In light of the Federal Reserve’s efforts to combat inflation by raising interest rates, mortgage payments and rates have been affected. But here’s some great news for prospective home buyers: there’s a new program designed to ease the burden of your mortgage payments.
Introducing the ‘Inflation Relief Mortgage Rate Program’ from select lenders! This program offers a 1% reduction in your interest rate for the first 12 months as inflation begins to stabilize. When the Federal Reserve adjusts its policies, you’ll have the opportunity to refinance and potentially lower your mortgage payments.
Here’s an example of how it works: A homebuyer purchases a home for $650,000 with the Inflation Relief Mortgage Rate Program and they save around $400 on their payment each month for the first year, resulting in total savings of $4,800. After 12 months, payments return to its standard rate, allowing ample time to explore refinancing options for a lower monthly payment.
This program is giving homebuyers more flexibility in their payment for the first year – a time when they are usually buying new furniture, décor, making improvements or customizing the home to fit their style.
The Inflation Relief Mortgage Rate Program works in conjunction with most traditional loan programs out there. Homebuyers can go to @whatsamortgage on Instagram to learn more about how the program works and where to apply.
In 2021, homeowners with mortgages (63% of all properties) in the U.S. have gained a total of over $3.2 trillion, or a 29.3% increase in home equity since 2020. The number of residential properties with negative equity dropped by about 3% from 1.5 million homes in 2020, to 1.1 million homes in 2021.
Negative equity: Borrowers whose remaining mortgage balance is higher than the value of the home.
Home equity is affected by market price changes. When home prices change, borrowers close to the negative equity range (around 5%) will either move out of, or into negative equity. If home prices increase by 5%, 141,000 homes would regain equity. If home prices decrease by 5%, then 183,000 homes would move into negative equity.
According to reports from CoreLogic, 2021 home prices increased by 18% during Q4. That’s 10% higher compared to 2020, which showed an 8% increase at the end of Q4. The rising appreciation of homes year over year have decreased the national negative equity numbers to the lowest they’ve been in the last decade, with homeowners in California dropping below 1%. Homeowners on the west coast averaged the biggest increase in equity across the nation. California homeowners gained $117,000, Hawaii homeowners gained $128,300 and Washington homeowners gained $95,500.
The average homeowner in the U.S. gained roughly $55,300 in home equity during 2021. Insights from CoreLogic project that home prices will likely increase by 5% from Q4 2021 to Q4 2022. The Home Price Index for January 2022 shows home prices have already increased by 19% compared to January 2021. However, home equity growth is projected to slow over the remainder of 2022.