Not only higher mortgage rates make headaches for home buyers watching their buying power slip away — borrowers are having to pay extra to get the best rates.
"In addition to the increase in rates, what most potential borrowers do not know is that it is pretty much impossible right now to get any mortgage without paying discount points," said Scott Senner, senior loan originator with InterLinc Mortgage in Edmond. "One discount point is equal to 1% of the loan amount, and is a cost that is paid at closing in addition to all other closing costs."
Paying points is also called "buydown" or "buying down" a mortgage.
"Someone buying a primary residence can expect to pay between one and two points on their loan — or negotiate it into their purchase contract for the seller to pay it: Good luck with that," Senner said.
By the way, mortgage rates aren't high. Just higher.
"Can we afford it?" Interest rates are humbling OKC homebuyers
"They are only higher now than the artificially low rates that we enjoyed the past couple of years," Senner said. "Mortgage rates in the 3% range are not 'normal.'
"It was great while it lasted, don’t get me wrong, but as both the mortgage industry and the general public start coming down from the sugar high that we have had for the last couple of years, everyone needs to understand that we are in a transition to a much more 'normal' market."
Home price gains are cooling but still hot to the touch in OKC
Here are the clearest signs that home sales are slowing here:
Sales are down:
August 2021 sales: 2,143
August 2022 sales: 1,907
Percent change: -11%
And inventory is up:
August 2021 homes for sale: 1,940
August 2022 homes for sale: 2,753
Percent change: +42%
The bidding wars leading buyers to pay more than sellers are asking is subsiding slightly. Buyers paid 99.9% of the listing price on average in August, the first time in months for the average not to top 100%, according to the Oklahoma City Metro Association of Realtors.
The present inventory would last 48 days if no other homes were listed. In August 2021, there was a 33.5-day supply. This doesn't include for-sale-by-owner transactions or homes sold directly by builders and not through Realtors.
Homes that sold did so somewhat slower, in 14 days on average versus 12 days a year ago.
Read the full story on The Oklahoman.
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