Top 3 Impacts to Home Ownership in 2015

The Westbard Vision
March 31, 2015
2015 Real Estate Year in Review
January 5, 2016

The Year 2015 brought with it some important changes for homeowners and would-be home buyers in Montgomery County and nationwide. Here are the top 3 changes this past year:

  1. Federal Reserve Rate Hike
    Fed Implements 0.25% Rate Hike in 2015

    Fed Implements 0.25% Rate Hike in 2015

On December 16th, 2015, the Fed raised interest rates by 0.25% for the first time since June 2006. While mortgage rates will not drastically increase quite yet, you can certainly expect to a see a gradual and continuous rise in mortgage interest rates in the year ahead. If you’re thinking about buying, act sooner rather than later.
In addition, if you have an adjustable rate mortgage (ARM) or home equity line of credit (HELOC), it will likely adjust upward upon your next anniversary date especially if the Fed continues to raise rates incrementally in 2016.  Most economist are predicting that mortgage interest rates will remain at historically low levels but gradually rise into the 4.25% to 4.5% range over the coming year. 

2.  Mandatory Radon Testing Required to Sell Your Home

In November 2015, the County Council approved a new regulation requiring home sellers in Montgomery County to perform radon testing before the sale of any single-family home – the first such regulation in the entire country. There are a few exceptions to this testing rule – estate sales and tear-down properties are among them. The new regulation goes into effect in October 2016.  While there is no requirement for the installation of a remediation system based on testing results, a buyer will be permitted to cancel a home sale contract if the seller should refuse to do so. The cost of installing a radon remediation system is usually around $1,000.

Radon testing required as of Oct. 2016

Radon testing required as of Oct. 2016

There has been a great deal of controversy surrounding this new legislation. While proponents assert that buyers need to be informed about radon and the impacts of this odorless, colorless carcinogenic gas that may be present in homes, opponents challenge that the testing requirement is ridiculous for a number of reasons including flawed test results (home kits can be purchased from stores for around $40 for a 2-day test; however, the World Health Organization and the EPA state that 90-day testing is much more accurate). Opponents have also suggested that buyer educational requirements should suffice versus mandatory testing.

  1. Massive Overhaul in Home Sale Closing Process Nationwide
    Consumer Financial Protection Bureau is now in charge

    Consumer Financial Protection Bureau is now in charge

Thinking of buying or selling a home in 2016? As of October 2015, MASSIVE changes occurred in mortgage lending laws across the country. Thanks to the Dodd-Frank Act of 2010, the Consumer Financial Protection Bureau (CFPB) has taken over the administration of RESPA (Real Estate Settlement Procedures Act) from HUD (Housing and Urban Development). With this new government agency comes sweeping changes including new forms, new rules and new time frames for a typical home sale. These changes are nationwide affecting home sellers, home buyers, settlement attorneys, mortgage lenders and real estate agents alike.
The goal of this reform was to simplify the information provided to buyers and make mortgages more transparent and easier for the consumer to understand. As with most any government agency created to “simplify” things, complaints run rampant that these new changes are more confusing, more time consuming and more expensive for everyone.
If you are planning to buy or sell a home in 2016, expect longer settlement times (45-60 days versus 30 days), new procedures and new forms you have never seen before. Contact Brian and Amy Maury or your mortgage lending professional to discuss these changes in more detail.