Wondering if 2013 will be the year to become a homeowner? A look at prices and mortgage rates provides a favorable outlook.
As I noted in my previous blog post, mortgage rates are still low, and the Federal Reserve's announcement last week that it would continue its bond-buying program into 2013 will keep them low. They might rise if Congress doesn't resolve the "fiscal cliff," notes Greg McBride, CFA, Bankrate's senior financial analyst. But he added that "Even if today's 3.5 percent rates became 4 percent sometime next year, those rates are still low enough to enhance affordability."
What about home prices? Opportunity arises there, too, as prices stabilize. There will be an emergence of buyers who were waiting for prices to drop. More sellers will be able to afford to put their homes on the market. Some areas of the country are already seeing multiple offers on homes for sale.
Real estate research firm Fiserv predicts that home prices will rise 1 percent from fourth quarter 2012 to the end of 2013. From second quarter 2013 to second quarter 2014, the firm predicts a price increase of 3.4 percent. "Housing is finally turning the corner," Fiserv chief economist David Stiff said in a statement. "There is no reason to be fearful of further large price declines."
When it comes to obtaining a mortgage, borrowers still need good credit and proof of income. The days of easy credit are long gone, and borrowers are more knowledgeable and cautious about getting in over their heads financially than they were during the heady days of the housing bubble.
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