Interest Rates Are Increasing
Interest rates have increased almost 3/4 of a point in the last six months and most experts expect rates to continue to increase through the year.
Interest rates along with price determine the overall cost of a home. Even with prices softening, if interest rates rise, it may be less expensive to buy now rather than wait.
The 30-year mortgage may disappear
There has been much debate regarding government’s role in providing support for homeownership. There are several experts who believe If Fannie Mae and Freddie Mac’s roles are eliminated, or even limited, it may be the end to the 30-year mortgage. This concern is addressed in MSN Real Estate’s Is it curtains for the 30-year mortgage?
Residential mortgage requirements could be much more stringent in the future
Here are proposed changes to the requirements for a qualified residential mortgage:
- Certain mortgage types would be eliminated
- You would need to put a minimum of 20% down
- You would need a minimum 690 FICO score
- The ratios of income to both the mortgage payment and overall debt would become much more conservative (28% and 36%)
There would be loans available to purchasers who don’t qualify under the new rules. However, they will probably be more expensive to the buyer (both in rate and costs).
Bottom line
You may be waiting on the sidelines to see if home prices will continue to drop further before you purchase a home.
However, your mortgage expense is a major piece in the overall financial picture of homeownership. Make sure you consider it when timing your decision about buying a home.
