Great news for homeowners – home values are steadily rising and millions of people have equity in their home again. This is welcome relief for people that have counted their home as part of their net worth and those that have been hit hard with the declining home prices of the past several years. According to Corelogic, 2012 over 1.7 million homes regained equity. That means that 49.4 million homes with mortgages that now have positive equity (38.1 have 20% or more equity) in the US. That leaves 10.4 million mortgages with negative equity.
According to the Corelogic report, home values only need to increase another 5% for 1.8 million mortgages to hit the positive equity mile marker. These trends are a positive sign for homeowners throughout the country that have felt stuck in their current home loan or have wanted to sell but needed values to increase first. If you are in the market to purchase a home this should be a clear warning sign – buy now if you want to save money. There are still plenty of short sales on the market but this is likely to change as more homeowners hit the positive equity mark on their mortgage. Home prices typically increase in the late spring and summer months as more people put their homes on the market. Home buyers purchasing now can take advantage of the combination of seasonally low home prices and the number of short sales still on the market.
For homeowners that still have negative equity there are home loan programs that can help. The HARP loan program was created as part of the Making Home Affordable Act and has been extended throughout 2013. This program is only available to homeowners that have less than 20% equity in their home. If your value has declined and hasn’t come back to where you have less than 80% loan to value, the HARP home loan is an ideal solution. It allows you to lower your interest rate even with a low home value. An experienced mortgage lender can walk you through the process to show you how much money you can save on a monthly basis.
Additionally the FHA Streamline Refinance program will typically waive the appraisal requirement. This is an advantage for homeowners that don’t have very much equity in their home. In order to qualify for this loan program you need to be an existing FHA loan holder and be current on your mortgage payments. Since the FHA is already insuring your mortgage they know your pay history and the risk associated with your mortgage loan. If you have been making on time payments reducing your mortgage interest rate will only increase the likelihood of you paying on time, making your homes value less of an issue.
For homeowners throughout the country 2013 is likely to be a good year. Home values are rising and for the first time since the housing bubble popped, the majority of homeowners finally have equity in their home. If you are looking to purchase a home – act now before to save both on your homes purchase price and your monthly payment.
