Get off the sidelines if you are thinking about buying a home. Contrary to implications in the news, now is one of the best times to be a home buyer. No one knows how long this once in a generation, or perhaps once in a lifetime, window of opportunity will be open but there are several things working in the home buyers favor right now.
First, home prices in most markets have declined in the past year; therefore, you can get much more home for your dollar. The drop in values has been more modest in the Midwest compared to the rest of the country, so if we assume only a 10% drop in value; someone looking at a $300,000 home a year ago might be able to purchase the home today for only 270,000.
Secondly, mortgage rates on 30 year fixed loans for both government and conventional loans are at or near all time lows. Rates a year ago were around 6% and today they are around 5%, so assuming a loan amount of $150,000; monthly savings compared to a year ago would be around $100 a month!!
Lastly, if you need help with down payment money; the Missouri Housing Development Commission (MHDC) just made it easier for first time homebuyers who are eligible for the $7,500 Housing Tax Credit from the Federal Government.
The $7,500 Housing Tax Credit is currently given to those first time homebuyers on their tax return the year after they buy; so someone buying in 2009 would not receive that money until 2010. This unfortunately doesn’t help that first time homebuyer who needs down payment assistance.
MHDC has set up a program so that this same homebuyer can borrow those funds today and then pay it back when they get the Housing Tax Credit later on. One key thing, this Housing Tax Credit is only available until the end of June, 2009; so get out there and start looking for that new home!!!
30 Year Fixed 5.00% with 0 points and only $399 in lender fees
MHDC (CAL) FHA 30 Year Fixed 6.50% with 0 points
FHA 30 Year Fixed 5.00% with 0 points and only $399 in lender fees