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Homebuyers are rushing to get mortgages before higher rates price them out

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Mortgage rates are rushing higher, and last week that caused a major divergence in mortgage demand.

Refinancing continued to dry up, but homebuyers appear to be rushing into the market. As a result, total mortgage application volume rose 2.3% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.64% from 3.52%, with points remaining unchanged at 0.45 (including the origination fee) for loans with a 20% down payment. That rate was 72 basis points higher than the same week one year ago and has increased more than 30 basis points in just the last two weeks.

As a result, applications to refinance a home loan, which are most sensitive to weekly rate moves, fell 3% for the week and were 49% lower than the same week one year ago. The refinance share of mortgage activity decreased to 60.3% of total applications from 64.1% the previous week

“Mortgage rates hit their highest levels since March 2020, leading to the slowest pace of refinance activity in over two years. FHA and VA refinance declines drove most of the refinance slowdown,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Mortgage applications from homebuyers, however, jumped 8% for the week, although they were still 13% lower than the same week one year ago. The activity appears to be on the higher end of the market, where there is more supply. The average loan size for a purchase application set a record at $418,500.

“The slower growth in government purchase activity is also contributing to the larger loan balances and suggests that prospective first-time buyers are struggling to find homes to buy in their price range,” added Kan.

Demand for housing continues to be strong, as supply did not increase as it normally does in December. Some buyers may be getting a jump on the usually busy spring market, concerned that rates will be even higher in a few months.

Paul Legere, a buyer’s agent with The Joel Nelson Group in Washington, D.C. calls the activity, “unprecedented.”

“Some lenders I work with say they have had more first-time homebuyer applications in the last couple of weeks than they’ve seen in 20 years,” said Legere, adding that he just wrote an offer on a $1.3 million home with an escalation clause up to $1.625 million ... and lost.

Learn more.

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How To Become Head of a Household: Homebuying and Mortgage Guide for Singles

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Many people might picture homeownership as an event that happens only after two people get married and start a financial partnership.

Some mortgages are still structured to reflect that idea. But nowadays, more single people without children are investing in their own homes.

In fact, the share of U.S. single homeowners is the highest it’s been in more than 100 years, according to an analysis of U.S. Census Bureau data by Haus.

Given rising home costs, the reduced buying power that comes with a single income, and the way mortgages are structured, becoming a homeowner as a single person might not seem easy. But it is entirely doable.

We reached out to real estate and financial professionals for advice on how a single person can buy a home within their budget. Read on for their tips and insights.

Tip No. 1: Consider government-insured loans

Even if it’s substantial, having one income to pay the bills inherently increases the risk for a lender.

“A single person can’t rely on a partner’s income for a mortgage, so if something major happens—like a medical emergency or a significant reduction in income—it will be difficult to make mortgage payments,” says Kris Lippi, a licensed real estate broker in Connecticut. “It can also be difficult to make that initial down payment. Government-insured loans are a good option and have a lower down payment requirement, too.”

One example is the mortgage program run by the Federal Housing Administration (FHA). While a conventional mortgage requires a 20% down payment, an FHA loan requires only 3.5%.

In addition, veterans should consider a VA Loan, backed by the Department of Veterans Affairs, which can help borrowers get lower interest rates with no required down payment or monthly mortgage insurance premiums.

Tip No. 2: Don’t think (too) big

Consider how much space you need as a single homeowner without a partner or children.

“Look for smaller houses with one or two bedrooms and one bathroom,” advises Martin Orefice, CEO of Rent To Own Labs. “You’ll end up with a much lower mortgage that way.”

Having a more manageable space will also reduce all your costs and bills.

Tip No. 3: Improve your credit score

Focus on your credit before you try to get a mortgage.

“If you’re in a lot of debt, it will be virtually impossible to secure a mortgage,” says Michael Dean, a real estate broker and co-founder of Pool Research.

