Long-term housing market trends across the nation

Rising interest rates contribute to a rise in foreclosures

The housing market has taken a pounding over the past several years. In many parts of the country, housing values are significantly lower than they were five years ago. While some signs of a recovery are underway, it may not be the best time to try to sell your home if you are looking to move.

Watch out for future foreclosures

There are going to be a second wave of foreclosures on the horizon. This is because mortgage loan rates are going to go up as the economy starts to get stronger. However, this is not a good thing for folks who used variable rate interest loans to purchase their house. Their mortgage payments are going to go up and that could put a strain on their finances. If rates go up too much, it could force those who are barely making their payments to stop making them altogether.

Rental properties will be popular

Many people are going to continue to buy investment properties to take advantage of the depressed housing market. With prices well below market value, those who can afford the higher cost of investor home loans are going to do so. Those who are looking to rent a home instead of buy a home are going to jump at the chance to live in a home without having to be saddled with a mortgage.

Mortgages may be easier to get

As the economy recovers, lenders may start to be a little more lax when it comes to their lending standards. Today, it is almost impossible to get a loan unless you have a 20 percent down payment. However, it may be possible to find a lender or two willing to give you a break on your down payment if you have good credit or plan to live in a duplex with a tenant.

FHA loans should continue to be used by more first-time buyers

First-time homebuyers are going to continue to use FHA loans instead of traditional mortgages. This is because you can get a house for up to $300,000 or more in some locations without putting any more than 3.5 percent of the purchase price down. Over the past decade, FHA loans have become the preferred choice among borrowers due to the fact that you can buy a home with poor credit. You can also buy a home as long as your debt-to-income ratio is over 40 percent. That is not possible with a traditional mortgage.

Interest rates should stay low for another year or two

The good news for buyers is that interest rates should remain low for the next year or longer. This means that you can start saving up now and buy the home when you are ready without having to pay a high rate of interest. While there may be some temporary upticks in mortgage rates, they should smooth themselves out quickly. Investor home loans should come with lower interest rates for the next couple of years as well.

Buying a home is a goal for many people. The best thing that you can do for yourself is save up as much money as possible and clean up your credit to increase the chances of getting approved for a mortgage. When you have done that, you should be able to find a home for a reasonable price and interest rate almost anywhere in the country.

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