At risk of sounding like a hectoring parent, there are reasons Realtors are pounding the point about buyers entering into contract by April 30th.
- Rates are low today, but they will not be tomorrow. In just a few days, the Federal Reserve will withdraw from the mortgage-backed securities market ( a source of funding for loans!). Private, FOR-PROFIT companies will then be funding and pricing loans. For profit means.. your rates just went up.
- The spread between 10 year Treasury notes and Fixed-rate mortgages is at a 10-year low. If there is even a slight increase in risk appetite, the seemingly, but not comparable government backed securities and treasury securities will surely see a noticeable increase in mortgage rates.
- Finally… the tax credit issue. If you have not heard by now,.. your Realtor is not doing their job to explain to you that there will be NO extension of the tax credit. If you are not in contract by April 30th, you WILL have missed this opportunity to receive a tax credit in 2010. Plain and simple, it is NOT coming back. Is $8000 (for first time buyers), or $6500 (for 5+ year home-owners/new buyers) important to you?
The time for locking into a purchase before April 30th is less than 5 weeks away. Get out there, get on some of this inventory, use some of your money for repairs if these homes are not quite perfect..negotiate for repairs, for closing costs, lock into some of the down-payment assistance programs that are available and get it done! Your Realtor is about to be busier this month than ever before. Don’t let this opportunity pass you by if you are considering buying a home. Don’t kick yourself later, but I know you will if you don’t move on this!
P.S. The difference in a 30 yr.mortgage at 5.25% vs 7.00% is $192.26 a month! An increase in payment of almost $200.00! Still thinking of waiting?
If so,.. this may tip the scale…..You just reduced the amount of home you could purchase by $30,000 !! ….. Still thinking of waiting?
Figures based on $170,000 30-year Mortgage at 5.25 and 7%.
Payment of $938.00 for $170,000 at 5.25
Payment of $931.00 for $140,000 at 7%