What If?

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What If I wait to buy?

I was fortunate enough to have had an incredible response to a First Time Homebuyer Seminar. I had 35 people in a room all there to learn how to buy a home in todays marketplace, how to secure their $8,000 tax credit and how to retain a lawyer to represent them for free.

Fifty people pre -registered and thirty-five actually showed up. The biggest objection that they raised was that why should I buy now? If I wait and the price falls more I get it cheaper.  My first response was WHAT IF? What if the rates go up after the value falls. Your payment will be the same a year from now on a lower priced home and all you gained was another year in your parents basement.

Today I came across an interesting article I wanted to share. When I tell a prospective borrower to buy now he thinks it’s a sales pitch. But, when Money Magazine says I am right that opens some eyes and ears. The following was in Money Magazine 3/2/2010 by Beth Braverman:

“It’s a good time to buy, but it’s still a really difficult market,” says Patrick Newport of IHS Global Insight. As the clock ticks toward the tax-credit deadline, answer these questions to decide whether it’s time to get off the sidelines.

Current homeowners who sign a contract to buy a home on or before April 30 get a dollar-for-dollar reduction on their taxes of 10% of the purchase price of the home, up to a maximum of $6,500 (first-time buyers can get up to $8,000).

But according to the National Association of Realtors, buyers spend about 12 weeks home shopping before making an offer, so if you haven’t already started looking, you may be pressed to meet the deadline.

Besides the loss of the tax credit, the biggest game-changer facing buyers is a potential jump in mortgage rates. If the Fed moves ahead with its plan to stop buying mortgage-backed securities at the end of March, the rate on a 30-year fixed mortgage is expected to increase nearly a percentage point from today’s 5.18% to 6.1% by the end of 2010, according to the Mortgage Bankers Association. On a $300,000 fixed-rate mortgage, that’s an extra $174 per month. . If the house you want costs $375,000 today and you put down 20%, you’d pay $1,644 a month for a fixed-rate mortgage at 5.18%. Buy that same home for 5% less later on with rates at 6% and you’d only pay an extra $65 a month.

One of the many lessons my father taught me was that I know what today is but I have no idea what tomorrow brings.

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