Written by: Steve Gouveia & Mike Thompson
There is a lot to be said about the economy in 2016:
- Low mortgage rates defined the third quarter
- More millennials moved out of family homes as job opportunities expanded
- There were fewer listings and new units and more owner-occupied units became rentals
So, what’s in store for 2017? If you’re considering buying a home, this will be your year. Here’s why:
Rising Rates, Steady Home Prices
In response to the latest presidential election and the Federal Reserve policy decisions, mortgage rates are on the rise. As a potential homebuyer, you may see this as a negative; however, moderately rising mortgage rates may help slow the increasing home prices we have been seeing. That is, you might finally be able to find a “deal” in the housing market come 2017. But remember not to wait too long into the year, as interest rates are rather unpredictable and could rise higher than you’re willing to spend.
Rising Rent Prices
Why support someone else’s equity when you could be building your own? Landlords price their units based on demand and as more people buy into the rental market, the higher these monthly payments become. Over the course of your rental agreement, you could have been paying down your own mortgage rather than your landlord’s. Give up on renting and commit to a home of your own.
Builders’ Optimism
Predicting 2017 to bring one of the strongest spring housing markets in a decade, experts say we can expect an abundance of new homes to be built throughout the new year. According to the NAHB Housing Market Index, the Northeast, which has historically underperformed compared to other regions, is now considered a “good” housing market [1]. When builders feel optimistic about the housing market, they provide more housing options. Newly built homes often come with warranties that protect homeowners against expensive defects and features you won’t get with older homes.
100% Financing
Homebuyers are often mistaken that they must make a substantial down payment; however, not long ago, Envoy introduced a program that allows for 100% financing. The first mortgage is a traditional FHA loan – 96.5% loan to value loan – and requires a 3.5% down payment. Because some individuals do not have 3.5% to put down, Envoy created a Down Payment Assistance program, which essentially allows for 100% financing on an FHA loan.
This program gives homebuyers two options:
- If your income is less than 115% of the median income of the area you’re purchasing your home, Envoy will gift you 3.5%
- If your income is above the area median income, Envoy will give you 3.5%, but it will need to be repaid over 30 years
When this program is included with seller’s assist, you can buy a home with little-to-no money out of pocket. While there are caveats to financing options such as these, the idea of a down payment requirement shouldn’t scare you from buying this year.
In preparation for the year to come and the prospect of buying a home, make sure you have your paperwork in order. Let the Kelly Team at Envoy Mortgage guide you through the process! Call us at (610) 335-1801 for a free consultation.
[1] http://themortgagereports.com/24148/nahb-housing-market-index-december-2016