Current Interest Rates for Home Loans- Is it Time for You to Apply?

Current Interest Rates for Home Loans- Is it Time for You to Apply- 150x150Mortgage interest rates were at a record low last year and have slightly increased since then. This seems like the perfect time for you to become a home owner. The housing market struggled to recover for the past few years, but it seems that it is on the right track now.

Whether you are looking to buy a new home or your home has lost some of its value over the last few years, making it impossible for you to refinance, it looks like 2013 is the year when the home buying activity will see significant increase, making it the perfect time for you to buy a home.

Current Interest Rates

Current mortgage rates today for mortgage loans are around 3.5 percent for a 30-year fixed-rate mortgage. This rate is pretty close to last year’s historic low of 3.31 percent, but it is still a very low rate, that you should take advantage of.

The housing market is recovering, with home prices slowly increasing, and inventory decreasing more and more. The building industry is also slowly recovering, but they aren’t able to satisfy the demand for new homes yet.

Because mortgage interest rates are currently low, you will pay a lot less over the life of your loan. This makes current interest rates for home loans very attractive to home buyers, which will most likely lead to a rise in mortgage interest rates in the near future. Some economists predict mortgage rates as high as 4.4 percent by the end of the year.

Should You Apply for a Mortgage Loan?

Mortgage interest rates are low right now, but so are home prices. Statistics indicate that prices for homes are rising, and could go up by as much as 5 percent in 2013 only.

Many industries are recovering from the economic crisis, which will result in a decrease in unemployment rates, creating more and more home buyers. Also, new construction is on the rise, as the builders are starting to regain confidence. New homes will see, according to predictions, a 20 percent increase in 2013.

With mortgage interest rates near historic lows and the economy recovering, this may just be the perfect time to buy a home. If you decide to wait for lower prices and interest rates, you could end up having to pay a lot more for a mortgage loan. These are just predictions, but common sense also dictates that mortgage interest rates should not go lower than they were last year, especially since they have already started to rise since the beginning of 2013. Ultimately, it is up to you to do your homework, read the facts and the predictions, and decide if this is the right time to become a home owner.

Mortgage Rates Forecast Vs. Home Mortgage Rates Today

Mortgage Rates Forecast Vs. Home Mortgage Rates Today- 150x150Today’s home mortgage rates are very close to the record lows registered at the end of last year. They have been slowly increasing since then, and there are signs that they will keep increasing. With this in mind, you are probably wondering if you should buy a home now or wait longer. Increasing rates are always bad news for people who wish to become home owners, but mortgage professionals don’t think that rates will rise unexpectedly just yet.

Mortgage rates have been slowly increasing and decreasing since the start of the year, and most analysts don’t think that we will see any major changes in the near future, but they expect a slight increase this year. The recovering economy seems to be slowly growing and there is an increase in job growth, both of these giving confidence to investors and home buyers, so the rates will most likely start going up.

Home Mortgage Rates Today

With current mortgage rates near all-time lows, an increase in home sales and refinances has been recorded this year. The economy, which has the largest influence over mortgage rates, is experiencing more and more growth and, unless a new crisis arises, it will keep growing in the following years. So 2013 might be the last year when mortgage rates will be close to record lows, meaning that acting now might save you money.

Securing a low interest rate on your mortgage means that you will pay less overall for your loan. The current rate for a 30-year fixed-rate mortgage loan is 3.6 percent, while the rate for a 15-year fixed-rate loan is 2.80. Not the lowest they have ever been, but pretty close, and they might not stay in this range in the near future. Rates have been steadily increasing since last November, but are still considered low, so today’s low mortgage rates might be the perfect opportunity for you to become a home owner.

Mortgage Rates Forecast

Like most home buyers, you are probably looking towards the future, and not the past. Low mortgage rates might be a thing of the past, but, according to specialists, they won’t increase significantly and surprisingly in the next months.

The Federal Reserve’s recent actions have kept mortgage rates at a low level. The government has been purchasing mortgages from the lenders, allowing them to lend more money to borrowers, while keeping mortgage rates low. But the government’s help won’t last indefinitely, and the mortgage rates will start to increase more significantly.

The mortgage rates are expected to go above 4 percent by the end of this year, and probably over 4.5 percent by the end of 2014. While this might not seem like a lot, especially for a first time home buyer, the difference will add up over time, and the 1 percent difference in current and future rates will actually mean that you will be paying thousands more on your mortgage loan.

As long as no major events happen in the United States or internationally, like a new war or a major event in the financial world, the mortgage rates will most likely continue their upward trend, at least for the near future. As the economy continues its growth, the mortgage rates will be affected by it, but it looks like it will only be a slow, but steady, increase for the next couple of years.

