March 14, 2017
At the beginning of 2017, Forbes.com published a housing outlook for 2017 which included predictions from experts about what could happen this year. Three months into the new year, how accurate were some of the highlights of this piece? How do current trends affect mortgage loan applicants and those looking to refinance?
A quick look at current events shows that some of the observations made at Forbes.com in an article by Samantha Sharf are absolutely right and there’s no reason to expect anything different in the short to mid-term. Consider the prediction made in this piece about mortgage rates. According to the article:
“By historic standards rates are still low. In 2017 experts expect movement, but differ on where for the 30-year fixed rate will land. Estimates out there range from between 3.75% and 4.6%–not so far from where it is today.” A glance at the most recent mortgage rate trends shows rates (best execution) listed between 4.25% and 4.5%, which is right about where the Forbes article predicted it would be. Whether the experts thought we’d hit that range this early in the year remains to be seen, but they definitely called the current trend accurately.
The article also calls attention to potential confusion, economically speaking, in the housing market. One prediction was made that city earnings will rise, but general ability to purchase a home may also fall. This, according to Forbes.com, could be attributed to pay increases in sectors that are considered pricey housing markets. The more affordable markets may not, according to the blog post, see a similar increase in earnings.
A gradual rise in home prices is among the predictions made in this article, something which could benefit home owners looking to refinance. If the appraised value of a property increases, the borrowing power for an FHA refinance loan, rehab refinance, or streamline refinance could also go up. According to Forbes:
“Redfin expects the median home sale prices to gain 5.3% in 2017 compared to 2016, which would not be a major change from the 5.5% year-over-year gain expected to close out this year. Zillow is forecasting the median home value to rise 3.2% from $192,500 between November 2016 to November 2017. Zillow’s home value index rose 6.5% in the year ending November 30th.”
What does all this mean for current and potential new home owners? Budgeting and planning ahead for a mortgage or refinance loan is more critical than ever. You may feel you have enough time to save up for a down payment and closing costs; anticipating higher rates, creeping house prices, and even the cost of localized services related to real estate such as appraisals and inspections could mean adding more time to the prep stages of your home loan application. For those looking to refinance, taking full advantage of rising property values is never a bad thing.
It may serve a borrower well to have a conversation with a loan officer and/or a real estate agent to see what trends might affect a future refinance or new purchase loan. If property values are on the rise, when is the best time to apply for that rehab loan or energy-efficient mortgage refinance?
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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