For most loans, you’ll need a credit score of around 600, but a score of 700 or higher will help you secure lower interest rates. According to the Federal Reserve, 90% of mortgages in 2019 were taken out by people with a credit score that was higher than 647, and 75% of mortgages were taken out by people with a score of over 700. The median credit score was 759.

You’ll need to pay off all significant outstanding debts and pay your credit cards and bills on time to raise your credit score. (Payment history makes up about a third of your credit score).

Remember, higher scores also mean you’ll be able to make a lower down payment, which may be necessary if you are to snag your dream home.

Tip No. 4: Beware of big mortgages

Just because a lender will approve you for a larger mortgage doesn’t mean you should dive in and accept it. Remember, you alone will be carrying the nut, so be extra cautious about the size of your monthly mortgage payments.

You should think carefully before opting for an adjustable-rate mortgage (ARM). ARMs begin at a fixed interest rate that is usually lower than a comparable fixed-rate mortgage. But an ARM rate will change after three, five, seven, or 10 years, and the rate will adjust based on market indexes. Sometimes this means your initially low ARM rate will shoot up and raise your monthly mortgage payment.

“If you go with a fixed mortgage rate, you’ll be able to plan ahead and budget your spending accordingly,” says Dean. “You need to know where you are putting your money and what is expected in terms of payments if you are the only one paying the bills.”

Tip No. 5: Consider a co-signer

If bad credit or other issues are interfering with your dream of owning a home, consider adding a co-purchaser to your mortgage, whether or not they intend to live with you.

Co-signing or getting a loan is a great option, says David Aylor, the founder and CEO of David Aylor Law Offices in Charleston, S.C.

“If you have family members that can lend you cash to make your down payment, it can be worthwhile,” adds Aylor. “But you should only take that route if you come to a reasonable agreement, crunch the numbers, and determine that you’ll all be able to make the budget work.”

Tip 6: Make a comfortable down payment

Down payments can be a tricky business. Saving for one can be difficult, but if you can put down a substantial down payment, your monthly bills will be lower, and you’ll have a chunk of equity in your home.

“You’ll be footing 100% of the monthly payments yourself, and the bigger your down payment, the lower your monthly bills will be,” says John Li, co-founder and technical lead of New York’s Fig Loans. “You don’t want to become ‘house poor’ and struggle from month to month to meet your steep payments.”

Get more tips like these on Realtor.com

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As Featured in West + Main Home Magazine: Stuff We Love!

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West + Main agent Megan has a side-hustle...and we're obsessed! Her knack for sourcing one-of-a-kind antique and vintage rugs through her company Randi's Rugs is a wonderful bonus for her real estate clients too!

W+M Agent

Megan Pierce

Anderson

Vintage Persian Heriz

8x11 1970's Wool

$1,625 

ROBERT

Vintage Persian

6x8 Wool Rug

$1,025

SAM

Vintage Persian Nain Wool and Silk

4x6 Area Rug

$525



If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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5 DIYers Share the Under-$100 Home Projects on Their To-Do Lists for 2022

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A DIYer’s work is never finished. There’s always something that can spark inspiration and a project that needs to get done.

Maybe a popular item has swept social media, and they want to see if they can do it differently for their followers. Perhaps they’ve been putting off a detail in their home that could use some attention, or it could finally be time to commit to an overhaul that’s been under lots of consideration. Given their wide-ranging creativity and penchant for photo-ready projects — from bathroom redos and kitchen accessories to backyard updates and bedroom must-haves — it’s thrilling in its own way to see what’s next. 

With a whole bunch of 2021 projects successfully behind them, we asked a few DIYers what they have in store for the next 12 months. But instead of letting their imaginations roam freely, we had a small caveat to that question: We also sought to know if any of those projects can be accomplished for less than $100. 

The responses I got range from big projects that span entire floors to little ones that barely cover a wall. They also note how keeping control of a budget can be good for the environment, since reusing paint, sifting through thrift stores, or upcycling furniture is as kind to a wallet as it is to the environment. As 2022 gets underway, let these creatives inspire you to think about the projects you’d like to accomplish alongside them, including the ideas they list below. 

