For people who have been on the fence about buying a home for the first time, 2015 could be the ideal year to make a decision. For a number of reasons, this year presents both affordability and an easier process than ever. Let’s take a look at what makes it a great time for first-time buyers to take the plunge.
Reason #1: The Economy Is Improving
The economy has improved significantly in the past half decade, which means more money in Americans’ wallets. For many Americans, these improvements translate into finally making tough economic decisions, like purchasing a first home. Not only is a home a place to reside, but it’s also an investment.
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With improvements in the nation’s economy come higher property values. Property value is already on the rise early in the year – which means it’s a good time to snatch up the ideal home sooner rather than later. As evidenced by Quicken Loans Home Value Index data, home values have increased by almost 4% in the past year. For many homebuyers, this statistic is enough of a reason to buy sooner rather than later – before home values increase even further.
During the final policy meeting of 2014, Janet Yellen, Chairwoman of the Federal Reserve Board, offered some information that has already encouraged homebuyers to act fast. According to Yellen, the Fed plans to raise interest rates this year – but not until a few board meetings have passed and the nation has watched the current state of interest rates play out.
Reason #2: It’s Going to Be Easier
At the end of December, Fox Business blogger Chris Birk stated that it will be easier to buy a home in 2015. Reasons for this include:
- Mortgage credit lenders are relaxing their requirements. After Fannie Mae and Freddie Mac implemented new policies in 2014, lenders and buyers alike found that much of their confusion was cleared up. With new clarity and peace of mind, industry experts believe more people than ever will have access to mortgage credit. Further, many lenders are lifting many of their overlays.
- Down payments are decreasing. In their new regulations, Fannie and Freddie have stated that they will both support loans with only 3% down payments. This means more borrowers will be qualified for mortgages this year.
- Rates are still lower than expected. At the beginning of last year, economists predicted that mortgage rates would rise above 5% by the end of 2014. This statistic has proven to be false. In November of 2014, the average rate on a fixed mortgage remained at 3.86%, for an annual average of 4.17%, according to Freddie Mac’s data. While these rates may rise as 2015 progresses, they still promise to stay far below historical averages for the past generation.
With all this in mind, it may become tempting to purchase a new home without doing some of the important legwork this process requires. Prior to making a large investment like buying new property, you should always be sure to check your credit score to find out how much house you can afford.
Next, you’ll have to go through a thorough process of application, pre-approval, processing, underwriting, and closing. Check out the breakdown of the loan process today to get started.