RALEIGH/WINSTON-SALEM,N.C.–The Carolinas Credit Union League and two CUs in North Carolina have been offering video segments to the media as part of an effort to offer consumers more information on home shopping, especially as rates continue to rise.
Allegacy FCU and Coastal CU have been participating in the initiative to “put (consumers) on a more comfortable path to the American Dream.” The video segments feature Allegacy Mortgage Loan Officer Bob Church and Coastal Credit Union VP-Real Estate Operations Louis Guillama.
“Most (buyers) are quite apprehensive at everything that’s going on. Prices seem to be changing on an almost weekly basis. There’s this persistent scarcity of inventory,” says Guillama. “It really requires you to just go at everything at a moment’s notice and it doesn’t allow you a great deal of time to do some research on a pretty substantial offer.”
The CCUL cited data from the Mortgage Bankers Association Purchase Application Payment Index (PAPI) showing it had increased 8.8% from March to April 2022 and a cumulative 23.7% since January.
‘Take a Deep Breath’
“If you get in a bidding war, take a deep breath and sit deep in your seat if you’re going above list price,” Church, a 34-year lending veteran, advised in the video. “You have to be realistic about it. If you’re already $30,000 underwater, how long are you going to be in the house to recoup that? It takes years to pay down that amount of principal.”
In a statement to the media, the Carolinas league pointed out that on a 30-year mortgage for a $250,000 home in 2019, a typical buyer with 20% down would pay $1,178 monthly and $141,556 in total interest based on a 3.94% average rate. At 5.32% today, that buyer pays $166 more each month and $200,764 in interest over the life of the loan, the league stated.
“Then there are closing costs and prepaid taxes averaging $2,970 in North Carolina,” the league added.
‘Aim a Little Lower’
“Try to aim a little lower,” Guillama urged consumers, “because undoubtedly you’re going to pay a lot more than the asking price for a piece of real estate today. You want to shop at a lower price point to give yourself enough margin to still qualify at the new contract price.”
The Carolinas league also noted the Federal Housing Administration (FHA) says annual home expenses of up to 30% of income are “affordable.” Yet 45% of homeowners surveyed by Clever Real Estate earlier this year are spending more. Nearly one in three commits more than 40% of income to their homes, the league said in announcing the videos.
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