Mortgage Trends for Spring

Filed under: Market Comentary

buyers sellersFor the past several years, homeowners have seen their houses losing value. However, this is definitely starting to change as low mortgage rates continue and home prices are gaining value. With this happening, an increase in the number of buyers is expected to shop for homes this spring.

With that said, according to Fox Business, here are a few housing trends you can expect to see this spring.

1. There will be fewer options, higher prices, and bidding wars.

Attempting to buy a home this spring will definitely bring competition with it. According to data from the National Association of Realtors, the demand from homebuyers is growing faster than the supply of homes for sale. National Association of Realtors’ Jed Smith says that “buyers are encountering bidding wars in many parts of the country” and these “competing offers pose a challenge for first-time homebuyers.”

According to the Fox article, there were 1.94 million homes for sale nationwide as of February. That represented a supply of 4.7 months at that month’s sales pace and a balanced market requires about six months of supply.

2. The Loan Modification process will be made easier for some.

Many of the homeowners who are currently behind on their mortgage payments might get a hassle free opportunity to reduce their monthly payments. Starting in July, the FHA is going to require mortgage servicers to offer a “streamlined modification program” to borrowers with loans owned or guaranteed by Freddie Mac or Fannie Mae. The specifications on these “offers” will be geared towards homeowners who are least 90 days behind on their loans, but no more than two years behind. And, to qualify, borrowers must owe at least 80% of the home’s value.

In addition, this modification will reduce the loan’s interest rate and will extend the loan term to 40 years. There will also be minimal paperwork involved with the modification as borrowers will not be required to submit any financial documentation to the lender to gain approval. After the homeowner makes three payments during a three month “trial period,” the loan modification will become permanent.

3. FHA and their mortgage insurance.

Borrowers looking for a low payment mortgage will be charged for mortgage insurance for the “life of their loan” if they don’t get their FHA mortgage by June 2. The FHA currently requires borrowers to pay for mortgage insurance on FHA loans until the balance reaches 78% of the original value of the home.

It is important to know that once this change goes into effect, all new FHA loans with less that 10% down payment will carry mortgage insurance until the loan is refinanced or paid off. Loans with a 10% down payment or greater will have to pay for mortgage insurance for at least 11 years.

Spring looks like an excellent time to buy a home or sell the one you own. If you have any questions, please call me and set up an appointment so we can discuss your intentions.




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