Not having a home to sell has actually been a plus for those looking to purchase a home recently. That meant the first time home buyer had the advantage. That may be changing with the new rules and fees going into place. First time buyers are down to 29% of the market from 40% just recently. And that number is expected to drop even more.
Increased fees for low down payments and increasing interest rates constitute part of that. Higher down payments are also being expected. These are in response to the recent mortgage melt-down. Banks and lenders are trying to recover the money they lost to bad loans. In addition, they will likely be required to buy back many bad loans sold to Freddie Mac & Fannie Mae.
Put more money down. Not because you have to but because it makes economic sense. You can still get the .5 to 5 per cent down loans, but why pay that mortgage insurance and interest premium if you don’t need to? For instance, paying 3.5% down will now cost you $30,000 more than last September on a $300,000 mortgage. A larger down payment can eliminate this.
Plan to live there longer, a decade or more. Gone are the days of day-trading home shopping. Real estate is an investment that usually requires time to pay off. Those days have returned. Even today, after the big “crash”, homes are worth more than they sold for ten years ago. Actually, this is a good thing. This is sustainable growth.
Prepare for competition in purchasing your home. The days of free-falling prices are behind us. Programs to help the borderline homeowners are beginning to be put into place. Downsizing retirees and empty-nesters are looking at these homes also, and many of them have sizable down payments available.
Our take on what it means to YOU? If you are thinking about buying in the very near future, this is your get moving call! This increase will not only cost more money, this increase could increase your DTI to the point that you will have to let go of your dream house and settle for something lower in price. How much does it effect you? Call us today to find out. 530 315-2808
Questions about YOUR best action? Contact us today for your free analysis.
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