the pandemic.


Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.

Source: homes.com

5 Telltale Signs That You May Not Be Ready To Buy a Home

If the dream of owning a home is on your bucket list, you’ve likely combed through listings, narrowed down your home preferences, and even attended a few open houses. But while you might be mentally ready to buy a home, your financial situation might tell a different story.

“Renters who are ready for homeownership should have their financial house in order before contemplating a purchase,” says Ben Creamer, co-founder and managing broker of Downtown Realty Company in Chicago. “I tell my clients to approach buying a home as they would for their job—it requires planning, diligence, and structure to be successful.”

There are a number of monetary factors that can rule you in—or out—as a viable candidate for a mortgage. Here are some signs you’re not ready to be a homeowner.

1. Crummy credit score

Those three little numbers, which are based on your history of financial stability and how responsible you are with your credit, play a big role in the mortgage process.

“A low credit score will directly impact your ability to get a mortgage loan for a home, because it shows that you have not been responsible with managing and paying down consumer debt,” says Creamer.  

He says a score that’s basement-level low—typically anything below 500—means a prospective buyer will likely not qualify for a home loan of any kind. If a credit score is low enough to flag the buyer as a credit risk, a loan may be approved but the terms will be more costly (e.g., having to pay more in loan origination points, a higher cash down payment, a higher interest rate, or all of the above).

“In the end, if you can’t manage consumer debt, you’re not ready for mortgage debt,” says Creamer.

On the other hand, having a high credit score (typically above 740) significantly improves your chances of receiving your loan’s lowest possible interest rate, says Lauren Brown, a real estate agent at Keller Williams Realty in San Diego.

“This way you can save thousands of dollars over the life of your loan,” she says.

2. Patchy job history

Lenders want to see a stable job history, so switching jobs every year or so might not look great.

“Job stability is vital to pre-qualifying for a loan to purchase a home. Most lenders require not only proof of employment but also ask for up to 12 months of financial statements to ensure you are qualified to take on a mortgage,” says Brown.

Creamer says a home purchase is not something that should be done on a whim, since the buyer is responsible for the mortgage payment every month for the next 30 years. 

“Banks want to see a steady, uninterrupted stream of income from a borrower. A prospective buyer who can’t commit to a job might want to rethink committing to a 30-year mortgage payment,” says Creamer.

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Watch: 5 Things First-Time Home Buyers Must Know

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3. Not enough money saved for a down payment

If you’re looking to buy a home, you should have saved and built a nest egg that can cover a down payment and any unforeseen expenses that may come up during the purchasing process.

“It’d be wise to save enough to cover at least a 20% down payment,” says Brown. This amount is typically recommended since it means the lender won’t require you to also pay for private mortgage insurance.

Of course, 20% down is not always realistic for most buyers. In fact, the average down payment in January 2020 was just 11.4%, according to real estate data firm Optimal Blue. That’s why, at the beginning of your home search, you should find an experienced real estate agent or lender that can give you a realistic picture of how much house you can afford and how much of a down payment you’ll need.

4. You can’t get a favorable loan

When shopping for loans you’ll become quite familiar with mortgage interest rates, aka the extra fee you pay your lender (based on your total loan amount) for loaning you the cash you need to buy a home.

Your financial situation determines the type of rates you qualify for, as well as the upfront fees you may have to pay. But if you’re not pleased with the terms of your mortgage, you shouldn’t move forward with the purchase.

“A higher percentage interest rate may not seem like a big deal, but it actually translates to tens or maybe even hundreds of thousands of dollars over the course of the loan. It’s better to hold off on buying until you can secure a more favorable loan,” says Creamer.

Brown advises speaking with your lender about developing a course of action to improve the terms of your loan.

5. Too much debt

Someone who is drowning in debt should tread carefully before juggling a home mortgage loan. 

“If you haven’t managed your consumer debt wisely, you’re not ready to take on a sizable mortgage debt,” says Creamer.

Brown says in a lender’s eyes, you probably can’t afford to add a mortgage payment to your budget if your other bills eat up 50% of your monthly income. She says it would be best to pay off any debts before purchasing a home.

Source: realtor.com

The Future of Homebuying: Questions to Ask in a Post-Coronavirus World

For almost all of the spring homebuying season, the real estate world has been rocked by ever changing guidelines and procedures due to COVID-19. As some states deemed real estate non-essential and federal guidelines tightened, buyers are experiencing a new landscape in real estate. As Americans slowly transition to the new normal, buying a home in a future that’s post-coronavirus may look a little different. Knowing what changes have occurred during COVID-19, as well as what questions to ask, is going a vital part of navigating the real estate world in the future.

gay couple buying a home gay couple buying a home

How Can I Tour the Property I Want?

One of the most obvious– and fastest– changes during the pandemic crisis was how buyers could safely enter the homes for sale. In most cases, this has been an individual brokerage decision, as well catering to the comfort level of sellers. However, there have been some general guidelines in place, as well as new alternative options, that allow buyers to continue their home search.

