Purchasing a home in 2015 is a good option for many reasons. The housing market is stronger, rental rates are rising and home mortgage approval is far more attainable. Become familiar with the market and why you should buy now and start the home-buying process in 2015.
Stronger housing market
A stable and strong housing market is good news for potential homebuyers. Core Logic's 2015 Housing Outlook indicated that dropping oil prices and an anticipated rise in demand for housing will push the 2015 housing market upward.
The decreasing price of crude oil leaves Americans with extra income and can cut down on energy-related costs in homes. The housing market may benefit from individuals becoming more confident in their financial situations and ultimately deciding to purchase homes.
A heightened demand for real estate options is a major driving force behind a stronger housing market. As millennials get married and plan to start families, their residential needs shift toward homeownership. In addition, the Bureau of Labor Statistics reported in the December 2014 Employment Situation that the unemployment rate decreased 5.6 percent and nonfarm payroll employment increased by 252,000. Continual job growth is key to bolstering the housing market. Zillow, a real estate company, noted that homeownership tends to decline when unemployment rises. If millennials find and retain full-time positions, they are more likely to invest in a home.
Rising rental rates
According to MarketWatch, 59 percent of millennials would rather rent a space than purchase a home. Unfortunately, this may cost them more than $700,000. Lower interest rates and the soaring cost of rent make purchasing a home a more savvy economic decision.
Purchasing a house may be a better idea because you are making mortgage payments to own your home, while renting does not offer that advantage. Buying a home now may be the better decision if you are able - average home prices and interest rates are expected to increase in the future.
Owning a home is more attainable for qualified buyers
The requirements for being approved for a mortgage have recently become more lenient for qualified borrowers. Lower down payment options are available, credit and underwriting requirements are loosening and extra expenses are being reduced.
Freddie Mac offers the Home Possible Advantage program which allows for a 3 percent down payment. To qualify for the program, a borrower must be a first-time homebuyer and he or she must enroll in an education loan program, provide proof of income and meet the credit requirements. Fannie Mae also offers to cover 97 percent of the home's value.
"Our goal is to help additional qualified borrowers gain access to mortgages," said Fannie Mae's executive vice president for single-family underwriting, pricing and capital markets, Andrew Bon Salle. "This option alone will not solve all the challenges around access to credit. Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage. We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers."
In addition to a more feasible down payment option, premiums associated with FHA loans have now been cut, according to National Mortgage News.
"That $900 could be a full month's payment that they're saving," said President Barack Obama during a recent speech in Phoenix. "Over the next three years these lower premiums will give hundreds of thousands of more families a chance to own their own home. And it will help make owning a home more affordable for millions more households overall in the coming years."