Homeowners across the country have been able to take advantage of super-low interest rates on their mortgages for the past few years, which has certainly helped to make home purchases more affordable.

But now that the Federal Reserve has recently announced that interest rates will start to increase, homeowners and borrowers may wonder what type of impact this may have on home sale prices. After all, higher interest rates means more money spent over the life of a mortgage.

The question is, do higher rates mean sales will suffer? 

Obviously, the higher the mortgage interest rate, the more money is needed to pay towards interest on a loan. The reverse is also true: when interest rates are lower, the cost to borrow is also reduced, making it easier and more affordable for borrowers to take out a mortgage.

We’ve been seeing the latter scenario play out in many markets across the country: with a sustained low-interest rate environment, sales have been pretty strong in many markets. The number of home sales increase as more people are able to take out a lower-cost loan. During periods of low interest rates, more homes are constructed as the demand increases. Not only that, but development firms are able to finance more construction thanks to the ability to borrow money at a cheaper interest rate.

While the cost to obtain a mortgage is correlated to the interest rate, sale prices of homes don’t necessarily always directly relate. Despite the fact that lower rates can realistically boost the demand for homes and subsequently drive home prices up, the demand can just as easily subside if the prices climb too high, thereby causing property prices to drop.

But are we placing too much emphasis on interest rates on home sale prices?

As much as interest rates have an effect on home values, they aren’t solely responsible for the prices that homes can sell for at any given time. There are plenty of other factors, such as a strong economy, which have just as much – if not more – of an impact on sale prices as mortgage rates.

Mortgage Rates Don’t Directly Impact Home Sales

While higher interest rates can have a negative effect on sale prices, they’re not the only things impacted in the housing market.

A sudden spike in mortgage rates can lead to a plummet in home sales, as well as induce current homebuyers to readjust their approach.

Whether they start looking at homes in a lower price bracket, scrape together more money to put towards a larger down payment, go for a variable-rate mortgage in order to slash a few points off their interest rate, or bail out altogether, these are all real possibilities that can have an effect on the overall housing market.

The Ripple Effect of Rising Rates

When first-time homebuyers are pushed to the side as interest rates increase, the effect is seen down the line. Those already in the market who are looking to sell their current properties and make a new purchase are also affected.

Homeowners with properties listed on the market may eventually discover that it becomes more challenging to actually sell their homes because there are fewer buyers able to afford them. And so the ripple effect works its way through the market. At some point, property prices can be negatively affected.

Mortgage rates also impact non-owners who are on the fence about renting or entering the housing market. At the end of the day, the more affordable option is often chosen. And while in many cities home prices are relatively affordable, in many other cities – such as San Francisco and Boston – buyers can be easily nudged out of the market with even a fraction of a point increase in mortgage rates.

In these more expensive markets, a rising rate could make renting a more attractive option, which can thereby slow demand for housing in these particular areas.

The Bottom Line

Considering how low mortgage rates still are, we’re a long way from the sky-high rates that plagued the nation back in the 80s. While rates aren’t expected to spike anywhere near those staggering figures, we can still expect a marginal increase in rates, albeit a very slow and steady one. In the meantime, now seems to be as good a time as ever to make a purchase, considering the fact that we’re still hovering around historical lows in mortgage rates. The sooner you can lock in at a lower mortgage rate, the more affordable your home purchase will be.

After the financial crisis hit the nation back in 2008, hundreds of thousands of families lost their homes to foreclosure. In fact, foreclosure filings skyrocketed over 81% that year compared to the year before.

Getting approved for a mortgage is tough enough these days for any borrower, but it can be a lot more challenging with a foreclosure on the record.

But all is not lost. Becoming a homeowner again after suffering through a foreclosure is possible, though a number of hurdles need to be overcome first in order to obtain another mortgage and get back into the market.

And the length of time that you’ll need to wait to put your name back on title will depend on the precise loan that you’re after.