  • Masks worn by all individuals viewing the home
  • Requests for individuals that have travelled out-of-state to refrain from viewing in person
  • Shoe “booties” provided to buyers as they tour the property
  • Online virtual tours, like those available on Homes.com, which allow buyers to view the property from the comfort of their own home
  • 360 degree walking tours
  • Zoom tours with a Realtor. Many agents are offering this service to reduce the number of individuals in a property while also allowing people to view the home

In a world post-coronavirus, or at least, post the social distancing guidelines, these safety recommendations may still be in the future of homebuying and selling. People will likely want to stay protected from outside germs, so having extra precautions in place will be around longer than you might think.

Read: How to Buy a Home During the COVID-19 Crisis

Read: What You Need to Know About Virtual Open Houses in the COVID-19 Era

Is My Down Payment Assistance Program Still Available?

Many first time homebuyers have relied on down payment assistance programs to purchase a home without having to pay 20% down; however, once COVID-19 hit and unemployment increased, many of the programs were suspended. It is important to note that not all down payment assistance programs were suspended and in the near future as guidelines loosen, many programs, if not all, will resume. If you as a buyer are relying on a DPA program to purchase your home in a post-pandemic world, it’s important to ask the following questions:

  • Will I still get a rate lock on my interest rate?
  • How will this impact the homebuyer education course that may be required?
  • Will there be a delay in processing my loan?
  • How often will I have to submit employment verification?
  • Has the credit score requirement changed?

Am I Still Approved For My Loan?

Since COVID-19, many lenders have tightened the requirements on loans. For many, they have increased down payment requirements and credit score requirements. In addition, many lenders are doing more employment verification checks throughout the loan process. Buyers may experience a delay in loan approval as processing times have increased, and as we continue to see the requirements loosen up in a post-coronavirus world, loan officers might become busier than before. These are some things to keep in mind about loan approval post-COVID-19 to prevent your approval from being dragged out longer than you want. Ask your broker these questions:

  • What do you need to verify my employment?
  • Is there a new minimum credit score requirement?
  • Will I be able to put less than 20% down? If not, what are my options?

How Will The Closing Process Work?

As attorneys and title companies work to close transactions during COVID-19, many are taking extra precautions to effectively protect themselves, and the public, while still conducting business. Each title company and attorney may have varying precautions, and many are even offering alternative closing options. It’s likely that as we continue to move forward with loosening up the restrictions of social distancing, many of these companies will be continuing to exercise precautionary steps. Here are some options you may be seeing come with us in the future:

  • Curbside closings to offer minimal contact
  • Electronic wire funding providing a touch-free funding option
  • Personal protective equipment required at in-person closings such as masks and gloves

What If I Was In The Process Of Buying But I’m Furloughed?

An unfortunate effect of COVID-19 is that many previously qualified buyers were furloughed or laid off due to no fault of their own. Unfortunately, while lenders may sympathize with the situation, most will not approve a home loan to an unpaid furloughed employee. Since this is uncharted territory even for lenders, requirements may differ. It’s important to ask the right questions if you’re currently furloughed, or expect to be out of work in the future, but are still wanting to buy a home:

  • How will my furlough affect my loan approval?
  • Will my time of employment have to start all over again once I’m not furloughed?

As we all adjust to a new normal, even in real estate, what has been business-as-usual may look differently. Buyers may experience more delays and hurdles in the process, but it is still possible to buy a home during and post-COVID-19. To begin your home search, download the free Homes.com app or search online!


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

Years of Work Needed to Afford a Down Payment – 2021 Edition

Years of Work Needed to Afford a Down Payment – 2021 Edition – SmartAsset

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Assembling enough money for a down payment is typically the largest hurdle to clear when securing a mortgage. The median home price in the U.S. is up 14% year-over-year, according to a November 2020 Redfin report, and as the housing market gets more expensive, so too will the deposit that you have to front for a home. Working with professional financial advisors can help you strategize so that your money’s doing the most for you, but in some places compared to others, scraping together that bundle of cash can be particularly daunting. Keeping all this in mind, SmartAsset investigated where it takes longest to save for a down payment.

To do this, we examined data on the 50 largest U.S. cities, using median home values, median income figures and assuming that workers would save 20% of their income each year. We calculated the years needed to save for both the recommended 20% down payment as well a 12% down payment (the median down payment among all homebuyers in 2019, according to the National Association of Realtors). For details on our data sources and how we put all the information together to create our final rankings, check out the Data and Methodology section below.

This is SmartAsset’s fifth look at how many years of work it takes to afford a down payment. You can read the 2020 edition here.

Key Findings

  • Oakland takes over in the Bay. In the last three editions of this study, San Francisco homeowners have always needed to work longer than Oakland homeowners to afford a down payment. This year, however, Oakland has surpassed San Francisco and moved to the No. 2 spot, bumping the Golden Gate City to No. 3. San Francisco real estate is still pricier – with a median home value of more than $1.2 million – but the differences in average income make Oakland second only to Los Angeles on our list.
  • It still takes less time in Midwestern and Southern cities to assemble funds for a down payment. Residents in the East Coast and West Coast cities that comprise our top 10 will need more than three times longer to save up for a down payment than residents in the Midwestern and Southern cities that comprise the bottom 10. To save up for a 20% down payment, those in the top 10 will need to work an average of 8.90 years, compared to only 2.83 years in the bottom 10. For a 12% down payment, it will take 5.34 years for residents in the top 10 cities to reach their home buying goals, while it will take 1.70 years for residents in the bottom 10 to do so.

