If you didn't buy a Columbia SC home in 2013, you may be kicking yourself about now. Home prices for the year climbed an average of 13.6 percent.
Why 2014 Will Be a Good Year to Buy a Columbia SC Home
Market forecasters predict that 2014 will be another year of gains for the real estate market, even though the rapid pace of sales in 2013 cooled off a bit at the end of the year. On Dec. 30, The National Association of Realtors said its pending home sales index, based on contracts signed last month, rose 0.2 percent in November, below the 1 percent rise forecast.
Columbia SC home prices are expected to rise about 5 percent this year. Higher mortgage rates are expected to dampen the pace of both sales and price gains, but not bring them to a halt. The average rate on a 30-year fixed mortgage is expected to rise from 4.5 percent to 5 percent this year.
Even aside from expected price gains, to buy a Columbia SC home is almost always a good investment in the long run. Tax benefits are not to be overlooked.
When one rents, at the end of the year he or she has a pile of 12 cancelled rent checks. However, the homeowner has a pile of 12 cancelled mortgage checks that are nearly fully tax deductible in most cases.
Time will tell. Stick with us here and we'll keep you updated on the news that affects those wanting to buy a Columbia SC home in 2014.
Get more news about Columbia SC real estate by clicking the Columbia SC Real Estate News link to your right under Columbia SC Real Estate Categories.
The old "no one is going to buy a Columbia SC home in the winter" philosophy is gone. At least among serious home buyers it is.
January can be a great time to buy a Columbia SC home, and here's why:
Mortgage rates are low now, although they are higher than they were six months ago, and higher than they were last March, but may be lower than they will be this Spring. The price increases that were common this past Spring and Summer are slowing. Even the Columbia SC area is showing signs of cooling, and we're not talking about the weather here.
There isn't a lot of competition. Most deals were wrapped up before Christmas, or people put off looking until after the New Year. There are still homes on the market, but not as many people gunning for them. This is an advantage to buyers.
To buy a Columbia SC home during the winter can be to your advantage too because most of the home's big systems are put to the test. Heating, plumbing, roof and gutters are all being tested by the weather.
Granted, some of the curb appeal may be missing because grass is not as green and flowers are not in bloom, but fixing up landscaping is a lot less expensive than finding out next winter that your heat doesn't work because you bought when no heat was being used in the Spring or Summer.
Investors are, for the most part, usually not buying homes during the winter months, meaning you'll have less competition to buy a Columbia SC home now as opposed to waiting until warmer weather.
Another factor when considering whether winter is the best time to buy a Columbia SC home is the "Housing Affordability Factor". This takes into account the median price of a single-family home, median family income and interest rates to gauge whether it's a good time to buy. Numbers over 100 indicate that the average American family should be able to afford a purchase, and in May 2013—the most recent data available—the Index showed 172.7, about the same measurement as affordability in 2010 (not considered a particularly impressive year) and a drop from last May's 188.4. While favorable, the current market wasn't exactly considered ideal then.
So if you've been considering buying a home but thought winter might not be the best time, think again. Winter is a great time to buy a Columbia SC home. Call us, we'll explain even more reasons why you should get started now.
Undisclosed debt can become a problem when you're buying a Columbia SC home and going through the process of getting a mortgage. There is a period of time known (in the industry) as the "quiet period." This is a time where it is important for you not to buy ANYTHING on credit.
Over the past few years, lenders and underwriters revamped their standards to reduce risk, but Equifax says there's one challenge many lenders still have difficulty combating — undisclosed debt.
Undisclosed debt poses a risk even for lenders with conservative underwriting standards, experienced professionals, and credit-worthy applicants.
Disclosed or Undisclosed Debt During Quiet Period
Nearly one-fifth of borrowers apply for at least one new line of credit during the period between their credit profile review and the closing on their mortgage loan—deemed the "quiet period" by Equifax.
Some people buying a Columbia SC home sign up for store credit as they purchase new furnishings or household items not realizing this could impact their credit. Others intentionally apply for multiple mortgage loans at the same time.
Whether undisclosed debt during the quiet period is intentional or not, it poses a threat to lenders, regardless of their underwriting process. About 36 percent of borrowers who opened at least one trade line during the "quiet period" increased their debt-to-income ratio by at least 3 percent, which is significant for lenders.
Some lenders used to attempt to prevent undisclosed debt by pulling a borrower's credit profile again immediately prior to closing, but this can be cumbersome and inefficient. Instead, Equifax is now recommending to lenders continual credit monitoring throughout the application and closing process. Lenders can receive daily alerts of borrower credit activity and can adapt as needed.
This new credit monitoring is even more reason than ever not to be buying anything or opening new lines of credit while you are in the process of buying a Columbia SC home. Buy a house full of furniture while you're waiting for your loan to be finalized and you may end up with no where to put it when your loan is denied because your debt to income ratio went beyond the limits.
To stay on top of Columbia SC mortgage news and tips, check out our other articles by clicking on the Columbia SC Mortgage Info link to your right under Columbia SC Real Estate Categories.
If you're even remotely considering buying a Columbia SC home, there's no time like the present. The clock is ticking, and soon, getting a mortgage will likely become more difficult and more expensive.
Loan limits for popular mortgages are scheduled to drop in January 2014. The Federal Housing Finance Agency is planning to slash the maximum size of mortgages eligible to be backed by Fannie Mae and Freddie Mac, which currently run as high as $417,000 in most parts of the country and up to $625,500 in pricier cities.
People who need bigger loans will have to go to private lenders, who want low-risk, affluent borrowers who can make a bigger down payment of 25 percent to 30 percent. Private lenders, include many banks, credit unions and independent mortgage lenders, originate mortgages under their own terms and in most cases hold the loans on their books. Most are very selective, seeking out affluent borrowers who present little risk of default.
Buying a Columbia SC Home – ARM's May Be The Only Option
Applicants buying a Columbia SC home who qualify for private mortgages could find that adjustable-rate home loans are their only option. With ARMs, borrowers have a fixed rate for a set period of time – often five years – before rates become variable. ARM origination in the private market is already on the rise.
Private mortgages tend to charge higher interest rates than Fannie Mae and Freddie Mac-backed loans. But increased lender appetite for private mortgages has helped lower their rates, which are hovering near and in some cases lower than rates on government-backed mortgages for people buying a Columbia SC home.
It's easy to make mistakes when buying a Columbia SC home and looking for a mortgage for that home.
Problems to Watch For When Getting a Mortgage
1. Check your credit before you let a lender look at it. Clean up any problems you find on your credit before a lender sees it, and you'll be offered a better deal. If a lender sees problems, it's a sure thing that your rate will be higher.
2. While they're still available, get a pre-approval letter before you start shopping. Many lenders are getting away from giving out these commitments, but while you still can, get pre-approved for a mortgage before you start looking at buying a Columbia SC home.
3. Shop for the best deal on your mortgage. Don't just assume you're getting the best rate possible with the first lender you talk to. It pays to shop around for a mortgage a lot more than you do when buying gasoline for your car.
4. Don't just focus on rates. Learn about all the fees a lender can throw at you. Mortgages are often loaded with fees, and these fees can cost you money if you don't shop these as well.
For more tips and articles on buying a Columbia SC home, click over to our Columbia SC Home Buyer Tips section under Columbia SC Real Estate Categories to your right.