Winter is typically considered a bad time to buy a new home or sell an existing one, but according to new report by Bankrate, that is not always the case. As homeowners planning to refinance and prospective buyers deal with the harsh weather, there may be some “good news” to follow in the coming months, though Bankrate believes consumers will have to act quickly to this end. Lending standards are a bit easier in the winter than they are in other seasons, and that may include, but not be limited to lower down payments. But that was not the only winter housing trend in Bankrate’s list that could benefit customers in general.
Getting into detail with less stringent lending standards, the financial services company published quotes from Ellie Mae president Jonathan Corr, who predicted that the market may “see some more potential lending to make more mortgages available to more buyers.” He also predicted that lenders may allow people to repurchase loans “for pretty much anything,” and may also overlook tiny errors that would otherwise be issues in other times of the year.
Also mentioned were recent moves from mortgage buyers Fannie Mae and Freddie Mac, both of whom are now allowing down payments of as low as 3 percent.
In 2014, home price increases had thankfully and mercifully decelerated after their rapid increase in 2013. For the current year, the deceleration may continue, and that should be a boon for the broader housing market, as it will allow for more stabilization. According to Platinum Data Solutions CEO Phil Huff, this could mark the “beginning of a new norm,” or a more stable market. Low mortgage rates were another ongoing trend, though this is where its “act soon” warning kicks in – 30-year fixed-mortgage rates are now at about 3.65 percent in most surveys, but the Mortgage Bankers Association expects rates to move up to about 4.4 percent by the end of the March quarter.
Though, both of the above winter trends were rather obvious to point out for those in the know, one of the more interesting ones mentioned, if not the most interesting, was the potential opportunity to refinance home equity lines of credit, or HELOCs. The Federal Reserve’s plans to increase its overnight rate later this year could make HELOCs more expensive, which makes refinancing in the winter a good option. “If someone has a large line (of credit) and rates start jumping, that can drastically impact the individual’s ability to pay the loan,” said Chad Royle of Denver’s Bank of the West. “I would strongly encourage people to consider refinancing into a fixed term now.”
The last trend mentioned by Bankrate was another rather obvious one, but a trend that consumers should be aware of, especially younger buyers looking to purchase their first home. As mentioned above, Fannie Mae and Freddie Mac are now allowing ultra-low down payments of as low as 3 percent, down from the previous minimum of 5 percent. Also, homeowners who want to refinance under Fannie Mae’s guidelines can refinance a maximum 97 percent of their home’s values, even if they do not have enough equity to refinance by conventional means.