As Dean Hartman said last week, the purchase of a home is a personal decision. However, we want to give everyone four great financial reasons why you should not wait before taking the plunge into homeownership.
Interest Rates Are IncreasingInterest rates have increased almost 3/4 of a point in the last six months. Most experts expect rates to continue to increase through the year. Interest rates along with price determine the overall cost of a home. Even with prices softening, if interest rates rise, it may be less expensive to buy now rather than wait.
The 30-Year Mortgage May DisappearThere has been much debate regarding government's role in providing support for homeownership. There are several experts who believe If Fannie Mae and Freddie Mac's roles are eliminated, or even limited, it may be the end to the 30-year mortgage. This concern is addressed in MSN Real Estate's Is it curtains for the 30-year mortgage?
QRM Requirements Could Be Much More StringentHere are proposed changes to the requirements for a 'qualified residential mortgage':
- Certain mortgage types would be eliminated
- You would need to put a minimum of 20% down
- You would need a minimum 690 FICO score
- The ratios of income to both the mortgage payment and overall debt would become much more conservative (28% and 36%)
Rents Are Expected to IncreaseThe supply of available rentals is decreasing and the demand is increasing. That will lead to an increase in rental costs throughout the year. The Wall Street Journal this week quoted a report by Reis, Inc:
"Expect vacancies to continue declining, and rents rising through the rest of 2011 at an even faster pace."