With rising interest rates and less people looking to refinance, mortgage lenders in Knoxville are putting more of a focus on securing home loans and loosening some of the lending guidelines for approval as bait.  According to a recent report by LendingTree, the average down payment for a 30 year fixed rate mortgage dropped 2.74% to 15.73%. Tennessee actually ranks as the 9th lowest state, as far as low down payment average, coming in at an average of 13.5% down payment.

The FHA recently removed the popular 3% down payment on their loans and has subsequently increased it to a minimum of 5%.  Buyers can find many non-FHA loans through lenders offering the same 5% down.  Remember, the better your credit and income are, the better your rate and terms will ultimately be, so do your homework prior to applying for a loan.  There may be some actions you can take to increase your credit score, that will ultimately save you money on your loan and help you get approved.

Contact Troy Stavros with Gables & Gates, REALTORS at 865-999-0925 to discuss the home buying process or for additional advice on getting a home loan.  Working in the Knoxville real estate business daily, we have many trusted mortgage lenders in Knoxville that we work with and can recommend so you don’t get stuck in a bad situation.

Whether you currently have your Knoxville home on the market, are planning on selling in the future, are searching for a home in Knoxville, or plan to be, knowing what the real estate landscape will look like in the year ahead can help you make a plan.  What can we expect moving forward for the rest of 2013 and through 2014 in the Knoxville real estate market?  The video below, recorded yesterday, answers many of those questions.  Lawrence Yun, Chief Economist with the National Association of REALTORS, gives us his professional opinion on how far we’ve come the last few years and what we have to look forward to in the real estate market in the year ahead.

A summary of the main points include:

• We’ve experienced a 20% cumulative gain in homes sold over the last 2 years
• We’ve experienced double digit price gains in the last 2 years
• We are seeing a decline in affordability (caused by the higher home prices, slower income increases and rising interest rates)
• Decline in affordability will level out the rapid growth of home sales
• Home prices will continue to rise because of a continued inventory shortages
• Job growth will increase the pool of home buyers
• Look for a possible loosening in the mortgage underwriting (approval) standards
• Mortgage interest rates should rise and average approximately 5.3% by the end of 2014
• Price increases will be more moderate

What does this mean for you as a Knoxville home seller or home buyer?  If you are selling a home in Knoxville you will benefit from the continued price gains, but the rising interest rates could effect the number of buyers that can afford your home.  Also, once you’ve sold your Knoxville home you typically turn into a buyer.  Those buying a home in Knoxville will be effected by the decline in affordability caused by the higher home prices and rising interest rates.  Continued shortages in inventory will mean longer home search periods and having to pay closer to asking price because of increased competition for Knoxville homes.

Our advice would be to start the process now.  Take advantage of the current mortgage rates and home prices before they start rising.  While many buyers will wait until Spring, starting now means you will face less competition which could ultimately save you even more money.