Coming into 2015 interest rates have declined by over .5%! Also, The Federal Housing Administration announced that beginning on January 26 the monthly mortgage insurance (MIP) is being reduced from 1.35% of the loan amount annually, to .85%. These two factors have increased purchasing power by approximately 10% making NOW the time to purchase a home rather than waiting for the proverbial "spring market".
Take the following comparison of a prospective buyer's purchasing power last fall compared to today (assuming a 3.5% down payment FHA mortgage - with a $250,000 purchase price and $241,250 mortgage plus $4,220 upfront MIP)
Fourth quarter 2014 (rates at 4.00% and MIP of 1.35%)
Mortgage Payment - $1,167
Monthly Mortgage Insurance Premium - $271
Annual Income needed to qualify - $72,000 (assuming the old 29% dti standard and $300 for real estate taxes and homeowner's insurance)
January 2015 (rates 3.5% and MIP .85%)
Mortgage Payment - $1,102
Monthly MIP - $170
Annual income to qualify - $65,000
Now take the home buyer who has $72,000 income and apply that to today's mortgage rate and MIP. That same buyer's purchasing power has increased from $250,000 to $290,000 and the payment will be exactly what it would have been a few short months ago!
So if purchasing a home is in your plans for 2015, don't delay! We are very fortunate to experience this decline in mortgage rates; it has caught even the most seasoned Wall Street investors by surprise, and likely won't last for too long!
Call today for personalized consultation and mortgage prequalification to see if this is the right time for you to purchase a home!