If you are planning on buying a home, this might be the perfect time to start looking. Not only are the mortgage rates expected to grow, but other costs associated with mortgage loans will experience an increase in the near future. Mortgage rates might still seem fairly low at the expected 4 percent by the end of 2013, but every small increase means more money out of your own pocket, and a more expensive and harder to repay mortgage loan. So, if you think you have done all the research and have a full understanding of what buying a home entails, purchasing a home at today’s mortgage rates is probably a better idea than waiting a few more months or years.

Is Demand Being Met for New Houses?

Demand for New Homes Not Met By Slow Home Building Industry-150x150The economic crisis has resulted in home builders losing more than 70 percent of their business. Over the past few years, the American housing market has suffered the most severe downfall since the Great Depression of the 1930s. The housing decline affected both investors who could no longer buy and sell houses for a quick profit, but also families who couldn’t afford to pay their mortgages anymore. This resulted in a lot of people losing their homes, and banks losing money. Families couldn’t afford mortgage payments anymore, or simply chose to walk away from their mortgage because their home was now worth much less than the mortgage value. As a result, the market was flooded with low priced houses, which caused the growth of new home building to slow down a lot, putting many home builders out of business.

Demand for New Homes

Across the United States, the number of houses for sale is at its lowest since 1999. This is due to the fact that new construction has been very slow for the past few years, and investors have bought many of the foreclosed homes. The steady job growth that the United States is experiencing lately resulted in more families looking for a home, many of them looking for new constructions.

Often owners who put their homes up for sale receive a few offers within a couple of days after the listing, so many people decide to not list their home yet, because they fear it will be sold before they even have a chance to buy a new one. This all contributes to the rise in demand for new houses.

The Slow Home Building Industry

The increase in demand for new houses is, for many builders, the sign that it is time to get back to work. Unfortunately, most home builders are not yet ready to start work again.

Many workers have left their construction jobs and started working in other industries. Because the housing market just recently started recovering, it is hard to bring the workers back and offer them a good salary. As a result, the time needed, as well as the cost of building a new house, has increased.

The most affected home builders are the ones in areas of the United States that were hit the hardest by foreclosures. A lot of distressed properties are still available on the market in those areas, which makes the demand for new homes lower than in other parts of the country.

Another problem that the home building industry faces is that small home builders, who far outnumber large public home builders, will find it hard to recover after years of low demand. Unlike large developers, they will have to borrow money in order to buy a developed lot, which puts them at a large disadvantage. Fortunately,  job growth has created significant demand for new homes from people who want to live close to their work place. This would be a great niche for small builders, because big developers will regard it as not profitable enough, and prefer to build more homes at a time elsewhere.

While the demand for new houses has not yet been met by the home building industry, we must keep in mind that the housing market was hit very hard by the economic recession. It will be a while until builders fully recover, but improvements can already be seen and, hopefully, the buyers’ demand for new houses will be met in the near future.

10 ‘Make it or Break it’ Real Estate Issues for You in 2013

Top 10 Real Estate Industry Issues in 2013- 150x150Since the housing bubble burst in 2008, most people don’t trust the real estate industry anymore. The housing market is slowly recovering, and statistics show that most Americans would buy a home in the next few years, even if they expect the prices to go up in the near future.

Prices on homes have already started to climb, with a steady increase in almost each month of 2012. National home prices have increased by over 6 percent in October last year. In California, one of the states that were the most affected by the housing market crash, more than 50 percent of the homes listed for sale received multiple offers from eager buyers. The same trend was followed by Florida and Arizona last year.

Being an industry that has just started to recover, the real estate industry still faces a lot of issues in the years to come. Here are the top 10 issues that you should be aware of:

Top 10 Industry Issues

1. An Increase in Home Prices. With builders not being able to keep up with the demand for new houses, prices for older houses will continue to increase. The construction of new homes is almost three times lower than it should be to keep up with the population increase and the recent job growth. The inventory of homes for sale is at the lowest since 2006, and economists predict a 5 percent increase in home prices for 2013.

2. An Increase in Rent Prices. The job growth will push most people, who moved in with their parents or with friends back when the economic problems started, to start looking for apartments and houses to rent. This will create a lot of demand for rentals, which will cause rent prices to increase by up to 9 percent in 2013.

3. Less Good Deals on Foreclosed Homes. Sales of foreclosed homes represented only 11 percent of all home sales in 2012, down from 28 percent in 2011, and are expected to be even lower in 2013. This happened because banks have sold many distressed home loans to companies who agreed on new terms with the borrowers, instead of foreclosing.

