The Right Time to Buy A Home

The confusion caused by the way the media has reported the issues affecting the housing and credit markets has resulted in far too many people who want to buy a home deciding to wait. Others are sitting it out because they believe their credit rating is too low. Most could not be making a more egregious mistake. Those who live in markets beset by declining home values may have been justified in waiting, but market values are beginning to stabilize and the other factors that make waiting at this time a mistake are rapidly approaching their deadline.

Among the greatest advantages to home buyers is the fact that it's a buyer's market. Increasingly, home sellers are agreeing to pay a buyer's closing costs, or shaving higher percentages of the price from the top.

You don't need sterling credit to borrow for a home loan. The fact is that prospective buyers with FICO scores of 580 or higher can obtain financing. For that matter, a buyer with a score of 560 or lower may be able to obtain financing if they can demonstrate that they have been able to manage their finances over the past year.

One deadline has in fact already passed. As of October 1, 2008, the up-front FHA Mortgage Insurance Premium for FHA loans with the minimum down payment has risen from 1.5% to 1.75%, and the monthly premium has gone up to .5% to .55%. These are marginal increases that amount to pennies per month compared to what follows.

The next deadline that will affect those who wait are the new HUD regulations affecting buyer contributions for FHA loans. On January 1, 2009, the amount of the sales price that a buyer will need to pay from their saved funds will increase from 3% to 3.5%.

Finally, the $7,500 first time home buyer tax credit will only be available until July 1, 2009. Don't wait until June 1! To take advantage of this one, a buyer will need to have closed the sale by July 1. If a buyer does not have a working contract by May 15 or so, and is not pre-approved for the loan, they are risking loosing out on this.

Waiting now could not only result in loosing significant bargaining power, lower cost to buy and lower payments, and the opportunity to take advantage of $7,500 of interest free money over 15 years—with a built in mechanism to make sure your can repay it, the tax advantages of home ownership—it could also postpone many another vehicle available to assure a secure financial future.

What are you waiting for?