1. Rent Prices are Expected to Increase This Year

National vacancy rates for rental properties are down to 6.8%, which is the lowest rates have been in almost 20 years. With a lack of rental properties available this leaves renters with no room to negotiate prices. Rental rates are expected to rise 8% by the end of 2016.

This means in most areas buying a house is cheaper than renting. According to Ralph McLaughlin of Trulia, interest rates would need to increase to 6.5% for the cost of renting and buying to be equal. The 2015 rent.com report stated that 88% of property managers raised their rent within the past year.

With increased rental costs and a lack of rental properties, buying a house is the best option for many consumers.

2. Interest Rates are Historically Low, But Rates are on the Rise

If you are considering a home purchase or a refinance now is the time to take action. Interest rates are historically low, but policy makers are forecasting federal fund rates to rise to 1.4% by the end of 2016.

In December 2015, the Federal Reserve raised its key federal funds 0.25%. This change marks the first interest rate increase since 2006. The key federal funds serve as a base line for banks and lenders to determine their interest rates.

One important thing to note is that the Federal Reserve believes raising the federal funds interest rate is an indicator of a healthy economy. Fed Chair Janet Yellen stated that they have been monitoring the economic growth and have seen a pattern of sustainable improvement.

3. Available Home Inventory Will Expand

Experts are expecting the housing inventory to slowly increase in 2016. Many homeowners will take advantage of the low interest rates and put their home on the market in the hopes of getting a new mortgage before the rates rise.

In addition, builders are starting to focus on stater and middle range homes, which will increase the amount of available homes and make it easier for buyers to qualify for loans. With more homes available, the market competition will decrease and this will stabilize home prices.

Experts are advising consumers to be patient while the housing market is in recovery. Many markets will still experience growing pains while the housing market catches up with demand. This will be especially true on the lower end of the housing market.

4. Down Payment Assistance is Available

For many borrowers saving for the down payment is the greatest challenge they face when applying for a mortgage. In order to help the housing market recover, the government created new programs to specifically help borrowers with down payment assistance.

Earlier in 2015, Fannie Mae rolled out the HomeReady program. The highlights of the program included a down payment as low as 3%, lower mortgage insurance and most lenders accept credit scores between 620-640. The fee changes have made FHA loans a possibility for more borrowers.

Often people forget about the less common loans such as VA and USDA. These loans both do not require a downpayment, but they do have additional requirements that often make them more difficult to qualify for.

Talk to Mortgage Explorers to find out if you qualify for these alternative downpayment options.