Rate Expectations
We sit down with our favorite lender to talk percentage points and what we can expect in 2023.
We thought we’d start the year off right with a glance ahead. For those of you who might be considering making a move, now is a good time to take stock and get organized. And that means a look at the numbers. Though inventory is typically low in the winter months there are still great opportunities and it’s wise to have your ducks in a row just in case. For many of us, securing financing is a crucial part of the home buying process. The good news is that you can (and should) take steps now so that when your dream home comes along, you’re ready!
Chris Albanese of CrossCountry Mortgage took time to talk about mortgages with us and get into the nitty gritty of financing. He’s incredibly creative, professional, knowledgeable and has been a trusted advisor and resource to many of us personally and professionally here at Upstate Down.
UD: What can we expect in the year ahead in terms of interest rates and home mortgages? How do you think this will impact our local market?
CA: The simple answer: rates will continue to fall. The last few years we had extremely low rates due to the pandemic followed by rising rates throughout 2022. Before rates jumped, there was a wild imbalance between supply and demand. Most buyers became jaded by higher rates and extreme price moves. Many dropped out from the market. I suspect that demand will perk back up next year as home prices either soften or level coupled with financing terms becoming more favorable. As supply chains, consumer spending and overall markets further normalize, rates will trend in the exact same direction as the inflation data. This will trickle down to our local market. The overall 2023 economic outlook is not calling for big gains most anywhere. Housing, however, looks positive.
UD: What are some strategies for prospective buyers in this market?
CA: The best strategy from a financing perspective is to have your pre-approval situation vetted and lined up for the buying opportunities. Buyers, do not focus on mortgage rates as a barrier to entry! Rates are temporary snapshots in time that can be revisited when lower rate opportunities become available. Focus on the price you want to pay for the asset and try to benefit from the softening environment.
UD: Historically we’ve been in a second home market. Now, we’re also seeing more work from home folks choose the Hudson Valley as their full-time home. Can you explain the difference between a primary home, a second home, and an investment property from a lender’s perspective?
CA: The most flexible lending options as well as most advantageous rates will always apply to a primary residence purchase transaction. A primary residence offers the ability to put as little as 3% down compared to that of a second home and investment properties where the minimum down payments are 10%-15% respectively for most programs available. The rate on the non-primary residence transactions are firmly higher compared to that of a primary residence.
UD: What’s an appraisal and why does it matter?
CA: An appraisal report establishes the market value of a home based on similarly sold homes within a 6-12 month look back – commonly referred to as sale comps. The market value of the homes serves as the collateral to the mortgage that’s being secured. It’s critical for lenders to establish this value through an appraisal to ensure the loan has sufficient backing in place.
Appraisals also serve as a layer of protection for buyers. If the purchase price is not supported by an appraisal, the buyer's financing is potentially in jeopardy, sometimes allowing the buyer to renegotiate the price.
UD: What should prospective buyers look for in a lender or keep in mind when shopping for a mortgage? What products or services do you offer that might be different from other lenders?
CA: This is a great question. Buyers should really look to work with someone who is willing to educate and explain the process thoroughly and clearly. There are a lot of moving parts to purchasing a home. No questions should ever go unanswered and no conversations should be rushed.
UD: Can you tell us more about CrossCountry Mortgage?
CA: CrossCountry Mortgage (CCM) is a mortgage bank – not a traditional broker or traditional retail bank. We do not hold any depository funds – we strictly are a lender of mortgages. Traditional banks typically cater to a narrow segment of buyers. On the other end of the spectrum are brokers, who generally will have more options than banks. However, brokers do not actually make credit decisions or have the ability to lend and fund mortgages. CCM falls smack in the middle: we are a direct lender, which means we are making the credit decision, and we have firm control over the process of underwriting and funding (similar to retail banks). However, we have a vast investor base which allows us to tap a significant range of offerings & programs, more similar to a broker. We have the investor variety of a broker and the control of a bank. To me, the best of both worlds!
Upstate Down Q&A
With Chris Albanese
What’s your favorite farm or farm stand in the Hudson Valley?
Barton Orchards – My wife used to live across the street from this farm so always soft spot for them!
What’s your favorite restaurant?
I love food, I have too many favorites!!!
What do you love most about your home?
My front porch – Not even a question!