Preparing For Homeownership

Before you plan on applying for another mortgage, there are a few tasks that need to be ticked off your checklist first. It should be noted that a minimum three-year waiting period will need to elapse following a foreclosure. The clock starts from the actual date that the foreclosure was completed, not when you were notified that you had to vacate your home.

Since you’ll likely be required to put a minimum 10% down payment towards any new purchase you make, now’s the time to start saving every penny possible. This is typically the most challenging thing for homeowner hopefuls to do, especially when mounting debt is present that requires attention. Lenders will want to be certain that you won’t default on your loan again, so the more money you can put towards the purchase – and ultimately reduce the loan amount – the better.

Your credit score plays a key role in your ability to get approved for a loan, so do what needs to be done to improve it. Get a hold of your credit report to see if there are any errors that are bringing your score down. If so, request an investigation to get those mistakes wiped off your report. In the meantime, make sure any debt payments you’re responsible for are made in time and in full each month, and don’t take out any additional loans for large purchases.

Make a trip to your mortgage lender to discuss your options, and apply for a mortgage pre-approval. This will help you narrow down the price range of homes that meet your specific budget, which will help save you and your real estate agent in the home searching process. Your loan specialist will let you know at that time if there are any other things you need to do to boost your chances of mortgage approval.

Conventional Mortgages

If you intend on applying for a conventional mortgage, the wait time following a foreclosure will vary from one lender to the next. You can expect to have to wait any time between two to eight years, or even longer in some situations. Some lenders may slash the waiting period, as long as they are confident that you have a considerable down payment saved up (often 25% or more). They’ll also likely tack on a higher interest rate, and subject you to more stringent credit and debt-to-income criteria.

FHA Mortgages

Unlike conventional mortgages, FHA loans – those that are backed by the Federal Housing Authority – are the most lenient of loan programs for those who have undergone foreclosure in the past. A minimum of three years must pass following foreclosure before being eligible for these types of loan, which begins when the foreclosure case ended. However, if the foreclosure involved an FHA loan, the waiting period begins on the date that the FHA paid off the previous mortgage lender on the claim.

While the traditional wait period before being able to apply for an FHA loan has been three years, recent changes in the agency’s regulations have made it possible for FHA loans to be approved as early as one year after the completion of foreclosure. The caveat is that you’ll ned to prove that a financial situation outside of your control led to the foreclosure. This would include a medical problem or job loss that slashed your income by at least 20% over a six-month period.

Fannie Mae & Freddie Mac Mortgages

Before applying for a Fannie Mae or Freddie Mac loan, a minimum of seven years needs to pass following the completion of foreclosure. However, like FHA loans, there are exceptions. You might be able to cut back the waiting period down to three years if certain requirements are met.

For starters, if you can prove that the foreclosure was caused by circumstances outside of your control, you may be able to shorten the wait period. This may also be possible if you can show that the maximum loan-to-value ratio of your new mortgage is 90%, or is the LTV ratio specified on Fannie Mae’s loan eligibility matrix – whichever of the two is higher.

The Bottom Line

Climbing out of the financial distress of foreclosure may be tough, but it’s still possible to become a homeowner once again. Depending in the type of loan you are considering, the wait times will vary. Your best bet is to hunker down and get your financial life in order, sit down with a mortgage specialist, and determine which loan type is ideal for your particular financial situation.

Millennials now make up the largest proportion of the population in the US at over 80 million. With so many of these 20- and 30-somethings, one could only assume that they’d simultaneously make up a large part of the real estate market.

But that’s not necessarily the case.

Millennials are taking their time testing the waters of the housing market, for a variety of reasons.

A number of studies have shown that a large portion of millennials – also referred to ‘Generation Y’ – have plans to buy a home some time in the near future, but they’re not quite ready to take the plunge. Whether they’re currently renting or still living with Mom and Dad, the pace at which they’re entering the market is a lot slower compared to their parents’ generation.

So why is this demographic hesitant to jump into the world of homeownership?

They Don’t Have Sufficient Savings

Getting a mortgage to finance a property is pretty tough when your savings account is scraping the bottom and your student debt is sky high. That’s precisely where many millennials are finding themselves.

