Without a doubt, a mortgage is the biggest commitment that any person makes in their lifetime. As such, it is a good idea to be informed instead of wandering without any information about the subject. As we head into the year 2014, local as well as international indications suggest a healthy year for real estate and property. The headwinds observed in 2013 generated by tight credit for home mortgages are going to remain stronger for a while. Obtaining a real estate mortgage was a daunting process in the year 2013 not because of marginal qualifications but due to strict underwriting scrutiny.
Current mortgage climate for 2014
Despite these headwinds, 2013 was a good year for obtaining a real estate mortgage. Fortunately, the trend is likely to continue even in 2014. In fact, it is estimated that the number of people buying real estate will increase to a considerable extent in the current year. There are many reasons for a favorable buying environment. First of all the qualified mortgage rule is now in effect; it is meant to safeguard the interest of consumers. According to this rule, the buyer’s ability to pay back the loan is carefully assessed and supposed to be a key factor. If the buyer becomes qualified to avail a loan according to the new mortgage rule, there is no reason why his mortgage application will be rejected. Another indication in favor of property buyers is high drop in the rate of interest. During the last year (2013), the rates of interest have come down. This has created a conducive situation for buyers to avail a loan for buying real estate. No matter whether you are hunting for a small property or a big real estate, the climate is encouraging to buy any property. Yet, the tight credit situation of the economy still prevails. Even so, it is likely to ease over a time period. When this happens, it will open up doors for banks and lenders to offer home loans quite comfortably to potential buyers. If you have made up your mind to apply for a real estate mortgage, it’s the right time to apply and avail a loan due to low interest rates and more favorable buying environment.
How much more difficult it is to qualify for an FHA mortgage
It is true that FHA mortgage loans have become more expensive in 2014, but FHA mortgage buyers have an edge over conventional mortgages. The main reason is FHA loans are assumable; it means that a buyer can take over the seller’s existing FHA loans rather than applying for a new mortgage at the current mortgage rate. This can be extremely handy given that FHA mortgage rates are expected to rise in 2014. Likewise, the enticement of a lower interest rate (future interest rate) can help you attract a great number of buyers when you decide to sell your home. However, there are many more reasons why availing an FHA real estate mortgage loan is far easier than a traditional loan. While applying for a mortgage loan at a conventional lender, your credit score must be 640 or more in order to get approved for the loan. On the other hand, you can avail an FHA mortgage with a credit score of as low as 580 points. Similarly, you can qualify for a mortgage even if you are able to pay just 3.5 percent as down payment amount. All such benefits are not present in a regular mortgage loan. FHA loans enable sellers to pay up to about 6 percent of the loan amount to cover the buyer’s cost. In traditional loans, sellers can pay only 3 percent of the loan amount. For a lot of homeowners, this is a great benefit. However, FHA loans have few downsides. The upfront as well as annual mortgage insurance premiums are extremely high; this is the main reason why FHA loans have become expensive in 2014. Despite these price rises, FHA loans can be highly beneficial to any home buyers. Furthermore, the eligibility criteria to get an FHA loan are favorable for buyers. As a result, even folks with limited financial resources are able to get a real estate mortgage by availing FHA loans.
The current climate for buying real estate is in favor of buyers on account of low rates of interest and relaxed mortgage terms. Even so, FHA loans can be a better real estate mortgage deal for most home buyers. Although the cost of FHA loans has increased, you can easily qualify for an affordable FHA loan. Start early and make sure you have everything handy beforehand while applying for an FHA loan. Similarly, evaluate all possible options to increase your chances of getting a loan. If you act prudently, and assess your financial standing in the light of current mortgage rules, you will definitely qualify for an FHA loan with no trouble.