The Good, The Bad, & The Ugly - Mortgage Interest Rates & the Tax Credit - News you need to know!!

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When is it a good time to buy a home?

Important interest rate info below. Please read ...


first time home buyers


First time homebuyers have been blessed with low mortgage interest rates and the first time homebuyer tax credit.  We have heard so many times in the last 12 months that now is a great time to buy. But is this true?  So when is it a great time to buy as a first time home buyer or even a regular borrower?

Let me keep it simple.  The best time to buy a home is when you are ready to buy. It should not be an impulse, for those that buy when they are sad or happy. Or just because your friend or neighbor bought a house. Or to keep up with the Jones's.

In the last 2 years, buyers have been very lucky with low interest rates in the high 4's to mid 5's and because of the first time home buyers tax credit. What it comes down to is knowing the future and the what ifs. No, I don't have a crystal ball, but the writing could be on the wall. Let's explore some.



mortgage interest rates on the rise


The Federal Reserve implemented a plan to help keep mortgage interest rates low. It was a way to keep buyers' fears low and hopefully to help stimulate the economy.  Here is a press release from Nov. 2008 - Federal Reserve announcement in buying mortgage-backed securities & GSE's - This was the original plan. What is the plan now?  There is news that this plan will come to a halt. And I feel that all buyers and anyone related to the real estate market, should know now and not later. And not be told as it is actually happens.

So what does this all have to do, especially with first time homebuyers?  I hate to be the bearer of bad news, but this needs to be talked about and now. Interest rates could climb higher in the next several months or so. 




Is time running out to buy a home?



time could run out & cost borrowers money

No, time is not running out. People will always buy homes.  But it should come with careful consideration and planning. And much of this planning should come from a very knowledgeable loan officer.  You should not just buy because you could get a tax credit or because mortgage rates are low.

Here is a question and answer fact sheet put out by the Federal Reserve. FAQs: Purchasing Direct Obligations of Housing-Related GSEs - And here is an excerpt specifically stating the Feds backing out the direct obligations.

mortgage backed securities









first time homebuyers tax credit

Lastly, you have the first time homebuyer tax credit which is due to expire with homes under contract by April 30th, and that close before June 30th. Detailed information on the home buyers tax credit can be found here : Tax Credit for home buyers -


Summary :  There should be no need for panic. I wanted to supply information and educate, because if you a serious first time homebuyer or any other type of buyer, you should not be sitting on the fence, waiting for interest rates to drop or home prices to drop even further.

One fear of mine is that we could see rates go up as high as 7% by the end of the 3rd quarter. Let's just play devils advocate and say they go from 5% to 6%. On a $250,000 loan, your payment would go from $1,342.05 to $1,498.88 a month.  That is a monthly difference of $156.83.  That turns out to be a grand total of $1,881.96 a year.





Again, I don’t believe in negative news to instill fear and or panic. But I do believe that many should be aware of this. If you are a serious buyer, just don’t be caught with your pants down or listening to someone else that might not understand the value of our economic issues.

And keep in mind that you don't need 20% down or credit scores above 700.

Please read : FHA loans with 3.5% down  &  Rumors why FHA loans are bad 




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For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!




Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc


Re-Blogged 13 times:

Re-Blogged By Re-Blogged At
  1. Tim Bradford 02/05/2010 10:41 AM
  2. Chrysti Tovani 02/05/2010 11:08 AM
  3. Gabe Sanders 02/05/2010 10:50 PM
  4. Monica Hess 02/06/2010 02:31 AM
  5. Will Steneman 02/06/2010 03:39 AM
  6. Teral McDowell 02/06/2010 03:44 AM
  7. Mark Watterson 02/06/2010 05:07 AM
  8. Jill Schuster 02/06/2010 05:25 AM
  9. Larry Brewer - Benchmark Realty llc 02/07/2010 01:59 AM
  10. Lyn Sims 02/07/2010 02:47 AM
  11. Diana Perez 02/07/2010 11:44 PM
  12. Connie Harvey 02/08/2010 09:52 AM
  13. Jeanean Gendron 02/10/2010 01:46 AM
  14. Brian Anderson 02/10/2010 02:57 PM
  15. Lori Liveston 02/10/2010 03:38 PM
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Realtors Needing the services of the Lending Powers
1st Time Buyers
first time home buyers
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mortgage backed securities
first time homebuyers
8000 tax credit
first time hombuyers tax credit

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Bill Ladewig - Escondido, CA
Experience Is Your Advantage

Jeff, good stuff.  Anytime is the right time to purchase a home as long as it is being bought for the right reasons

Feb 05, 2010 08:06 AM #1
Tim Bradford
Cleveland, OH
NMLS 250013

Another great post and I have already reblogged it.  Very simple and straight forward.  Thanks for taking the time to put this togetehr. 

