Orange County buyers, have you been trying to decide whether or not you should buy now? Have you been considering the first time home buyer credit and the second time home buyer credit that expires in just a few months, and thinking maybe you should buy.
Perhaps you know that Huntington Beach First Time Buyers can get up to $100,000 from the city with no payments for 45 years, or maybe you have heard that Fountain Valley first time buyers can get up to $150,000 from the City of Fountain Valley.
If you have been considering buying a home in Orange County, then these are all great reasons.
However, as Lonnie Glessner points out in his post below, the single biggest factor to consider buying now, may be interest rates and the increases that are likely coming.
He discusses an increase in payment of $93 per month for a $200,000 home. Consider that a home here in Orange County might be $400,000, $600,000, $800,000 or more, and think about what that does to the cost of your mortgage.
I’ve explained to clients before that prices may fall a little more. However, if prices fall 10% and interest rates go up 20% from 5% to 6%, then they will have a net increase in their payment, not a decrease.
If you would like to discuss whether or not this is the right time for you to buy, please contact me at 714.319.9751 for a free consultation to discuss your options.
Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied. This blog is not intended to offer any legal, tax or other advice.
The number one reason to buy a home right now may surprise you. The number one reason to buy a home now is NOT that the first time home buyer tax credit or the repeat home buyer tax credit is ending this spring. However, both of those are good reasons to buy a home right away.
The number one reason to buy a home NOW is found in the following quote from last week–
“April 1 will be the first day that the Federal Reserve will end its debt purchase program and allow the struggling U.S. mortgage market to operate unassisted. As a result, the Fed believes mortgage rates will rise about three-quarters of a percent to about 6 percent,” Boston Fed President Eric Rosengren said recently.
Here is the projected economic impact if you a buy a home in April or later according to the Fed-
· If you buy a $200,000 home with a FHA loan and put 3.50% down your monthly payment just increased by $93 a month or $1,120 a year! That’s equal to eating out 4 times a month at Chili’s and their 3 Courses for $20 Menu.
· Your monthly payment increase is 8.6%, this is equal to every home seller in the country raising their prices by 8.6%. Yuck!
· Finally, if your debt-to-income ratios are really tight your pre-approval for a home price of $200k, just got decreased to $182,800.
· Or if your pre-approval is good for a price of $175k, it just got decreased to $159,950.
· Or if your pre-approval is good for a price of $150k, it just got decreased to $137,100.
So, how do you avoid this from happening to you? First, you could hope or pray that the Fed will extend their purchases of mortgage bonds. Second, you could buy a home BEFORE the Fed’s purchase plan expires on March 31st.
It’s your choice. You have been warned.