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2014: Year of the Repeat Columbia SC Homebuyer
As prices continue rising in the new year—albeit at a slower pace—investors will begin to ease back from the market, but repeat homebuyers will be there to pick up the slack, according to Trulia's predictions for the Columbia SC housing market in 2014.
Other changes to the Columbia SC housing market in the new year include lower affordability, "less frenzied" home-buying, and a shift in the rental market from single-family homes to urban apartments.
The biggest obstacle for potential homebuyers is saving enough money for a down payment. This hurdle was the most commonly cited challenge in a Trulia survey of current renters wishing to own their own home. Fifty-five percent of survey respondents cited this obstacle, and among young adults (ages 18 to 34) the rate was even higher at 58 percent.
The second most common barrier to homeownership is lack of stable employment—cited among 36 percent of all survey respondents and 43 percent of young adults.
The pace of Columbia SC home price appreciation will slow in the new year, but rising prices, combined with rising mortgage rates, will take a toll on affordability.
Continued price increases will likely lead more Columbia SC homeowners to list their homes for sale, leading to an increase in inventory in 2014.
At the same time, traditional homebuyers will face less competition from investors, and mortgages "should be easier to get" as the new regulatory environment takes shape removing the uncertainty that has made lenders wary.
During the recession, single-family home rentals increased 32 percent, but some believe that several factors will lead to a decline in this trend in 2014. Fewer foreclosures, fewer investor purchases, and loosening credit standards will all contribute to the decline.
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2014 Mortgage Fee Hike Postponed
Planned fee increases that would have added to the cost of millions of mortgages will be postponed, maybe even cancelled altogether.
Currently, borrowers seeking loans backed by Fannie Mae and Freddie Mac are set to pay higher upfront fees starting April 1. The fees, ordered by the Federal Housing Finance Agency in December, are meant to help safeguard banks against risky borrowers who might default.
Housing experts say they will add thousands of dollars to the cost of all mortgages insured by Fannie and Freddie, with the biggest hits taken by borrowers with less than perfect credit histories.
The mortgage industry has been bracing for substantial increases in the price of loans in 2014. It is already costing a bit more to borrow money to buy a home lately, as fixed mortgage rates have drifted to the highest level in three months.
The incoming chief of the FHFA, Mel Watt, said he intends to postpone the fees — and perhaps even cancel them — until more analysis is done. The FHFA oversees Fannie Mae and Freddie Mac.
Even with the reversal, however, mortgages will probably get more expensive over the next few months anyway as the Federal Reserve cuts back on its purchases of mortgage backed securities, a program designed to keep interest rates low.
Stay tuned and we'll keep you updated at this website on mortgage rates, and the cost of getting a mortgage when buying a Columbia SC home.
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New Year Starts With Disappointing Numbers
With a new year starting that will surely bring higher interest rates and tighter lending standards, the housing market is already showing signs of a slowdown, as pending home sales for November increased only slightly from the previous month.
The Pending Home Sales Index from the National Association of Realtors is based on contract signings for the purchases of existing home sales. The index inched up 0.2 percent to 101.7 in November, from a downwardly revised 101.5 in October. Most economists were expecting an increase of 1 percent.
The index is 1.6 percent below November 2012 when it was 103.3. The data reflects contracts but not closings.
Total existing-home sales this year are expected to reach 5.1 million, a gain of almost 10 percent over 2012, but should stay at that level in 2014, and then rise to 5.3 million in 2015, according to the NAR.
The national median existing-home price for all of this year will be close to $197,300, up nearly 12 percent from 2012. This median price is projected to rise at a more moderate pace of 5 to 5.5 percent in 2014, and grow another 4 percent in 2015.
Faced with plunging property values and rising defaults, lenders are charging borrowers higher mortgage rates and adding fees. Not all of these added costs are set in stone, however. If you’re looking for a loan, vigilant shopping and a little haggling can go a long way toward landing a better deal.
Here are some fees you need to watch out for:
Application Fees
Just because an ad says “no application fee” doesn’t really mean there’s no fee to get the loan. Fees paid outside of closing typically include an application fee, an upfront property appraisal fee, and a credit check. They might be disguised as something like a “document processing fee” or “doc fee.”
Risk Adjust Rates
Getting deemed a risky borrower is no longer just a matter of a low credit score. Lenders now consider other risk factors. Buy in an area that has seen values drop precipitously and you can expect a higher interest rate.
Down Payment Penalties
The days of zero down on a mortgage are long gone. Without a down payment of at least 20%, prospective homebuyers will undoubtedly be hit with a higher interest rate and need to pay for more points. (Each point usually amounts to a fee of about 1% of a mortgage.)
Also, if buyers can’t put 20% down, they’ll need to get private mortgage insurance, which typically costs 0.5% of the loan. Shopping around for lenders with more-favorable points and insurance charges can help lessen the blow.
Closing Costs
Closing fees amount to 2% to 5% of a home’s price. Location plays a big role, as taxes and other requirements vary by state. Some states require expensive attorneys to oversee the closing process, while others allow a title agent or escrow officer.
Ask potential lenders for a good-faith estimate of closing costs. Then check in weekly with whoever is handling the closing to see whether there are any changes in either lender or third-party fees.
If you need a place to start looking for a dependable mortgage expert, contact us. We work with many lenders and can give you a few names and numbers to get you started looking for the best home mortgage.