Procrastination or waiting for home prices to inch down further could be what prevents you from obtaining home ownership this year. Prices are near bottom and are not anticipated to drop dramatically this year. However that is only part of the cost of owning a home. The mortgage determines how much you will pay monthly.
Interest rates are sure to creep up as the governments backs away from buying loans from the banks and mortgage brokers. (Google fannie mae & freddie mac) That means private investors (that already got burned in the securities investments) will have to step up and purchase them. They will want far higher interest rate returns on those investments to offset the risk of defaults. The Gov. has artificially kept mortgage interest rates down to encourage the real estate recovery and programs like tax rebates for 1st time home buyers are history.
The Feds have also said they are going to back off on FHA loans, which according to my favorite lenders is aproximately 80% of the market right now. They are also talking about lowering the maximum loan amount through FHA and have already increased upfront costs as well as additional mortgage insurance fees and increased the down required from 3% to 3.5%.
So, what all this means is, you will have less mortgage choices and it will cost you more in the latter half of 2011. Buy now or pay later. You could be deducting mortgage interest from now till December on next year's return. Or you could be kicking yourself for holding out on a deal that never materialized and paying your landlords mortgage. Mortgage prices are sure to go up before home prices, but it really makes sense when frequently your rent is more than a mortgage payment would be.
Spring it typically the time most new listings come on the market, there is a great selection of well priced homes to choose from as well as affordable mortgages and programs. It costs you $0 to look and find out if you qualify. What might waiting cost you?
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