Why is it Easy to Obtain Mortgage in 2015

March 07, 2015

Why is it Easy to Obtain Mortgage in 2015

Why is it Easy to Obtain Mortgage in 2015

We are in the middle of the first quarter for 2015 and a lot of things are already happening in the real estate industry. Many are still thinking whether it is a good time to buy a home or not, especially for newbies or first time home buyers. We all know that this is a very big decision to think about and see whether you qualify, if you have the budget and you are just too tired of renting. There are certainly a lot of factors to consider, however, if you believe that you are ready – here comes another set of factors to consider – housing prices, interest rates, and will I meet the lender’s requirement for mortgage? Is it really worth it to invest or buy a home this time of the year?

This is good news for home buyers, while many are still contemplating about whether to invest into property most especially residential homes maybe these 4 reasons why it is easy to obtain a mortgage this year will help you to decide why.

We all know that these improvements are mostly through or by the government’s efforts to improve affordability and ease regulations in the housing market. Two mortgage financing giants, Fannie Mae have already made this move by allowing purchases of conventional mortgages that have down payments as low as 3 percent while Freddie Mac will do the same for mortgages closed on or after March 23.

If that is not enough, here are some reasons why it is a good time to get a mortgage:

Looser Credit

Many of us have heard as early as December 2014 that the Federal Housing Authority (FHA) will loosen credit to those who are credit-worthy and present lower risk for a loan. Annual premiums charged to borrowers will be cut to 0.5 percent which makes it 3 percent. Not only that, more mortgage lenders are now starting to loosen up with their credit and underwriting requirements. Compared to previous years, where it is difficult to obtain a mortgage even for a well-qualified buyer because the rules and lender’s regulations have just became too stringent. This has also enabled to expand eligibility for home purchases to thousands of potential home buyers.

Down Payments

Down payments have always been the first thing that causes hurdles in the home buying process, especially to first time home buyers. Bank giant Wells Fargo has relaxed its policy on down payment gifts to borrowers from relatives and friends. They are also gradually opening their credit box since the government has clarified its lending policies and penalties against lenders for defaulting loans. This in effect, provided them confidence to broaden their lending capabilities to a wide range of borrowers, including those who may not have high scores or a substantial down payment for their home purchase.

Home Prices

While some people may not be able to feel it, however if you see the housing price trend is that its growth has slowed considerably. Previously, Freddie Mac’s housing price leaped 10% from September 2012 to September 2013. Over the last year, the index is in a plateau of 5% and economists predict only a 3% increase for this year. Another factor is that housing inventory increase may also help to push down mortgage prices in some places.

Low Rates

Factors such as geopolitics and economy helps to keep rates lower than expected this year. Last week, an average of rate for a 30-year fixed rate mortgage was only at 3.89%. The rate has marked an 18-month low.

Gone are the days where obtaining a mortgage are just too easy. Becoming too lenient has caused the housing market to entirely crash down, thus after regaining its stability over the years the effect has just been overwhelming that many people have been shut down to obtain a mortgage, even to those who are qualified. 2015 is sure looking to be such a great year to start because of these many great factors to consider why it is a perfect time to purchase a home. Check your credit to see whether you’ll meet lender’s requirements and be able to find out what type of mortgage with specific price range is right for you.

Sources:

http://realtormag.realtor.org/daily-news/2015/02/23/why-buyers-may-find-mortgages-easier-get?om_rid=AAErMs&om_mid=_BU63GpB8-h8yAl&om_ntype=RMODaily

http://www.foxbusiness.com/personal-finance/2014/12/24/4-reasons-it-will-be-easier-to-buy-home-in-2015/