If you are considering buying a home this year, you have probably heard about some of the changes to mortgage regulations and changes in the marketplace. At this point, you may not be sure what to expect. Here is a general rundown of what you will likely see with respect to home buying, particularly in Oregon, in 2014:

  • The number of available homes for sale is dwindling, meaning that the competition for particular homes may increase. Buyers may find it necessary to submit multiple offers before acceptance, especially in the Portland area.
  • Interest rates are rising, and while they are still significantly lower than in the past, buyers may feel pressure to act before rate hikes take place. A one percent increase in interest equals an 11 percent decrease in the maximum amount of the loan.
  • New mortgage regulations may make it more difficult to qualify for a mortgage loan. Regulations created to protect consumers mean they will be required to prove their ability to maintain mortgage payments. Their debt to income ratio cannot exceed 43 percent in most cases. Self-employed buyers will need to prove they meet this level with two years’ worth of tax returns proving sufficient income in the same business. This can be a challenge since they generally use as many deductions as possible to avoid tax liability.
  • Lower FHA loan limits mean that buyers who need to finance properties costing more than $362,250 will be required to seek jumbo loans without FHA assistance and make a 20 percent down payment.
  • As interest rates rise, the refinancing market dwindles, which may force lenders to loosen some of their lending standards, however, the new regulations will limit their ability to do this or offer some of the creative financing they have in the past. Lenders are now required to make reasonable determinations as to the ability of the buyer to repay the loan in order to be safe from legal challenges in cases of default.
  • As the year progresses, regulations and economic change will probably result in a slowing for price increases.

Your partner in this process is your licensed real estate agent. It is his job to stay on top of all of these changes and help you navigate the process of buying a home.