POST TAX CREDIT CONSIDERATIONS FOR HOME BUYERS

MAY 1st,


The tax credit benefit for home buyers has expired. For those that were able to take advantage congratulations!!

However, if you are in the market for a home purchase, even if you did not get into a contract by April 30th , you still have very strong reasons to move forward quickly rather than waiting. Here are the main points of interest:

1. The Federal Reserve has ceased it’s purchase program for Mortgage Backed securities (MBS) the reason they have been buying these MBS packages has been to create a steady flow of new funds for mortgages AND to keep interest rates as low as possible. In order to have the open investment market absorb what the fed has been doing the interest paid on purchased MBS’s will have to increase to offset the risk of these investments. Along with that risk comes higher mortgage interest rates as well. So acting now will help you avoid the inevitable increases in rates.

2. The Federal Housing Administration (FHA) has announced it’s intention to implement several costly increases in FHA guaranteed loan programs. Some have already been executed. Others will follow in the early days of summer. The affect on home buyers will be to increase the amount of up front money required to make an FHA purchase from the current 3.5% to over 6.5% AND the rates will be even higher for buyers with lower credit scores. Acting now clearly will enable you to benefit if you don’t have larger amounts of cash for down payments.

Both of the above actions will come together to impact the amount of home you will qualify for, and possibly put you out of the market for the type of home you desire to live in.

ACT NOW IF YOU CAN!! IT’S WORTH YOUR ATTENTION.