What to Expect in 2014 – Real Estate in the Real World

 What to Expect in 2014 – Real Estate in the Real World

More often than not many home buyers and sellers only buy or sell when they need to. There’s very few homebuyers that sit around thinking, “Heck, let’s go out and buy a house today.” On the flip side with sellers, a small percentage consider selling just to see what they’ll get out of the home. Most home buyers do so because they’re either upsizing, downsizing or moving due to lifestyle or job change. The same with sellers; they need to either downsize, move up, or move on to a new location due to some extenuating circumstance such as job or family change.

That being said, there may be nothing anyone can do about how the housing market is going to go but there are major changes happening in 2014. Because the economy and the housing market has slowly recovered over the last year and a half, there will be major changes to the mortgage industry. It will be more difficult for people to get a home loan then it was just a year or two ago. This is due to the fact that most government-backed institutions are making it more difficult for lenders to loan money. Debt to income ratios will be lower, interest rates will be higher, and proof of income will get more strict.

If you think about it, this is actually a good thing. When the economy is doing poorly government institutions, private banks and mortgage providers will do a lot of creative programming and marketing to get more home buyers to apply and obtain a loan. Now that it’s becoming easier, those restrictions are starting to tack back on.

It will now be easier for those that make more money to get a loan versus low income. Over the last several years low income buyers or first-time homebuyers have had it easy with lots of down payment and closing cost assistance programs, zero down payment, and USDA type loans. We feel that over the next couple of years many of these programs will start to fade away and we will see a recovery in the typical conventional loan with 10 to 20% down.

So is this bad news for low income borrowers?

Not Necessarily. That lenders want to make sure that they won’t have a high risk borrower on their books. They will be more cautious as to whom they’re loaning money to which means a stronger economy for all of us.