According to a price index by CoreLogic, homes prices are up 7.5% in 2014 for the month ending in June.
However, this is actually a decrease from where prices where one year ago. Last year at this time home prices were at a 7 year high and had advanced 11.4% on a year-over-year basis. The slowdown in home prices is partially due to the sale of homes that are in foreclosure.
Foreclosed homes typically sell for less and thus reduce the average selling price of other homes in a given area. For example, when the sale of distressed properties rose sharply in 2009, home prices fell dramatically.
Good News for Buyers
The slowdown in home prices is good news for news for new buyers looking to enter the market. Last year buyers witness a sharply increase in home prices as well as mortgage rates. This came at the same time that wages remained stagnant for many workers. Paychecks for the average worker rose about 2% per year since the recession ended. This is about the same rate as inflation.
So, if you were one of the millions of people who was priced out last year because home sales were too high, now is an excellent time to reconsider buying a home. If you’re selling your home it may be worth holding onto it for a while longer.
Even if you’ve already purchased your home years ago, the drop in mortgage interest rates can still work in your favor. Refinancing to a new low rate can end up saving you thousands of dollars in interest payments over the life of your loan. Whether you’ve taken out a VA loan, FHA loan or conventional loan, there is likely a way for you to cut down your mortgage interest rate.
Closing costs remain low at many mortgage banks and there are still a number of places that are quoting interest rates in the 3% range. If it’s been a while since you’ve refinanced or you shave off at least 1% point from your interest rate, then it’s absolutely worth looking into a refinance loan.
The good news is that the qualifications for refinancing have gotten lower and lower over the years. If you’re unable to get traditional refinancing currently because the value of your home has declined, then you may be eligible to refinance through programs like the Home Affordable Refinancing Program (HARP).
Of course, if you’re looking to buy a home, not all areas of the country have been affected equally by the general decline in home prices. Some areas have seen the values of the homes actually rise. Areas in the southern part of California have seen an increase in home prices. If you find yourself in this situation, then you may be eligible for more conventional forms of refinancing.
Check with your local mortgage lender to find out how much you could possibly save by refinancing. You may very well lower your payment amount, shorten the duration of your home loan or potentially do both at the same time.