Most of the country’s $1.3 trillion student debt burden lies on the shoulders of younger Americans. And not only are Generation Yers working hard to pay down their debt, they’re not exactly having much luck finding a place that meets their budget.

With the current housing affordability crisis that’s plaguing many parts of the nation, being financially capable of affording a home is becoming increasingly difficult, especially for first-time buyers. Half of all millennials have less than $1,000 in savings, putting them in no position to be able to put a half-decent down payment on a home.

Lenders are a lot more strict with their lending criteria than they were before the financial crisis of 2008. And considering these young Americans have more debt and less income than prior generations, their debt-to-income ratios tend to be a lot higher than lenders expect. 

Plenty of millennials graduated from school facing a tough job market, and even when they manage to land a good job, they haven’t experienced the income growth that would provide them with enough money to pay down student debt and save for a down payment.

There’s a Ton of Competition

Along with an affordability issue also comes a supply issue, especially in certain pockets of the country like San Francisco and Seattle. And as inventory fails to keep up with demand, prices jump. It’s tough for millennials who are just getting into the real estate market for the first time to find their way in, especially when more and more of the competition is waiving financing contingencies and even going so far as to pay all-cash.

In fact, over 38 percent of single-family home and condo sales as of November 2015 are all-cash transactions. That’s a tough one for any buyer to compete with, let alone a young buyer within minimal savings and a ton of debt yet to pay off. Even with a good credit score and an adequate down payment, it might not be enough when competing with people with cash.

They’re Getting Married and Starting Families Later

Unlike their parents’ generation and those before them, millennials are waiting a lot longer to tie the knot and start families. From the change in culture to the volatile economy, this demographic just doesn’t have the same pressing desire to make such important commitments.

Younger people today are extremely cautious about entering relationships because they’ve seen so much divorce – they’ve been born into and grown up around it. Postponing commitment is becoming more popular, so bad relationships are more likely to end before marriage.

According to research from Pew Research Center, 26 percent of Americans between the ages of 18 to 33 are currently married. That’s much lower than the 48 percent of Baby Boomers and 65 percent of the Silent Generation who were married within the same age range.

And with fewer millennials making the leap into married life, they’re less likely to get into home ownership so soon. According to TD Bank, millennials are less likely to buy a home without a partner or spouse compared to first-time homebuyers from generations past.

The Bottom Line

There’s no doubt that millennials are getting a delayed start to entering the housing market. With mounting student debt, minimal savings, and lack of financial experience, there’s certainly some work that needs to be done. But with the right plan of action guided by a seasoned financial advisor, there’s no reason why millennials can’t put themselves in a stronger financial position and prime themselves to become homeowners sooner rather than later.

The differences between condo ownership as opposed to single detached home ownership are obvious. For one, there are HOA fees that condo owners need to pay that aren’t applicable to most single detached properties. Part-ownership of common elements is another unique feature of owning a condo unit.

But condo insurance is yet another aspect that differs from that of freehold properties. While both types of properties require insurance, condo needs are different. This is because condos are covered by the community’s master insurance policy for specific elements, as well as individual condo homeowner insurance.

But what’s covered under one policy isn’t necessarily covered under another.

Here are 4 things you should know about your HOA’s master insurance policy so you understand exactly how you and your belongings are protected.

1. Two Types of Master Insurance Policies Exist

Your HOA’s insurance policy falls under two broad categories: “all-in” and “bare walls-in.”

All-in – A lot more is covered through “all-in” insurance policies compared to bare walls-in coverage for condo owners. For example, if the walls in your condo are damaged by fire, your HOA community’s all-in insurance policy would cover many interior elements, such as fixtures, improvements and additions to the interior surfaces of the walls, ceilings, and floors. Under an all-in insurance master policy, you’d really only need limited coverage with individual homeowners insurance.

Bare walls-in – This type of condo insurance master policy covers all of the condo property from the exterior framing inward. But it doesn’t offer the individual unit owners as much coverage as an all-in master policy. Any damage to walls, floors and ceiling in individual units couldn’t be covered in the event of a fire, for example. Essentially, you’d require more coverage under your individual homeowners insurance policy in order to make sure your unit’s interior surfaces are covered.

