Spring 2013 can be a different ball game altogether for the home buyers and sellers. It is expected that the mortgage and the housing trends will change this year for the better. Low mortgage rates coupled with increase in home prices have attracted the homebuyers to shop for homes during this spring. Moreover, as more people will be buying homes, the inventory of homes kept for sale will lower. As a result, there will be less competition in the market from the seller's point of view.
Let's take a look at some of the mortgage and housing trends in spring, 2013:
1. Mortgage rates will creep up: Yes, that's true… mortgage rates are going to creep up this spring! However, all in all it will remain low compared to what it was is 2006 – 2007. According to the Mortgage Bankers Association, the 30-year fixed rate will reach 3.9% by the mid of this year. But again, thinking from a borrower's point of view, this will be a good deal.
2. Refinancing mortgage: Your home can now turn into an ATM. As home prices are rising, most of the homeowners will find that their property has started to gain equity. Once there is equity in the property, one can easily refinance it and take cash out. But in case you don’t have good credit scores and ample equity, lenders may not be ready to refinance the loan.
3. Eternal payments: There have been some changes in the rules and guidelines of FHA loans. Those homeowners who want low-payment mortgages will have to pay mortgage insurance for the life of their loans if they don't get their Federal Housing Administration mortgages by June 2, 2013. Once the new rule goes into effect, all new FHA loans with less than a 10% down payment will have to carry mortgage insurance unless the loan is refinanced or paid off. Those who pay 10% or more than 10% down payment will have to pay mortgage insurance for at least 11 years. This new rule can have a huge impact on those home owners who plan to stay in the property for more than 10 years. Though they can refinance the loan, we never know what the rates would be at that time.
4. Less paperwork: Homeowners may now get a quick and hassle free way out to lower their monthly mortgage payments. The Federal Housing Finance Agency wants the mortgage servicers to offer a streamlined modification program to borrowers, who have loans owned or guaranteed by Fannie Mae and Freddie Mac starting from July, 2013. The option will be available to those homeowners who are at least 90 days behind on their loans but not more than two years behind. To get this option, the borrowers must owe at least 80% of the home's value. Also, the borrowers may not have to submit any financial documentation to the lender to get approval. If the borrowers can make 3 regular payments when they are in the three month trial period, the loan modification will become permanent.
5. Competition: If you plan to buy a home in spring, 2013, you will have to face competition. The inventory of houses has started to reduce slowly. As a result, there will be a small difference between supply and demand. So, the demand from the end of the buyers will increase.