We keep hearing news about interest rates shooting up this year and the tighter lending procedures here and there, and for a homebuyer who’s thinking of buying his/her first home or the next, is home buying these days can get any tougher?
This year, analyst forecasts interest rates will shoot up to 5% and will continue to rise in 2015. It will be tougher for those who were not able to take advantage of the low interest rate we had in the past few years. With the interest rates having an impact with the mortgage payment and qualifying ratios, many buyers may not get approved for a loan if the rates increase.
On top of that, the new lending guidelines will also make the process tougher. With the Dodd-Frank act taking effect this month, it might be harder for buyers to qualify for a mortgage. If buyers are shut out of getting FHA, Fannie Mae, and Freddie Mac loan, they will have to turn to private lenders. Qualifying for a mortgage will need at least 25%-30% down and not all buyers can afford that especially those in lower paying jobs, retirees or those self-employed or entrepreneurs whose income are not stable.
We don’t know yet what the future months in the real estate will bring, but with the news we keep hearing now, it is better to be prepared.