By Matt Sapienza | Loan Consultant
What a wild ride interest rates have been on in 2022.
There have been major changes in the real estate market from the beginning of the year until the end of the third quarter.
We have seen interest rates double in a six-month period, adding to inflation for homebuyers as people from all over the country continue moving to Florida.
There has been a 25% decrease in funded purchase volume the past couple of months as the market adjusts to higher rates.
Changes have been made to the way and time it takes to lock our loans and even the need to requalify purchasers and those looking to refinance.
This has led to a couple of new approaches and brought back others as well.
From Q1 to Q3 clients and agents are going through a roller coaster to determine their accurate purchasing power. I have had several clients needing weekly check-ins to make sure their offers would still fit their budgets.
This has made our 90-day “Lock and Shop” option popular for many. The option allows clients to lock in their rate prior to finding a home.
However, to keep that rate, the buyer must close the loan within that 90-day period.
We also have added extended rate lock options for builder partners and clients, which allowed us to protect the client’s interest rate for up to 360 days. This has brought peace of mind to countless clients and made monthly payments much more manageable.
Those refinancing a primary home loan have all but gone away. But we remind each client purchasing now that refinancing is an option when rates come back down.
Investor cash-out refinances and primary HELOCs (home equity line of credit) have still had great success as this allows both to take advantage of increased equity in homes.
The great increase in rental rates is pushing investors to continue to buy and brought back many first-time homebuyers who are tired of not owning because of their high monthly rent payments.
Rates are still trending upward, but we expect some relief in the middle of next year, making it even more important to work with knowledgeable professionals.
Matt Sapienza is a Loan Consultant with Loan Depot.