Variations of both types of master policies exist, which should be detailed in the condominium association bylaws.

2. Your Individual Policy’s Coverage Will Depend on the Master Policy in Your Condo

Anything that exists within the confines of your individual unit is your responsibility. But depending on what type of master policy your HOA has in place, you may want to carefully consider the type of coverage that you get (and pay for).

The type of coverage you opt for can vary. But generally speaking, the following coverage options are available to offer protection on certain things that your HOA insurance might not:

Personal items – If any of your belongings are damaged or stolen, condo insurance can cover the replacement cost value (less depreciation).

Interior structure – Did you know that the actual flooring, drywall and fixtures are yours? As such, they’re your responsibility to protect under insurance if your HOA’s bare-walls in policy won’t.

Liability – If you have guests over and they’re injured during their visit, condo insurance may help cover the expenses if you’re deemed responsible.

Loss assessment – If your condo association determines that you’re responsible for any losses to the HOA – such as damage to one of the common elements – loss assessment coverage can protect you financially.

Loss of use – If your unit is damaged to the point that it becomes uninhabitable, your individual condo insurance policy may cover the costs associated with rental expenses while your place is repaired and brought back up to par. 

Identity theft – This is becoming a huge problem in the US. If your unit has been broken into and personal documents such as passports, credit cards and driver’s licenses are stolen, identity thieves can have a field day. This coverage comes with a minimal cost, but can be extremely helpful.

3. Should You Opt For Cash-value or Replacement-Cost Coverage?

After you’ve determined the right amount of coverage, you’ll need to choose your coverage based on two basic categories: cash value and replacement cost. The difference between the two could mean hundreds if not thousands of dollars, which is why it’s critical to choose wisely.

Cash-value coverage – Only the value of the insured item less depreciation will be replaced with the cash-value option. Any item you buy will immediately start to lose its value the moment you walk out of the store. A 5-year-old television isn’t going to be worth as much as it did when it was first purchased, for instance. The insurance company would need to check out what that same (or similar) television could cost today, then deduct any depreciation.

Replacement-cost coverage – Unlike cash-value coverage, depreciation isn’t used to calculate how much you’d get back after the loss of your contents, such as a television. Instead, you would receive a check for the amount what it would cost to replace your old television with a new one on the market today.

4. Association Insurance Policy Deductibles Are Paid By All Owners

Much like your own personal insurance policy requires a deductible to be paid should you file a claim, your HOA’s master policy requires the same. But the amount of this deductible can vary greatly, and is ultimately paid for as a group by all condo owners in the building.

Whether the condo community’s building was damaged by fire, wind, or natural disaster, the association would file a claim against the master insurance policy. The deductible amount would be spread out among all condo owners to be paid. So, if there are 50 unit owners in a building, and the master policy comes attached with a $5,000 deductible, each owner would be responsible to pay $100 towards this cost.

You need insurance for your condo, much like you would for any other type of real estate. But because of its unique traits, the type of individual coverage you get for a condo requires some careful consideration. Take the time to understand your particular HOA’s policy and coverage to make sure the policy you buy offers adequate coverage.

After the financial crisis hit the US back in 2008, FHA loans suddenly became pretty popular among borrowers who found it tough to secure a conventional mortgage. Before that, FHA loans were typically an option reserved mainly for low-income homebuyers.

Fast forward eight years later, and FHA loans are still a popular option for homebuyers who might struggle to get approved for a conventional mortgage. Thanks to their lower down payment requirements and softer lending criteria, FHA loans often make an attractive alternative for many borrowers.

Here are a few things you should know about these types of loans if you’re considering one.

1. An FHA-Approved Lender is Required

Don’t let the name fool you – the FHA itself doesn’t actually provide loans directly to borrowers. Instead, these loans need to be funneled through an FHA-approved lender. The FHA insures these loans and backs up lenders who provide them to qualified borrowers. That means the FHA will reimburse the mortgage company for its losses should the borrower default on payments.

