The longer you delay, the more you'll pay - both in interest rates and loan costs

Janna Rankin Scharf, GRI, CLHSM, SFR - Coeur d'Alene Idaho Real Estate

If you expect to be in the market for a home anytime soon, you need to be aware that the longer you delay, the more you'll pay - both in interest rates and loan costs. 

The most recent weekly Primary Market Survey released by Freddie Mac showed both long-term and short-term interest rates rising.

The 30 year fixed-rate average was 5.05% with an average 0.7 point.  That was up from 4.81% the week before, and 4.97% at this time last year.  This was the highest it's been since April, 2010.

The rate for a 15-year fixed rate mortgage rose, too.  It was up from 4.08% to 4.29%, but still lower than the 4.34% from last year at this time. 

Along with the rising interest rates, other costs associated with a mortgage are increasing.  

Last fall USDA raised their Guarantee Fee from 2.0% to 3.5%.  Also last fall, FHA Lowered their Upfront Mortgage Insurance Premium to 1.0% BUT RAISED their Monthly Mortgage Insurance from .55% to .90%. As of April 1st FHA is RAISING their Monthly Mortgage Insurance AGAIN from .90% to 1.15% (.25 bps)
 
As of April 1st, Fannie Mae & Freddie Mac have increased the cost of a Conventional mortgage by an average .25bps based on Fico scores and LTV's. You must now have a 740 Fico AND 25% down to avoid these adjusters. 

And now, the Obama administration is calling for down payments on conventional loans to be increased to a minimum of 10%.  The median down payment during the last quarter of 2010 was already the highest since 1977 at 22%.  

The bottom line, for anyone sitting on the fence, is that rates are forecast to continue to rise.  How much, nobody knows.  But it seems reasonable to assume that your purchasing power for the dollar is going to weaken as time goes by.  And along the way, costs are rising and requirements are tightening.  Perhaps it's time to jump off that fence and get moving!