After the economic bubble and the real estate market crash a few years ago, the industry has been waiting for some good news. Well fortunately enough, there is now much data that reports encouraging news for the housing market. Any sight of promising news is helpful, and analyst's data reports show that home prices are on a steady increase, though mortgage rates remain steady.
According to the data analysis firm, Corelogic, the price of homes increased in December of 2012 by 0.4% from the previous month, which makes the tenth month in a row that home prices have been increasing since 2011. The Improving Markets Index (IMI) reported that the last quarter of 2012 showed the highest increases since 2005.
What does this positive news actually mean for the housing industry?
Sellers are beginning to feel that it is a good time to sell their homes, though the mortgage process is still challenging for buyers, who often need good credit to be eligible for low-interest rates. However, lenders like Fannie Mae are coming up with incentives to attract potential buyers. One of those incentives is a program called HARP.
HARP is a refinancing program for eligible homeowners. HARP was initially a program geared towards homeowners who had mortgage loans that had been resold to lenders, like Fannie Mae and Freddie Mac, before June 1st of 2009. The goal is to open up the HARP refinancing opportunities to even more borrowers, not just those who are “underwater”.
For borrowers with less than stellar credit scores, there is still the FHA loan option, which is much easier to obtain than conventional mortgages. The FHA loans will allow borrowers to use grants, loans and approved gifts to qualify for a mortgage that is more affordable. Another advantage for borrowers, who choose to go the FHA route when it comes to obtaining a mortgage loan, is that FHA still allows sellers to put up 6% of the closing costs, which eases the financial strain on the borrower.
The industry is working hard to expand options to borrowers that will make it easier to obtain mortgages. Of course, this is beneficial to the home seller as well, who is then able to get their house sold quicker and off the market.
The Washington Post's Kathy Orton reported that Freddie Mac data states that though the fixed-rate 30 year mortgage went up slightly recently from 3.5% to 3.56%, it has been holding steadily at 3.53%, which is an improvement from last year's 3.95%. Freddie Mac's Vice President and chief economist, Frank E. Nothaft, states that because mortgage rates have been stable, “hovering near record lows”, this factor has also helped to encourage new home construction.
Things are looking up in the housing industry and it has been a long wait. Sellers are finding more confidence and feeling more positive about putting their homes on the market, while potential buyers are being offered more options to obtain lower rate mortgages. For the first time in many years, both sellers and buyers are experiencing the effects of good news.