In exchange for this insurance, borrowers are charged both an upfront fee and a yearly premium. This added protection gives FHA-approved lenders the ability and peace of mind to offer financing to borrowers who might not necessarily qualify for a typical home loan.

2. Mortgage Insurance Can Make FHA Loans More Expensive Than Conventional Ones

Speaking of insurance, it’s this feature that tends to make up the biggest cost for FHA loans. While the interest rates are often lower than conventional rates through Freddie Mac and Fannie Mae, mortgage insurance can make FHA loans more expensive.

As stated above, FHA mortgage insurance premiums (MIP) insure your loan in the case of default. It’s these premiums that allow the FHA to continue to keep this program available to homeowners without dinging the taxpayer.

FHA mortgage insurance premiums are paid in two parts. The first, referred to as “Upfront MIP,” is paid out at closing. This amount is automatically added to the mortgage balance by the FHA and is equal to 1.75% of the amount of your loan.

Your yearly mortgage insurance premiums, on the other hand, are paid out on a monthly basis. The cost of these annual MIP payments range depending on your location, and can be as high as 1.10% in more expensive areas of the country like New York City or San Francisco. On average, however, MIP is usually somewhere between 0.45% and 0.85% per year. The exact cost will also be based on how much is being borrowed, the length of the loan, and the loan-to-value ratio (LTV).

3. Minimum Down Payment is 3.5%

You’re probably already aware of the fact that FHA loans don’t require massive down payments in order to get approved for one. That’s probably one of the big traits that may have lured you to FHA loans in the first place.

What you may not know is that there is a minimum down payment, albeit a pretty small one. For the majority of borrowers, a minimum of 3.5% of the purchase price of a property is required by the FHA. That’s a very appealing feature of these loans when you factor in how expensive a home purchase can be.

4. Your Down Payment Will Determine the Credit Score Needed For Loan Approval

While FHA loans attract borrowers who don’t have excellent credit or a large amount of liquid cash to put towards a down payment, there is a caveat. The minimum credit score needed to be approved for an FHA mortgage depends on the type of loan that’s required by the borrower. In order to take advantage of a 3.5% down payment, your credit score needs to be 580 or higher.

If your score is between 500 and 579, you’ll need to come up with at least a 10% down payment. Make sure you know your credit score before applying for an FHA loan so you don’t come across any unpleasant surprises.

5. Closing Expenses May Be Covered

When buying a home, plenty of closing costs can creep up on the sale and really put a dent in the wallet. Appraisals, lawyer fees, title expenses, credit reports, and other closing costs can add up, but many times the FHA will allow such costs to be covered by sellers, lenders, and home builders. Oftentimes these costs are offered as an incentive for the buyer to purchase a certain property.

As great as this sounds, there’s a catch: lenders may charge a higher interest rate on the FHA loan if they pay for closing costs. Before agreeing to such an arrangement, it’s a good idea to compare loan estimates to determine which option makes more economic sense.

6. Costs of Certain Repairs Can Be Built Into the Loan

If the home you plan on buying needs a little TLC, you might be able to access the extra cash needed to bring the home up to par. The FHA has a product called an FHA 203(k) loan which helps cover the costs associated with repairs and renovations. This specialized loan product is built into the mortgage, so you end up paying for the repair costs little by little rather than all in one shot. This can be extremely helpful if you can’t scrape together a lump sum of money to pay for the renovations.

As if this wasn’t beneficial enough, the loan amount is based on the forecasted value of the home after the repairs are done, rather the current appraised value.

Getting a mortgage can be tough if your financial ducks aren’t all in a row. FHA loans can be a great option if you find yourself struggling to scrounge a decent amount of cash for a down payment, or if your credit score is barely scratching the surface of what’s considered stellar. But there are also other expenses that come with these government-backed loans; namely, mortgage insurance. Make sure you have an in-depth chat with your mortgage specialist to determine whether or not taking the FHA loan route is best for you.