We know that the Fed has started to taper it's quanitative easing program which has helped keep interest rates lower. So we expect that mortgage interest rates will slowly rise, but no one really knows how much they will go up. As the economy continues to slowly show signs of improving, the bond market will react with higher mortgage rates.
Home prices have increased. Existing home sales for November 2013 were right on target at 4.9 million, December and January look to be similar based on a seasonally adjusted, annualized basis. Home values have gone up about 9% over 2012.
With interest rates continuing to increase and home prices increasing, the beginning of 2014 could be a strong market. Anyone that is looking to buy will want to do so sooner to keep the price and rates as low as possible.
As far as mortgage programs and guidelines, it's too soon to know exactly what changes will come. We know that there will be some changes based on interpretations from the Consumer Finance Protection Bureau. Expect to see more documentation needed to prove income, especially if you are self employed or get commission or bonus income. The ability to repay the mortgage will come into play for some people.
FHA has given us some new rules for manually underwritten loans, but so far it hasn't affected any mortgages that are running through the automated approval process.
Remember that you can still buy with 3.5% down using FHA and zero down with VA and USDA loans. Conventional programs typically require 5% down unless you are using a special first time homebuyer program.
With rates and prices expected to increase, if you are looking to buy a new home, now is definitely the time to look. There should be more homes coming on the market with the holiday season over with, so it's a great time to start getting your mortgage approval so you are ready to buy.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants – Email – Website
