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8 Mortgage Tips for 2014

Househappy —  January 17, 2014 — 2 Comments

mortgage-ratesEarly 2014 might be a good time for buyers and homeowners to grab a low mortgage rate. If you keep your finances in order and act quickly, you will still have time to grab a great mortgage deal.

These 8 mortgage tips from MSN Real Estate can help you with your decisions in 2014:

1. Document your finances. With the new mortgage rules going into effect this month, lenders will be extra diligent when underwriting loans. Make sure to keep records of your finances, including bank statements, tax returns, W-2s and other assets you own. Lastly, be ready to explain any unusual deposits to your accounts to help close your loan faster.

2. Lock a rate as soon as you can. Rates will likely increase during the year with the Federal Reserve reducing the pace of the economic stimulus program. If you are planning to get a mortgage, lock in a rate as soon as you are able to.

3. Refinance now – if you still can. Those who are still paying more than 5 percent interest on their home loans might still have an opportunity to refinance at a lower rate. It doesn’t hurt to try. Talk to a loan officer and have them look over the numbers.

4. Buyers, use your bargaining power. Lenders lost a big portion of their refinance business when mortgage rates increased. This year, they will give more attention to homebuyers thus creating more competition. Buyers should take advantage of bargaining power and should shop around for the best deal and look beyond the interest rate on the loan.

5. Learn your rights as a borrower. Mortgage borrowers will get more new rights as consumers when the new mortgage rules go into effect this year. Make sure to be aware of your rights so you don’t run into any problems.

6. Take good care of your credit. If you are planning to get a mortgage, make sure to monitor your credit history and score until your loan closes. For the best rates, keep your credit score around 720 or above.

7. Don’t overspend. Lenders won’t want to give you a loan if you have little money left over at the end of each month. Try to keep your debt obligations below 43 percent of your income.

8. Consider alternative mortgage options such as ARMs. Depending on your plans, and how long you think you will keep your house, there are many different mortgage options. Rates on adjustable-rate mortgages can be as much as one percentage point lower than on fixed-rate loans. Although if you don’t know how long you plan to keep your home, a fixed-rate loan may be the better choice.

This article can be found in its original form on MSN Real Estate.

Photo: Total Mortgage

Home for sale via Househappy.org

2013 was a year of highs and lows in the housing market, so what should we be looking for in the year ahead? According to the Wall Street Journal, here are 5 “wild cards to watch” in 2014:

Will inventory rise? 

Though evidence shows that inventories likely bottomed out in 2013 and many markets are moving in favor of buyers, inventory numbers will remain tight. Contributing factors: foreclosure-related listings have fallen, traditional buyers still aren’t listing homes in high numbers, and new construction will take years to return to normal levels.

Where is the home-construction recovery? 

While home prices have begun to recover, they are still too low to justify the land, labor, and materials costs in new construction. Contributing factors: credit is harder to come by for smaller builders, and move-up buyers don’t have enough equity to “trade up” to a new home.

What happens to mortgage credit? 

Mortgages may be easier to come by but borrowing costs and fees could rise. Contributing factors: lenders could begin to ease certain “overlays” (additional credit and documentation checks) that have been imposed over the past few years, and mortgage insurance companies are getting more comfortable issuing loans with down payments of just 5%; however, banks may get more cautious as they face new mortgage regulations, and borrowers with hard-to-document incomes (anyone who is self employed or works on commission, bonuses, etc.) could continue to have a difficult time.

What will investors do with their homes? 

Investors have played a key role in stabilizing home prices in the past few years as they purchased tens of thousands of homes, particularly in regions that were hit hardest by foreclosures. Now that this rush to invest is dying down, more lenders and investors are extending debt financing to property owners to help boost returns.

When does housing hit a tipping point on affordability? 

Though rising prices are giving many homeowners equity in their homes again, price inflation is also making housing less affordable. This will become a bigger problem if cash buyers retreat from the market in 2014 and/or if interest rates rise significantly.

This article can be found in its original form on Wall Street Journal

Recent reports show that U.S. housing starts were up 22.7% in November, reaching its highest level in nearly six years. Data shows the housing industry adjusting to the rise in mortgage rates, steady job-market gains, and rising stock and housing wealth, which can boost the confidence levels of prospective buyers and may account for this new momentum.

“The recovery trend has resumed,” said Alan Levenson, chief economist at T. Rowe Price Associates.

A stronger housing market lends itself to growth in other areas as well––including job creation, demand for building materials, and an increase in the sales of home goods––making these latest reports good news for the wider economy.

This article can be found in its original form at Wall Street Journal