Feb 05, 2010 10:43 AM #2
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Jeff, It makes a lot of sense to buy a home when you need a home and not to feel rushed into it.  It's difficult to say what will happen in the future with interest rates or even bringing this credit back.  I hope people listen to your wise words.

Feb 05, 2010 05:00 PM #3
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks Jeff, for putting this into perspective.

Feb 05, 2010 10:49 PM #4
Mark Watterson
Salt Lake City, UT
Utah Real Estate

This is a good time for people to understand the facts about the government buying and relationship to mortgage rates.  They do need to make fully informed decisions.

Feb 06, 2010 12:44 AM #5
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans


BILL.... .  I would agree 110% and wonder how many have bought for the wrong reasons and what happened to them a year later....  just curious... and thanks

TIM..... . yea, it is very simple.  I just wonder how many will realize this and or follow this kind of info.  Thanks for the polite compliment.

CAROLE.... .  when so many are rushed, I have seen problems the mortgage side of things... and down the road with the buyer, and unforeseen circumstances. It needs to be planned out more than how many do plan. I see if often when I even pre-qualify someone....

GABE..... . my pleasure and as always, thanks for your support.

MARK... . it's always a good time to understand about the facts about the government. And I hate to be negative, but it will get worse for all out there...  the buyers and those in the real estate business.  We just need to be informed and to be prepared.  thanks


Feb 06, 2010 12:46 AM #6
John Chaump

Excellent post. Great info, graphics and links to original sources. This is what buyers need to know right now. Another point is the talk about raising the minimum credit score needed to qualify for a mortgage. Thank you.

Feb 06, 2010 01:37 AM #7
Lee Walsh
SecurityNational Mortgage - Lake Mary, FL
Executive Talent Scout for Mortgage Professionals


You said it.. "The best time to buy a home is when you are ready to buy."

Feb 06, 2010 03:18 AM #8
Sharon Filbig
Prudential California Realty - Escondido, CA
San Diego County Real Estate

Hi Jeff--I appreciate your thoughtful and objective analysis.  Especially because the masses are fed a steady stream of headlines that are designed to attract attention and viewers rather than portray reality.  If this very same analysis were being done on a major news network by some talking head, they would hype the story with the headline "time may be running out for first-time homebuyers" or "home prices may not have reached bottom".

Feb 06, 2010 03:53 AM #9
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans


JOHN.... . I think we need to get this kind of information out to the public now, because when it does happen, it might hurt and or be too late for many new buyers.  In regards to your second part of the comment, you stated ... "Another point is the talk about raising the minimum credit score needed to qualify for a mortgage."

Not sure what you are talking about... right now, most lenders can go down to a 620 credit score. Sure, some are at 640 and or 660, when it comes down to FHA credit scores.  Rumors of rising credit scores will alway be out there in my opinion. People talk about it when it happens. But most don't really know, not until it happens, hence why in most cases, these aee usually just rumors. My company just took the stance that we are actually lowering our credit scores on FHA loans & USDA loans down to 600. This will be on a case-by-case, but at least we will have the option.  Overall, this is my opinion about those credit score rumors.


LEE.... . thanks for re-iterating that statement.. I think it's one that is lost many of times when people think about buying.  thanks

SHARON.... . I would love to see the media talk more about what I just stated in this post. The problem is that the gov't and the media want to keep fear and panic to a minimum. The less we know, the better off that we are now when it comes to the doom and gloom of things.  But is that really good in regards to this kind of information that I stated?  Thanks for the polite comment.


Feb 06, 2010 04:23 AM #10
DeAndrea "Dee Dee" Jones
Home Buyers Marketing II, Inc. - Manassas Park, VA
The NorthernVARealEstateLady & DMVRealEstateChick

Great post and very valuable at the moment.

Feb 06, 2010 05:18 AM #11
Tom Pauling
Baird & Warner - Saint Charles, IL

You are when you are ready to buy.


Buyt it is the perfect storm for a buyer with low interest rates AND a depressed market on housing.

