Attention Homebuyers: Double-Barrel Stimulus Deadlines Threaten Rates and Affordability; The Time to Act is NOW!
The great author and speaker Og Mandino once said, "I will act now. I will act now. I will act now."
This is great advice for prospective homebuyers over the next 45 days, as two key government programs that have kept home ownership more affordable than ever wind down to their completion.
First, the Federal Reserve's Mortgage Backed Securities (MBS) purchase program will come to an end on March 31, just two weeks away! Without this program home loan rates could have been at least 1.00% higher...and potentially even higher...over the last year. Throughout 2009, the Federal Reserve was the primary buyer for MBS, purchasing as much as 80% of the supply in a given month. When this program ends, a lack of willing buyers will likely cause MBS prices to drop and rates to rise as a result.
The second shot will come on April 30th, which is the deadline for purchasers to get under contract to qualify for the Home Buyer Tax Credit program, which has been providing a tax credit of up to $8,000 to first time homebuyers and up to $6,500 to repeat purchasers.
Just How Much Will Waiting Cost?
While no one knows for certain what the future holds, two things appear clear. Home loan rates will likely be higher in the future, and free money from the government will be gone. These deadlines will affect both affordability to purchase and the opportunity to refi.
For prospective homebuyers, any increase in interest rates erodes your purchasing power. In other words, a 1% increase in rate represents an approximate decline in purchasing power by 10%. For example, if rates increase by 1%, people who qualify for a $200,000 purchase price today may only qualify for a purchase price of $180,000 afterwards.
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I will be around all weekend to help you out so please don't hesitate to call me. Last weekend, I think I spent half of my time on the phone which I loved. That means you are busy, the market is moving and we are helping buyers get into houses! Happy Spring! Tammi Lewis Senior Loan Consultant 1st Mariner Mortgage Cell#: (410)725-9451 Fax #: (443)296-9132 A REFERRAL IS THE BEST COMPLIMENT I CAN RECEIVE!
To begin your search for the perfect home or to sell your home in Northern Virginia, call Kim Darwaza at 703-856-2254. Please visit http://www.kimdarwaza.com to search the MLS for Northern Virginia listings.