Even though our economy is growing and mortgage rates will remain low—the 30-year fixed isn’t likely to pass 5%. As of this writing, rates are even below 4% again! Household income hasn’t changed in the last few years, while home prices are already about 20% higher on average (even more in San Diego). Lenders remain very cautious and are screening potential borrowers thoroughly before loaning out any money.
Here’s what to do if you’re thinking about buying or selling a home in 2015.
Sellers-no more bidding wars. Yes, you still have leverage, but less than you did. In the summer of 2013, homes were selling at a premium to original list; this fall, the market cooled dramatically. The takeaway: You have to price your house right. On the bright side, short sales and foreclosures have worked their way out of the market, so home sellers don’t have to compete with that.
Buyers-save in interest. The 30-year fixed mortgage rate is not expected to hit 5% until later in the year (then again, economists said that about this year too!), so the sooner the better to get the lowest rates. Of course, 15-year loans get be had for even a lower rate. With rates this low, it’s hard to think renting is a great option. Millennials continue to make up more than half of first-time home buyers. New home construction is also expected to increase 16% above 2014, giving buyers additional options.
Owners-renovate. Especially if you have a low-rate mortgage. Many times, it can be a lot cheaper to remodel than to move. If you need some cash, rates on home-equity loans and lines of credit are still low. Loans on HELOCs are a few points higher than a standard first mortgage.
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