4. An Increase in Short Sales. Instead of dealing with an expensive and time consuming foreclosure, banks prefer that the borrowers sell their home for less than what the mortgage is worth. In many cases borrowers are not required to pay the difference, which will generate more short sales, while the number of foreclosures will diminish.

5. An Increase in First Time Home Buyers. It is predicted that the growth in demand for homes in 2013 will be caused mostly by first time home buyers.

6. Bigger Home Building Costs. Even if new constructions are at a low level right now, construction materials are at high prices. The labor costs are also high because many construction workers left the industry when the crash occurred. The demand for new homes will lead to even higher costs for new construction in 2013.

7. Property Management Increase. Foreclosed homes that have been sold to investors in the past are now entrusted to professional property management organizations to maintain and rent. The number of foreclosed homes that will be sold to investors will increase in 2013, and so will the number of property management companies needed to manage them.

8. An Increase in Mortgage Interest Rates. Current mortgage rates have been at an all-time low lately, so predictions indicate that they will only go up in 2013. However, the interest rates will only slightly increase, to an average of 4 percent.

9. Credit Requirements. In order to get approved for a mortgage loan, your credit score must be in the 760s right now, but this might change in 2013. As more and more people will buy homes, lender competition will make credit requirements much more lenient.

10. A Two-Tiered Industry. Because banks don’t give out many construction loans, the home builders will be divided into two types: large home builders with access to funds, who can handle big projects, and small to medium home builders, who depend on loans and can’t handle big projects. This will create less competition and bigger prices.

The real estate industry has suffered greatly in the last 5 years, but it’s showing signs of recovery. While the worst has passed, there are still plenty of issues that need to be resolved, but that will happen slowly over the next few years.

Mistakes to Avoid When Investing in Real Estate

Mistakes to Avoid When Investing in Real Estate- 150x150Historically, real estate has always been a profitable industry to invest in. Over the past 50 years, real estate investments have become very popular, and have resulted in some big gains for those who know what they are doing. Unfortunately, the real estate industry is currently recovering from the recent economic recession, so investing in the housing market is riskier than ever. This, plus the high capital requirement, and the cash flow dependency, makes real estate an industry in which new investors, and even experienced ones, can easily find themselves not able to keep going due to a simple mistake.

Of course, even with the recent economic issues, a nice profit can still be made from investing in real estate, but it will be more difficult to do so. Let’s have a look at the most common mistakes that are made when investing in this industry.

Lack of Education

Educating yourself by learning from your own mistakes is not an option in the real estate world. One mistake is all it takes to put you out of business, so getting an education is an important part of becoming a successful investor. With so many educational opportunities available today, the only problem you will face is finding the best one. This is not something that you will want to try and save money with. Real estate education might seem expensive, but you will quickly realize that it is cheap if you compare it to what you will earn if you make it in this business.

Lack of Good Research

There are a lot of things that determine a home’s value, such as its size, the materials used in construction, the neighborhood that it is located in, and its condition. These are just some of the main aspects of a home that you should be aware of before investing in it. There are a lot of other things that you should know about a house or apartment before buying it, like if it’s located near public transportation or schools, if there are any construction sites nearby, if the area has flooding or termite problems, how old the home’s appliances are, and many more.

Paying Too Much

Closely related to doing good research on the property, overpaying is one of the main reasons you are not making money with your investment. Looking for a property can be time consuming and frustrating, so you might get a little hasty when finding a good home, and end up paying too much. To avoid this, you must have knowledge of what other properties in the area are listed for and have sold for in the past.

Miscalculating Expenses

Your profit is directly related to how long it takes you to buy the property, make improvements and resell it. Costs associated with making exterior and interior improvements, keeping the appliances running, or making changes to the property can quickly accumulate, so you must keep those in mind before investing in a property.

Getting Emotionally Involved

Many new real estate investors make the mistake of falling in love with a home that they have found on the market, which usually leads to them going out of their way to buy it. Decisions driven by emotion will usually result in a bad investment. Another way in which beginner investors lose money is by getting too attached to a home and not realizing that its value is starting to decline. Selling a property in a timely fashion is important in this business, and you will lose money if you fail to do so.

Not Building Relationships

Real estate investing is much easier if you are part of a team of professionals. It’s tough to make it on your own in this business, especially in this economic climate. Being part of a team, or assembling your own team, can be very beneficial to all the people involved. Aside from that, you need to build good relationships with other agents, home appraisers, inspectors, people who work in home repairs, and lenders.

Many big players in the real estate industry have made one or two mistakes themselves, but they have recovered. It is up to you to learn from their mistakes, and try your best not to make some of your own. Investing in real estate is a tough business which takes a lot of work, smarts, and luck, but the rewards are worth it.