The Federal Government has spent nearly a trillion dollars over the last year to keep mortgage rates low. As of March 31st that participation will end undoubtedly sending rates higher. The imminent increase in rates coupled with the expiration of the up to $8000 tax credit for home buyers and ever rising foreclosures are all likely to spell trouble for the housing market for the rest of 2010 and most likely well into 2011. Add on the further changes to mortgage qualifications, higher required down payments, less people gainfully employed, the expiration this year of the tax cuts, and it may be a couple of presidential elections until the market even begins to resemble what it once was.
I should also mention the recent changes in RESPA (real estate settlement practices act). These changes favor banks and lenders which will effectively put thousands of mortgage brokers out of business. Less competition means higher costs to borrow and more difficulty finding financing for your next home.
If you are in a position to buy do it by May of this year.
RESPA changes are already in effect.
Rates will be higher after March.
The Tax Credit ends in May.
Talk to a lender you can trust to tell you what you can afford.
As always, make sure you consult tax experts about tax consequences and your attorney about legal issues.