1. Los Angeles, CA

It will take residents in Los Angeles, California the longest to save for a down payment. The median home value is $697,200, which means that they will need to save $139,440 for a 20% down payment. If a person earns the median household income of $67,418 and saves 20% of that each year, then he or she will need to work 10.34 years to have enough money to afford a down payment.

2. Oakland, CA

In Oakland, California where the median home costs $807,600, a 20% down payment equals $161,520. The median household income here is $82,018, so a person saving 20% annually will need to work for 9.85 years to afford a down payment. For comparison, saving up a 12% down payment of $96,912 will require 5.91 years, but this means having to pay significantly higher mortgage payments.

3. San Francisco, CA

The median home value in San Francisco, California is $1,217,500 – the only city in our study with a seven-figure price tag. A 20% down payment on that median value would cost $243,500. With a median household income of $123,859, the average person saving 20% annually could afford a down payment in 9.83 years.

4. New York, NY

In the Big Apple, homeowners will need 9.81 years to make a 20% down payment on a home. The median home value is $680,800, which means a 20% down payment is $136,160. And for a comparison, a New Yorker saving 20% annually at a median household income of $69,407 will need 5.89 years to save for a 12% down payment of $81,696.

5. Long Beach, CA

Long Beach, California has a median home value of $614,400. To buy the median house with a 20% down payment, the average resident will need $122,880. If you earn the median income of $67,804 and save 20% of your income each year, then you will be able to afford a down payment in 9.06 years.

6. San Jose, CA

San Jose, California is in the heart of Silicon Valley, and as you might expect, the median home value is fairly high – at $999,990. A 20% payment on that home value is $199,980. The median household income in the city is $115,893, so if a resident saves 20% of his or her income each year, then the person could afford a down payment in 8.63 years.

7. Miami, FL

Miami, Florida is the only Southeastern city in the top 10 of our study. The median home value is $358,500, which means that a 20% down payment costs $71,700. The median income in Miami, however, is $42,966. So a resident saving 20% of that median household income ($8,593) each year could afford a 20% down payment in 8.34 years.

8. Boston, MA

It takes someone saving 20% of the median household income in Boston, Massachusetts 7.93 years of work to afford a 20% down payment on a home. The median home value is $627,000, with a 20% down payment coming to $125,400. The median household income in Boston is $79,018.

9. San Diego, CA

The median home value in San Diego, California is $658,400, which means that a 20% down payment is $131,680. Someone earning the median household income of $85,507 will need 7.70 years to afford that down payment. For comparison, a 12% down payment of $79,008 takes 4.62 years to save up for, with the caveat that paying a smaller down payment now means larger mortgage payments later.

10. Seattle, WA

Seattle, Washington rounds out the top 10 on our list, with a median home value of $767,000. This means that a 20% down payment is $153,400. So if you earn the median household income of $102,486, then it will take you 7.48 years – saving 20% of your income each year – to afford that payment.

Data and Methodology

To rank the cities where the average household would need to save the longest to afford a down payment, we analyzed data on the 50 largest U.S. cities. We specifically considered two pieces of data:

  • 2019 median home value.
  • 2019 median household income.

Data for both factors comes from the Census Bureau’s 2019 1-year American Community Survey.

We started by determining the annual savings for households by assuming they would save 20% of the median annual pre-tax income. Next, we determined how much a 20% down payment as well as a 12% down payment for the median home in each city would cost. Then, we divided each of the estimated down payments in each city by the estimated annual savings. The result was the estimated number of years of saving needed to afford each down payment, assuming zero savings to begin with. Finally, we created our final ranking by ordering the cities from the greatest number of years needed to the least number of years needed for each.

Tips for Hassle-Free Home Buying

  • Consider investing in expert advice. If you’re thinking of buying a home or starting to save, consider working with a financial advisor before you take the plunge. Finding the right financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors, get started now.
  • Prevent potential mortgage mishaps. The payments don’t stop after you’ve put money down; you’ll also need to make mortgage payments. Figure out what those might be before you move forward by using SmartAsset’s mortgage calculator.
  • It pays to read the fine print. When thinking about your home buying transaction, don’t forget closing costs. These may seem small compared to the down payment, but every dollar counts.

Questions about our study? Contact press@smartasset.com. 

Photo credit: ©iStock.com/valentinrussanov

Ben Geier, CEPF® Ben Geier is an experienced financial writer currently serving as a retirement and investing expert at SmartAsset. His work has appeared on Fortune, Mic.com and CNNMoney. Ben is a graduate of Northwestern University and a part-time student at the City University of New York Graduate Center. He is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance (CEPF®). When he isn’t helping people understand their finances, Ben likes watching hockey, listening to music and experimenting in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with his wife.
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