Read on to learn which projects are on their radars, and keep an eye out for their work in 2022. 

Painting a Mural

Catherine Meschia, a DIYer at Ctrl+Curate, has plans that are mostly personal, but based on her highly approachable portfolio, many readers will likely be able to follow her lead. 

“I’m looking forward to tackling a mural in our nursery. We’re expecting our first baby in March, and we’re feeling the pressure to get his room ready. Right now, it’s just a white box with no personality,” Meschia says. “I want to tap into the rich, tropical colors we have around us in Florida to make him feel connected to our home state. I’m planning on using chalk to draw out large-scale leaves, and choosing from sample-size paints to stretch the colors and budget. It’ll be cheaper than installing a mural, and I’m looking forward to getting into a therapeutic flow with it.”

Upcycling Old Furniture

Designer and DIYer Geri Alessi of Geri Loves Emi Paper Co. is hoping to incorporate more earth-conscious practices into her projects next year, including for a piece in her daughter’s room.

“In 2022, I want to work on being more sustainable wherever possible, and instead of always replacing old with new, I want to dabble in more furniture upcycling projects. In my daughter’s room, for example, there’s an old IKEA cabinet. I’d like to breathe new life into it by using a mixture of sample-size and leftover paints, adding half-wood dowels to the doors, and then placing new handles on top. It will be a simple but really impactful change.”

Refreshing a Laundry Room

DIYer Stacie Abdallah of Stacie’s Spaces has a lot of ideas brewing for the coming year, but she’s most excited to tackle an area that often needs more design attention: the laundry room. 

“My 2022 project list is ever-evolving, and the year hasn’t even started yet. One of the projects on my list is a laundry room refresh, and it should be less than $100 for sure,” Abdallah says. “We are going to add a quick board-and-batten treatment, lots of paint, a little stain, a new light fixture, and maybe some peel-and-stick wallpaper. I know that sounds like a lot, but it is a small space, and we already have some of the materials. As for everything else, I’ll be looking for deals! This room doubles as our mudroom, and with three little boys, it gets a lot of wear and tear. It’s time that we show it a little love — on a budget!”

Painting a Neglected Area at Home

Casey Finn of DIY Playbook has big ideas for 2022, starting with her basement. Her plan to make it feel more welcoming is one more example of how a simple coat of paint can sometimes have the strongest impact. 

“Since we bought our home, the basement has been pushed to the bottom of our to-do list. That all changes in 2022!” Finn says. “My first task? Paint! For a $45 gallon, you can make any space in your home look completely different and refreshed. I’m planning on a dark, moody navy for the entire basement, including some of the ceiling to hide the ductwork. I know a painting project isn’t the most exciting DIY, but it’s something everyone can do, and it will instantly change the way a room looks and feels.”

Creating Original Art

Trisha Sprouse, who DIYs for various home publications and runs the Vignette blog, wants to see if she can figure out a way to make an often pricey home item much more attainable in the new year. 

“In 2022, I’d love to add more artwork to my home. Instead of spending a ton of money on new or expensive art, I like to find thrift store pieces that I can easily flip,” Sprouse says. “For instance, if I find a great frame, I’ll replace the existing artwork with a new print that I’ve downloaded from the internet, and perhaps gild the frame with some Rub ‘n Buff. Or I’ll paint over an outdated canvas painting with spackling to give it a minimal makeover with fabulous texture. It’s such a simple and sustainable way to create new art by upcycling older pieces — and very budget-friendly, too.”

Get more DIY inspo on Apartment Therapy.

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6 Mortgage Tips for Single Homebuyers With Children

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If you’re a single parent, it’s arguably more challenging to buy a home than for those in a partnership with dual incomes.

Yet it’s easy to see why so many single parents are eager to purchase a house. Beyond finding a perfect kitchen and playroom, owning a home is an integral part of building a healthy financial future.

