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7 Tips for Trade-Up Homebuyers

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By Marilyn Kalfus

2. Keep a close eye on interest rates.
The California Association of REALTORS predicts the interest rate on a traditional 30-year, fixed-rate mortgage will increase to 5.3 percent next year, up from an average of 4.1 percent in 2013.

But interest rates could decline or hold steady in coming months, the National Association of Mortgage Brokers says. The group cheered the Federal Reserve’s recent decision to not lower its amount of monthly bond purchases. “The strategic move keeps interest rates low and helps continue to attract buyers to the housing market,” said association President Don Frommeyer.

The Fed is expected to start tapering bond purchases next year, sending interest rates up again.

3. Also watch for new mortgage regulations.
In January, new provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act take effect. The rules prohibit practices common before the financial crisis, such as “no doc” or interest-only loans, and require lenders to verify that prospective borrowers can afford to repay their mortgages. Many lenders are expected to issue “qualified” mortgages, which give lenders greater legal protection and require that borrowers meet stricter rules, such as a 43 percent debt-to-income ratio.

Under the new rules, some lenders say, fewer people would be able to get home loans. Consult a mortgage professional to discuss other upcoming changes in the law and all your options — and do it well before you’re ready to sign a contract.

4. Price your current home to sell fast.
If you’re on the hunt for a new home, you don’t want your old home languishing on the Multiple Listing Service. “Unless you’re in an ascending market, which we’re not in right now, you want to get sold in 30 days,” said Mac Mackenzie, an agent in Irvine, Calif. “Homeowners who want to sell their homes now have an 80 percent better chance because competition is going to be less at the end of the year. Selling at year end can be more profitable to a lot of sellers … and buyers are more serious at the end of the year.”

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