Well, 2010 is underway. What are your new year's resolutions? Is there a new home on the list? If you've been thinking about it, now's the time to see what category you fall into. If you consider yourself a leader, you're just about out of time. Leaders rarely have to say "Gee, I wish I would have..." There are signs that the market is at or near the bottom of the price ladder. The tax credit for first time home buyers ($8,000) and existing home owners ($6,500) requires that you must be under contract by April 30th. Of course, you don't need to get money back but how many of us can afford to refuse thousands of dollars?
Tick, tock the clock is running. Inventory has started dropping meaning there are less homes on the market.
Tick, tock the clock is running. Short sales can take months to get under contract so if you have your eye set on one, you should put in your offer now.
Tick, tock the clock is running. Foreclosures also take some time.
Tick, tock the clock is running. Some sellers, because it was taking so long to sell a home, may not have looked for a new home and there may be a contingency where they need to find a home before settlement.
Ok, you decided you still don't want to make a decision yet. What do you lose out on by waiting and being a follower? (I mean, besides losing out on the tax credit?) I mentioned before that there are signs that the market is at or near the bottom of the price ladder. That means by waiting, you'll probably pay more for your new home. If you currently own a home that you're selling, you may be thinking, "Well, I'll get more for my current home so it's a wash!" Is it really? Are you trading up? If your current home is worth $150,000 now and you think by waiting that you might get $160,000, you'll make $10,000 more, right? Wrong. You'll be paying more dollars on percentage items, like transfer taxes, maybe commission, etc. But wait! Your new home is also going up. Say you were looking at a home currently valued at $200,000. If that home is also valued at 7% more in the future, like your existing home, you'll be paying $213,333 for that new home instead. Like your current home, your percentage items also go up so your closing costs are higher. Title insurance, since it's based on the purchase price, may also go up. What about mortgage rates? We are seeing them slowly creep up but they are still considered low. After April 30th, where will they be? If the economy is rebounding, they will undoubtedly go up. Let's say you mortgage 100% of that new home today at $200,000 for 30 years. An average for a credit worthy buyer is around 5% in my part of the country. That makes the mortgage payment $1,082.45 per month for 360 payments. Let's say, after April 30th, the mortgage rate goes to 6% (still a decent rate) and your mortgage the full amount of the new home of $213,333 for 30 years, your mortgage payment would be $1,206.40. That's a difference of $123.95 for 360 payments or a total of $44,622. Add the tax credit to that and just for waiting, you paid out over $50,000! I don't know about you, but I'd rather have that money in MY pocket!
Tick, tock the clock is running.
Comments(3)