Originally Published By Shana Lebowitz on LearnVest.com
2014 was a rough year for potential homebuyers.
Housing affordability hit a near-six-year low, with home prices rising considerably faster than wages.
But as we head into 2015, disgruntled home seekers have reason to be cautiously optimistic: purchasing a place might get a whole lot easier. Read on for a roundup of four main reasons, courtesy of Credit.com, why next year could bring relief to would-be buyers across the country.
This month, Fannie Mae and Freddie Mac announced that they would begin backing mortgages with down payments of just 3%.
To be sure, potential buyers would likely need a credit score of at least 620 and a low debt-to-income ratio to be eligible. But this program could still be a huge help to first-time buyers, since research suggests that it takes at least a dozen years to save up for a 20% down payment.
Hundreds of thousands of new consumers are expected to qualify for mortgages, now that Fannie and Freddie have relaxed their lending standards. Specifically, the mortgage giants’ new guidelines clarify confusion about when lenders must buy back loans that go bad, likely giving more Americans access to mortgage credit.
Major changes should include shorter application processing times and laxer standards for consumers whose credit score dropped because of a singular event, like a job loss.
Home prices are expected to grow at a much slower pace in 2015 than they have in the last few years. Freddie Mac economists predict their housing price index will increase by just 3% next year, compared to 10% in 2013 and 5% in 2014. In some areas, increases in housing inventory will mean even lower prices.
Average 30-year fixed-rate mortgage rates dropped to 3.8% last week, the lowest level since May 2013. And while rates may rise to around 5% in 2015, they’ll still likely remain at historic lows.
That said, if you want to get the best mortgage rate possible, boosting your credit score can help. Otherwise, you could be in for the same rude awakening that this woman experienced.
