The Federal Reserve's pledge to stop buying mortgages by the end of March is sparking fears among home builders, mortgage investors and even some Fed officials that mortgage rates could rise and knock the fragile housing recovery off course. Rates on 30-year fixed-rate mortgage have risen by a quarter of a percentage point in the past month to around 5.2%, according to HSH Associates, near their highest levels since September as the bond market has pushed up long-term interest rates amid signs of an improving economy.
The recent rise in mortgage rates could be a prelude to even bigger increases in coming months as the Fed steps away from support for the market. That prospect has some in the markets counting on the Fed to change course and keep buying past March, which many officials are reluctant to do.
If the interest rates goes up by 1% point, you will lose 10% of your buying power. In fact, you will pay the same monthly payment for a home purchased at $180,000 that you would currently pay for a home purchased at $200,000
There has never been a better time to buy. You only have until April 30th to capitalize on the First Time Homebuyer Tax Credit and The $6500 Tax Credit for current homeowners. And, you don't need to sell your home to get the $6500 credit! You can keep if for an investment and move up.
You can purchase a house for $270,000 with FHA loan and a down payment of only $9,500. The seller can help with buyer closings costs and you get a $6,500 or $8,000 tax credit.
No one can predict where the bottom is until it has made the turn to go up again but I guarantee you are in the safe zone. Don't delay - with home prices low, interest rates low, and a tax credit to boot, I just can't see a more "Perfect Storm!"
A "perfect storm" is an expression that describes an event where a rare combination of circumstances will combine to create an unusual phenomenon.
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