As 2017 gets well under way, many people wonder how the policies of the new President and Congress will affect the housing market in general, and real estate investing more specifically. Let's look at some of the different policies on the books so far and what they might mean for you.
Reverse the Executive Order To Reduce Mortgage Insurance Premiums by 0.25%
The administration reversed the order to reduce the mortgage insurance premiums by 0.25% of the toal amount borrowed. Some people are happy, saying that the insurance protects taxpayers in case of another housing market crash. Others were distressed saying that this move keeps low-income home buyers from affording loans.
In terms of real estate investing, it depends on where you are in the process. For those that already have a mortgage, they will not be affected by the change. However, those that are seeking a new mortgage could not have higher mortgage fees, making some homes no longer a good buy for real estate purposes. This means that you need to be sure to calculate all your costs associated with your mortgage to be sure that the home will have a positive cash flow.
Increase in Mortgage Rates
Mortgage rates are increasing and will continue to do so throughout 2017. However, what will come after the end of the year is still unknown. It is possible that new tax policies will cause mortgage rates to decline.
For those that are investing, even with rising rates, there are still great deal to be had. The end of 2017 will still have very low interest rates. Paired with a low inventory of houses, the interest rates should not be a big factor at this time.
Loosening Regulations Dealing with Loans
This administration says that it will create policies that free up home buyers to apply for a wider variety of loans. This will start by reevaluating the Dodd-Frank Act to loosen some of the regulations on banks. This will allow banks to lend to more people.
For those that invest in real estate, this means that bank loans may be easier to obtain as you find properties. Of course, this will depend on the actual regulations put into effect.
Increase Tarriffs on Imported Goods
This regulation doesn't sound like it would affect real estate, but it will. As tariffs increase on imported goods, funding and investment will divert to more local resources. As this happens, local housing markets and prices will increase.
For those that invest in real estate, as more money stays in the local market, they will see local housing markets and prices increase. In general, industry-friendly policies help the real estate market.
As more policies change, real estate investors may see changes to the investing landscape. Some
policies could be good for investments while others not so good. However, as long as you look at the numbers and make sure the property will cash flow, then real estate investing will remain a valuable asset in your portfolio.