Five Housing and Mortgage Trends That Will Dominate 2020

As you settle into 2020, your plans for this year might include buying a house or refinancing your current mortgage. But before moving forward with a home search or mortgage application, you might ask: Is now a good time to buy or refinance?

This is an excellent question, especially since mortgage and housing trends can vary from year-to-year, with some years proving better for purchases and refinances than others.

Getting a mortgage at the right time can have a positive impact on your bottom line. So, what can you expect in 2020? Here’s a look at five of the biggest housing and mortgage trends that will dominate this year.

1. Experts Forecast Mortgage Rates to Remain Low

Home loan rates have been at a historic low for several years. And the good news is that mortgage experts predict rates to remain relatively low in 2020.

Current rates hover around 4%, and they’re not expected to increase much over the next 10 to 12 months. What does this mean? This signals that the current market represents an excellent time to buy or refinance and take advantage of lower rates.

Refinancing involves applying for a new mortgage to replace an existing mortgage. Getting a lower rate can reduce your monthly payment, possibly saving you hundreds each month. And if you’re thinking about a home purchase, a low-interest rate can make homeownership more affordable. You’re also able to get more house for your money.

Of course, getting a low rate depends on your credit score. Typically, borrowers with the highest personal scores qualify for the best rates. To get the most favorable rate, aim for a credit score in the mid-700s or higher. Pay your bills on time, pay down credit card debt, and correct errors on your credit report.

2. Low Inventory for First-Time Homebuyers

Experts also predict that current homeowners will keep their properties for a longer period of time. And as a result, they expect a shortage of homes, typically within the $150,000 to $400,000 price. This can make it difficult for some would-be first-time homebuyers. Those looking to enter the real estate game might have a hard time finding homes within their price range. It won’t be impossible, but they should anticipate a longer search.

3. Be Prepared for Bidding Wars

Because of limited inventory in some price ranges, homebuyers should also prepare for the possibility of bidding wars. This is when another buyer competes for the same property, causing the price to increase as offers and counter offers are made.

Many people see low mortgage rates as an opportunity to enter the housing market or buy another property. This way, they get an affordable home loan before rates increase. Low inventory, however, means that buyers could fight for properties, which can potentially drive up the final price of a home.

4. Real Estate Companies Offering to Buy Homes

A housing trend that’s gaining traction involves owners selling to real estate companies, rather than putting their houses on the open market.

If you need to sell quickly, companies like ibuyer and Zillow Offers might provide an instant offer on your property. You can receive a no-obligation offer without having to list your property or deal with open houses.

The real estate company purchases the home and schedules closings at your convenience. You sell your house to the real estate company, and the company resells the property within a few months.

5. Cash-Out Refinances Will Remain Popular

Mortgage experts also predict that cash-out refinances will remain popular among current homeowners. In 2019, American homeowners had an estimated $19.7 trillion in equity. For some, this equity represented an opportunity to sell their home and use the proceeds as down payment on their next property. Others, though, chose to stay put, and some of them refinanced their mortgages to borrow cash from that equity.

A lump sum from a cash-out refinance can be used for home improvements, debt consolidation*, college expenses, and other purposes.

Final Word

This year is an excellent time to get a new mortgage. Whether you’re interested in a purchase or refinancing, the loan experts at Blue Spot Home Loans can provide guidance and advice. To start your application, fill out the contact form or give us a call today.

*Debt consolidation does no pay off the debt, please consult a financial advisor regarding the effect of consolidating short-term debt into long-term debt.