And while homeownership may seem like an increasingly out-of-reach dream for single moms and dads, buying a house is definitely an achievable reality for most folks. To help inform you on this journey, we reached out to experts for tips on how to land a great mortgage as a single parent.

1. Leverage benefits

When applying for a mortgage, be sure to include any alimony and child benefit payments you receive.

“The most significant leverage a single parent has against lenders is his or her benefits,” says David Clark, a lawyer and executive partner at the Clark Law Office in Lansing, MI. “As a borrower, it’s essential to establish your capability to pay. So highlight the monetary amount you receive from child benefits, tax credits, and maintenance fees as all of these can be taken into account.”

2. Remember the 25% rule

Single parents have to carry a mortgage by themselves. With that in mind, it’s wise to leave plenty of financial wiggle room when shopping for a home. (An affordability calculator can help you determine what monthly payments you can swing.)

“As a single parent, you also have more ‘what ifs’ to worry about, so it’s important to give your budget breathing room for emergencies and extra child care costs,” says consumer finance expert Andrea Woroch, who’s based in Bakersfield, CA. “You should aim for your monthly mortgage—including taxes and insurance—to be around 25% of your income. This way, you have enough to cover house costs, child costs, and still reach savings goals, such as saving for retirement and college.”

3. Make a significant down payment if you can

No matter who you are or your financial and life situation, making a substantial down payment on a house will pay off.

“Getting a good mortgage rate can be a challenge for a single person,” acknowledges Kevin Miles, a finance analyst for Loan Advisor. “Making a big down payment will not only improve your chances of getting a good lender but also getting a better deal on your mortgage. It will also lower your monthly payments moving forward.”

Miles adds that having a good credit score (740-plus is considered optimal) will improve your odds of getting a reasonable mortgage rate, because good credit lets lenders know you can keep up with financial commitments.

4. Consider specialty loans or down payment assistance

Can’t swing a large down payment? That’s OK. As a single parent, you may be able to qualify for loans that require much less than the standard 20% down payment.

“A conforming, aka conventional, loan may only require a down payment as low as 3%, with a mortgage insurance add-on,” says Andrina Valdes, chief operating officer of Cornerstone Home Lending, in San Antonio, TX.

One of the best loans for single parents is from the United States Department of Agriculture, says Stephen Keighery, CEO and founder of Home Buyer Louisiana.

“The USDA loans are particularly helpful because most feature low-interest rates and do not require a down payment,” says Keighery.

The catch? “You have to ensure that the property is within the USDA-eligible area. It also requires you to pay a mortgage insurance premium upfront, but it’s significantly lower than many other premiums,” he adds.

And if you’re a teacher, firefighter, EMT, or member of law enforcement, Valdes says, the Good Neighbor Next Door program can get you up to 50% off on a foreclosed home.

5. Look for local loans

No matter what type of loan you ultimately try to secure, try to find a local lender.

“Working with a mortgage professional who is local to your market can be a huge asset,” says Michael Belfor, a mortgage banker and branch manager at American Pacific Mortgage in San Francisco.

“There are so many online platforms offering seemingly great deals, but that utilize loan officers out of the area or in call centers that may be completely out of the market,” Belfor adds. “This can make sorting out market-specific details very challenging.”

6. Beware of adjustable rates and multiple applications

The Federal Reserve may hike interest rates soon, so getting a mortgage with a fixed rate is critical.

“A 30-year fixed mortgage will allow a single person with kids to accurately forecast their monthly expenses,” says Nick Janovsky, global real estate adviser at Premier Sotheby’s International Realty in St. Petersburg, FL. “You should also watch out for pre-payment penalties. These are penalties the lender would charge you for selling the home within a set period of time.”

And beware of applying for multiple mortgages with different companies in a quest for the best offer.

“Each time you apply, they pull your credit, which reduces your credit score,” says Janovsky.

Learn more.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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