After years of hearing “Doom and Gloom” news regarding the housing market, we’re all happily watching as it begins to recover. Given some of the recent shifts in the market, I wanted to share with you some important things you should know.
If you’re low on equity
Unfortunately, everyone was hit by the equity loss over the past few years and for some, it may be a while before those losses are fully regained. If you fall into that category, here are a few things to consider:
1. Renting your home. If you’re thinking of taking advantage of the low rates in order to purchase a larger home, you might be surprised at how much rent your property might pull in. In fact, Trulia recently reported that its 35 percent cheaper to own than to rent in most markets. Renting is a great option if you’re looking to upgrade or downgrade from your current home but just aren’t sure you’ll get the sales price you want.
2. A HARP/HAMP/FHA Streamline, etc. Mortgage loans designed for equity shortage. These handy government loan programs have been abundantly helpful to homeowners over the past few years. They might be what you need to allow you to take advantage of today’s low interest rates, even if equity is an issue. There are programs available that allow for 100 percent-plus loan to value, subordination of second loans and no mortgage insurance. For many Arizona homeowners, this program is an excellent fit.
3. Cash-in refinance. With equity on the rise, some homeowners are finding their homes are JUST within reach of their ideal mortgage. If you have access to a little extra cash, you may be able to significantly improve the mortgage program you qualify for and make a big dent in your monthly payments.
If you’re in good equity standing
1. Consider your long-term goals. The next few “tips” will be dependent on whether you’re ready to start considering a move or whether you’re planning on staying put long term.
2. If you’re not planning on selling soon, get a mortgage “Check-up.” Some of the best rates available are on 10- to 15-year loans that could help you pay down very quickly with comparable (or even lower depending on your current loan) monthly payments. Even if you’re going from a 30-year to 30-year loan, you may be able to get a lower rate, get rid of MI, etc. It’s always a good idea to know how the recent market changes compare to your current situation.
3. If you’re thinking of selling soon. Contact a local real estate agent to get an accurate CMA (Comparable Market Analysis) of what your home might sell or rent for. You’ll want a good idea of what you’ll net in a sale in order to make your plans for down payment on a new property, etc. Also, in the current market, homeowners often find renting their home is a great long-term financial move for residual income.
If you’re not sure where you stand
Contact a local real estate professional who can help you assess how the market changes have affected your property so that you can make the best plans possible for your future.
If you’re planning to buy
Dodd-Frank changes have added some extra layers to the mortgage process with the implementation of new Qualified Mortgage interpretations. However, according to the Consumer Financial Protection Bureau, approximately 95 percent of loans made last year already fit into this category. As a result, these changes are not expected to have a significant effect on the 2014 housing outlook. Just keep in mind that these changes might result in a little extra paperwork during the loan process, so keep your financial records handy.
Overall, homeowners and future homeowners are starting to see a return to “normalcy” in the housing market and we’re expecting that trend of good news to continue throughout the year. I hope these suggestions are helpful to you as you explore the options available to help you plan for your financial future.
• Brandon Moore is a senior mortgage banker (NMLS 258524) who resides in Ahwatukee with his wife and two boys. Reach him at (480) 222-8893 or BrandonM@ASmartLoan.com.