That’s the sound of time slipping away on lower-priced mortgages, smaller-downpayments, lower interest rates, and cheaper closing costs.
If you’re a first-time buyer … or live in a high-priced region of our country … maybe you should be.
As of April 1st and after … there are many things in play that could drive-up the cost of seeking and securing your home loan.
Fees paid for small-down payment loans are rising. This type of loan is typically a launching-pad into homeownership for first-time buyers. There is talk of ending Fannie Mae and FreddieMac. Mortgage program options may dwindle. A rise in costs or availability of mortgage programs hurts this demographic greatly and slows their path to owning homes.
Couple those price increases with lenders’ demands for larger downpayments … and you cull even more first-timers from the home buying market.
Recent articles in a major newspaper hint at a property market that is improving. That means some stabilizing of prices and most likely a return to multiple buyers bidding on a home for sale … something that has been missing as of late.
Competition for homes typically means a more equalized buying and selling transaction. Buyers have had the upper-hand in recent years. If there are more buyers competing for a home, a seller won’t be as eager to entertain lower offers. Buyers needing or seeking discounted pricing to enter the market are going to be left behind.
Presently, a large portion of the buyers negotiating for homes are investors. Some have placed that portion of home buyers (in January, 2011) as high as 32% of the market. That means cash buyers are competing with standard buyers for home purchases. Sellers love cash buyers, as cash buyers do not need to navigate the rough waters of lending. That in turn makes transactions much easier for those selling their property.
First-time buyers can still compete against these cash buyers (do not give up hope!), as first-time buyers typically do not have many contingencies in their purchase contracts. But negotiating and hoping for sellers to pay closings costs, or paying for even minor home repairs, may become a thing of the past when there is more competition.
Other media articles offered recently (See the New York Times) reiterate the increasing difficulties that are coming down the road for those seeking mortgages. Again, especially hard hit will be the “more extremes” of lending … those searching for homes in higher-priced regions … and first-time buyers.
Loan limits will handcuff the higher-end property region’s borrower and limit the programs and outlets they have for securing loans. Jumbo loans may still be a possibility for these borrowers, but securing or even finding available programs of this type may be harder.
First-time buyers will have to save for larger down payments and/or pay higher insurance fees for lower downpayment government-insured mortgages. And it’s not chump-change we’re talking over the life of a loan. Those increased insurance fees can add-up to tens-of-thousands of dollars.
These articles mentioned, and many more, speak of real changes heading home buyers’ way.
These are not scare tactics drummed-up by those within the real estate industry. These increased mortgage costs and obstacles are a fact.
The old saying, “timing is everything” has never been more true than when speaking of home buying. Those thinking of entering the housing market need to be educated and aware of these upcoming mortgage industry changes. They then need to decide what makes the most sense to them financially.
Is it better to wait to buy a home and face the increased costs and new regulations of the near future? Does that route increase and expand your financial security for the future best?
My suggestion to someone even considering a home purchase right now is this … talk and work with a professional lender (such as myself) as soon as possible. See where numbers shake out for your personal financial scenario.
After seeking that guidance and assistance, you may find that common sense and your finances dictate that your personal path to homeownership is a longer one. Financial and credit preparations can be made for future home buying.
But you may also find that you are closer to homeownership than you think … and that the timing is right for you to start your mortgage and home search now.
Tick … tick … tick … are your home buying opportunities ticking away?
Another great informational article from my friend, Gene Mundt
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