With less new homes available for sale homeowners can earn more money with a proper sale of homes due to increases in home value. So called “bidding wars” are cropping up throughout the United States as homeowners sell into a market rife with competition. Analysts mention that the current market has insufficient houses for sale to be balanced. Balanced housing markets of the past have had a 6 month supply of salable material whereas the US currently has 4.7 months of supply given current sales prices and rates. To give some perspective, at this time last year, a supply of 6.4 months was seen by the housing market. Though, it should not be said that this is an unattractive time for home buyers, as both home prices and mortgage rates are very appealing, which is probably feeding the skewed rate of growth of home buyers to home-sellers. Business Insider’s article on housing and mortgage trends highlights more about the housing situation in general and what to expect from the coming months, like what is below.
Home owners behind on home loan payments might get a window to lower monthly payments. Soon enough, the fed is going to require mortgage providers to keep a modification system streamlined for the borrowers with loans by Freddie Mac or Fannie Mae, this program will start in July of this year. From there, mortgage providers will begin to send out to home owners who are between 90 days overdue but still shy of 2 years overdue. Specifically to those who still owe 80%, or more, of their home’s value who fit the paid bracket. This program would lower payments on houses by extending the loan term to 40 years and would require little to no paperwork. Once three consecutive payments have been made on the new plan it becomes the new fixed rate and solidifies the mortgage modification.
FHA loan appeal is dropping as borrowers will start needing mortgage insurance for the duration of loans if they should fail to obtain FHA mortgages by the second of June. This is a little of a change from the current normal which states that mortgage insurance is not required after 78% of original home value on FHA loans. The new system would entail that the mortgage insurance on FHA loans with low down-payments (1-10% home value) is required to pay into mortgage insurance until either the home is paid off or refinanced while those with greater than 10% home value down payment are required to cover insurance for eleven years.
This isn’t a terribly big deal for those who don’t plan to still be living in the same house for the next 10 years, and for those who do the option always exists to refinance down the road. This is a bit of a gamble though as we don’t know where rates will be in 10 years.
Another trend is showing more homeowners using their homes much akin to an ATM with cash out refinancing. This is a slowly growing practice, but, with good credit ratings people planning to use the funds for higher education can still find lenders who are undaunted by the history of this type of financial loan, which in the past lead to the economic meltdown of mortgages. Home loan rates are still rising, expected to reach 3.9 percent on the average 30 year fixed rate by the end of the quarter, but shouldn’t get much higher.
With the current state of the housing market, it is very much a seller’s market. Right now is a great time to buy or refinance homes, through Rate State, due to low interest rates and reasonable home prices. As for those of us looking to keep our houses, options are available to help solidify your home ownership with loan modification starting in June, as well as to refinance your home for a lower monthly rate. If you can hold that rate for 3 months, it becomes the new rate for your home.