Buying A Home In Salt Lake City? Do It Now !

We have been saying for awhile,  that if you are thinking of Buying a Home in Salt Lake City you had better DO IT NOW!

We have also told you ( as has every Realtor in the Salt Lake area) that there were at least 4 good reasons you should start your home search before the market changed.

1. The abundance of distressed properties in the greater Salt Lake Housing Market. Foreclosures, HUD Homes, REOs, Bank Owned Homes, and Pre Foreclosed Homes, IE: Short Sales give Home buyers in Salt Lake City real opportunities.
2. Prices on Salt Lake Homes For Sale (and Condominiums in SLC) have dropped in many areas as much as 50% in prestigious areas of the Valley. Pressure from sellers of existing homes has even driven down the price of Salt Lake New Construction ( New Homes)
3. Government incentives & Tax credits. The $8,000 tax credit for First Time Home Buyers in Utah now encompasses buyers that already own a home and while the incentive is reduced to a $6,500 incentive it can mean an immediate tax rebate for Salt Lake Home buyers.
4. Low Mortgage Interest Rates. Interest rates on the purchase of a new Salt Lake home are the lowest in memory of most Utah Home Buyers .

Frankly I'm not worried about Items #1 or #2.

There will be plenty of Salt Lake Homes For Sale, at  prices advantageous to Utah Home Buyers for a long time.

Item # 3, the Home buyers credit, has an expiration date. Whether it will be renewed or not, we don't know, but at least we have a date we can plan on to buy our New Salt Lake Home or Condominium.

We can at least understand our time frame, and what it could cost us to wait to buy that house in SLC Utah.

Not so with Item # 4, Interest rates.

Interest rates are a mystery to most of us, but can effect us the most.

Thats why when Doug Walker, one of our trusted lender associates @ Republic Mortgage sent us this article on "why you should buy that home in Salt Lake City today", we thought we should pass it along.

Enjoy.

For prospective home buyers who are on the fence about making a home purchase, the next few months represent a countdown of sorts for two reasons.

The first of these, the coming expiration of huge tax incentives, may be a bit more obvious to most borrowers. April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time home buyers and up to $6,500 for repeat home buyers. The credit can be claimed only on contracts that close by June 30, 2010.

Secondly, beyond the waning benefit of the Federal income tax incentive, another form of stimulus will soon disappear, as the Federal Reserve winds down a program that has been keeping home loan rates artificially low.

Rate Alert...

The lowest rates of 2009 were driven down to their attractive levels because of the Fed's Mortgage Backed Securities (MBS) purchase program. Home loan rates have an inverse relationship with the value of MBS. When these securities trade higher on the market, rates move lower and vice-versa. So when the Fed originally agreed to be a big buyer, it helped provide a market for MBS, which helped keep prices high and, as a result, helped push home loan rates low.

And while the Fed continues that program through the end of March 2010, the reality is that the Fed‘s "extension" was really more of a rationing intended to prevent home loan rates from spiking as the program is phased out. It's sort of like weaning the market off of its life-saving treatment instead of forcing it to go cold turkey.

Already, some in the media have mistakenly reported the extension of the program through March as good news, telling consumers that rates will continue to decline, and remain low into the spring. This gives a false sense of security that home buyers and refinances simply cannot afford.

The problem is...

Those reports do not accurately report what's going on or where rates are really headed. That can have a very costly impact on consumers who may miss out on historically low rates if they listen to these media outlets.

Here's what's really going on...

In May 2009, the Federal Reserves purchases of MBS peaked at an average of $25 Billion per week. As of November, the average weekly purchases dropped down to $14 Billion. At the end of November, the Fed had already used over 80% of the allocated funds for MBS, meaning less than 20% remained to be used over four months.

Making the problem worse is that the Fed now has less money available to purchase MBS while at the same time, the supply of these securities has increased as a result of refinance and purchase activity that was triggered by lower rates.

Why is that important?

As the Fed now has fewer funds to last through the remaining months of the program, its ability to keep rates low will wane.
As the Fed's program winds down and ends, we'll likely see two things happen.

First, we will probably see higher levels of volatility-with rates sometimes shifting dramatically in the middle of the day. That means it is more important than ever for buyers to work with a knowledgeable mortgage professional who has a finger on the pulse of the market at all times and can provide trusted, proven advice.

Second, since MBS will have less support from the Fed, rates are likely to rise over time.

In short, while rates are still very good, they may not be for long.

What should you do to protect yourself?

First and foremost, work with a knowledgeable mortgage originator who studies and monitors the market.

Second, don't be fooled by media stories that only report the headlines and don't understand the underlying implications of the Fed's actions. If you ever hear something in the news but aren't sure what it means to your situation, feel free to call or email me for in-depth answers and advice.

Finally, if you haven't yet explored how the current rate environment might benefit you or someone you know, let's arrange a time to sit down and discuss your unique situation as well as your short- and long-term goals. Remember, rates are still very good, but they may not be for long.

Doug Walker

REPUBLIC MORTGAGE

11602 S. Redwood Rd. #B101

South Jordan, UT  84095

801-302-7220 Office

801-244-7620 Mobile

888-878-5403 Fax

www.republic-mortgage.com/dwalker

If you haven't started looking for a New Home or Condo in Salt Lake yet you can get all the information you need @  Salt Lake Real Estate.

Or you can call us @ 801-567-0946 and ask us about Buying a Home in Salt Lake City. We'll say, DO IT NOW!