Reason #1. To Take Advantage of the Homebuyers Tax Credit.  A tax credit of up to 10% of the home's value and a cap of $8,000 is still available to NEW home buyers for any contract in effect no later than April 30, 2010 and closes no later than June 30, 2010.  In addition, move-up buyers who wish to purchase a new home are also eligible for a tax credit of up to $6,500 if they've owned and occupied a primary residence for at least 5 of the last 8 consecutive years.  Why not take advantage of this free money from Uncle Sam?  For more information on the tax credit, email me at coutler@TopProducer.com or visit www.FederalHousingTaxCredit.com.

Reason #2. Because Interest Rates Are Still at an All Time Low.  The Spring market has arrived, and with it, the interest rates are still the lowest they have been in years.  What does this mean for you as a buyer?  The lower the interest rate, the lower your house payment, and the less you have to pay back in interest over a period of years on your mortgage loan.  No one knows for certain how long the interest rates will remain at such low rates--which is why this is the best time to write a contract and lock in your rate.

Reason #3. The Soon to be Increase of the FHA Funding Fee and Other FHA Changes.  Although 100% loans (with the exception of VA mortgages) are a thing of the past due to the housing collapse, FHA loans (which are loans guaranteed by the Federal Housing Authority) are the most prevalent and most popular loans available due to the credit score requirements to qualify, and because borrowers are only required to put 3.5% down.  Effective April 5, 2010, the required up-front FHA funding fee will increase from 1.75% to 2.25%.  The funding fee is basically a mortgage insurance premium that is required to be added into your loan and financed. What does this mean to you?  Let's say you purchase a $100,000 home with a $3,500 down payment (3.5%).  The current up-front funding fee would be $1,628.  After April 5th, you will pay an additional $465.  You must have a home under contract by this date to avoid the increase if you are planning to finance through FHA.  Other FHA changes that will occur later this Spring will be the seller's contribution towards closing costs. Sellers will only be allowed to contribute 3% towards the buyer's closing costs versus the 6% that is currently allowable--which means  buyers will need to come up with more money to cover their closing costs, in addition to the down payment.

Reason # 4. Because of Supply and Demand.  Even though there is a lot of inventory and homes currently on the market, the best homes that are priced right are still selling relatively fast--even in a down market.  Also, new home prices are still at affordable prices and some are offering pre-construction pricing due to low sales during the winter months.  As the April 30th deadline approaches, there will be buyers who will procrastinate and struggle to find a home at the eleventh hour, just to beat the deadline.  By that time, the best homes will be long gone by the smart buyers who decided to act quickly.  Additionally, those incentives and pre-construction prices that were being offered by builders of new homes will disappear and prices will likely increase as their supply of available homes becomes limited.

Reason # 5. You Could Save Money As A Move-Up Buyer. While it's true that this market will make it difficult to get as much for your current home if you are trying to sell, the price of that larger home you've had your eye on has also gone down.  If you consider the price decreases in percentages, NOW is the best time to buy!  For example, if your current home is worth $200,000 and the home you want to buy has a value of $600,000, the difference in value is $400,000 right?  Not really! With home prices decreasing roughly 10% on avg in today's market, your current home would be worth $180,000, and the home you want to move up to would be worth $540,000.  So while your home value has decreased only $20,000, the home you want is now $60,000 less!  All the more reason that NOW is the time to BUY!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.