Agents working with clients shopping for a home get ready cause this year we can expect competition. Homeowners who experienced hardship in the years of declining home values will be happy to know that the game has changed in their favor.
Low mortgage rates and home prices have gained momentum, and an increasing number of buyers are expected to shop for homes this year. Here are five tips on what you should expect to see this spring.
Demand from homebuyers is growing faster than the supply of homes for sale. “It’s creating a little bit of a shortage and a mismatch between supply and demand,” says Jed Smith, managing director of quantitative research for the National Association of realtors. Buyers are facing bidding wars in many parts of the country, and competing offers present a challenge for first-time homebuyers.
2) Loan Modifications made easier
Homeowners who are behind on their mortgages may get a hassle-free opportunity to reduce their monthly payments. The federal Housing Finance Agency will require mortgage servicers to offer a streamlined modification program to borrowers with loans owned or guaranteed by Fannie Mae and Freddie Mac, starting in July. The offers will be sent to homeowners who are at least 90 days behind on their loans but no more than two years. Borrowers won’t be required to submit any financial documentation to the lender to get approval.
3) FHA loans lose appeal again
Borrowers seeking low-payment mortgages will be charged for mortgage insurance for the life of their loans if they don’t get their Federal Housing Administration mortgages by June 2. Once the change goes into effect, all new FHA loans with less than a 10 percent down payment will carry mortgage insurance until the loan is refinanced or paid off. Loans with a 10 percent down payment or greater will have to pay for mortgage insurance for at least 11 years.
4) Equity loans and cash-out refis are back – sort of
According to a recent study by CoreLogic, about 1.7 million homeowners regained equity in their homes last year, and an additional 1.8 million are close to it. All they need is home values to go up by another 5 percent, says CoreLogic. As home prices rise, millions of homeowners might consider turning to their homes as a potential source for a loan. Cash-out refinances and home equity loans are slowly returning, along with the temptation to tap into equity.
5) Mortgage rates rise at a snail’s pace
Mortgage rates are expected to creep up this spring but should remain low. The Mortgage Bankers Association estimates the 30-year fixed rate will reach 3.9 percent by the end of the first quarter this year. That’s not as good as the super low rates that borrowers saw in December 2012, but it’s still a good deal for most buyers and refinancers, housing experts say. “Rates are climbing slowly, but even by the end of year, they are not going to be astronomical,” says Smith. “They are still a bargain.”
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