Feb 06, 2010 07:06 AM #12
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Good post.  I think it is a good time to buy, if you can afford it.  But I will not make predictions about the future.  Too many variables (Variable = Government idiot). 

Feb 06, 2010 12:51 PM #13
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

It's a good time to buy when it's right for you as a buyer.  But .... let's throw in a few incentives right?  How about the tax credit that might help you with your first 6 months of mortgage payments? OR, just the fact that interest rates are so low right now. 

Feb 07, 2010 02:08 AM #14
Jayne Williamson, REALTOR, Broker, GRI
Keller Williams Realty Mountain Partners, Hendersonville, NC - Hendersonville, NC


It is a good time to buy...if it is right for you.  I am wondering what is going to happen after the buybacks are done and tax credits go away.  The job market is not showing any signs of life yet and that is what is holding a lot of people back.  It could get really interesting the second and third quarters.  As always, great information!

Feb 07, 2010 02:57 AM #15
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans


DEANDREA.... . my pleasure and thank you very much...and for stopping by.

TOM... . yes, it is the Perfect Storm right now... a very good analogy per se. But again, if it's right for you to buy and not because of such incentives.

GENE.... . you are correct in saying that there are way too many variables. Sure, rates are great and low... and who knows if they stay low after the fact, depending on the market. But by buying the MBS's, it certainly helps keep rates down and once that goes away, in my opinion, they will go up. The question is, how high and how quick. And does higher unemployment help keep the rates down some. Well, the stock market will help dictate that.  thanks


LYN.... . I agree, that the tax credit could help you make your payments for the first 6 to 12 months. But when you use up those reserves, did you bank on the fact that you might get a raise? So the money was used to help you guy by?  I know people that have said the what ifs, and those back fired on them. I am just saying, you really can't base your decision on such things as extra money from the tax credit to help make your mortgage payments. Even if you qualified.... you the borrower know what your limitations are and if you go over those such limitations, and hope that the money gets you through troubled times.. yet when the money is gone and nothing has changed financially for your?  I will go back to my original statement then... "The best time to buy a home is when you are ready to buy." 

Yes, this is just my opinion... but I have seen a lot of people say... well, things will get better, so let's do it... why not just be safe.. by within your means. Crap, things can still go wrong in this market or any other market. Just food for thought.


JAYNE.... . that is something else that I didn't mention in this post, but that I have mentioned over time. Yes, the job market is not rebounding.  I might talk about this in a few days. The gov't released the other day that unemployment dropped down to 9.7%.. wow, that is great. But you know what wasn't broad casted?  The fact that some haven't filed or that unemployment benefits stopped, so you lose track of some numbers.  Yes, it will be very interesting to see what happens on the 2nd and 3rd quarters. Personally in my opinion, I didn't see the Tax Credit lighting the market on fire as many had hoped it would...  so losing that doesn't bother me as much. And people have bought with much higher rates. It's is just the fear, questioning your employment and what prices will rise during all of this. Thanks and thanks for that very polite compliment..


Feb 07, 2010 03:36 AM #16
Matt Robinson
Professional Investors Guild - Pensacola, FL

Very good point about when is the best time to buy.  The interest rates and tax credit have definitely created a little more impulse in regards to buying, and that's never a good thing.  It's panic that the market was going to "run away" from them a few years ago that caused a lot of people to buy who clearly weren't ready to own a home. 

Feb 13, 2010 07:38 AM #17
Elizabeth Harp, Notary Public Signing Agent
Ozarks Notary Services - Nixa, MO


I do multiple closing in a day and here a while back I had a young couple to start the day.  They were really pushing to know if the 4.375% was good enough.  Later in the day I had a couple in their seventies.  Their rate was a little higher and they did not question it once.  We started to talk about it and they stated that they remember having a 21% first mortgage.  Go figure! 

The last twenty years have been lucrative in the least.  My point is: what ever goes down will come up and vice versa.  If home prices are down and the rate is low, it is a great time to buy.  As you stated, it should be a decision that is planed out and thought out carefully.  Great attitude!

Feb 16, 2010 04:45 AM #18
Rick Kellow
Cherry Creek Mortgage - West Bend, WI
FHA & Reverse Mortgage Expert


Great post... anytime is a good time to buy provided you can afford to buy and you don't buy too much home...



May 26, 2010 03:40 AM #19
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