3 Reasons Why Those Who Don't Buy Now Might Regret it Later
1. They won't receive a sizeable amount of money from Uncle Sam
2. They might not lock-in on historically-low interest rates
3. They might miss out on record home price affordability
If you've been holding off on a real estate purchase, glimmers of a turnaround in the housing market may have you wondering if it's finally time to make your move.
While home prices remain low, they're no longer free-falling in most markets. Mortgages are historically cheap. And the sweet tax credit that was offered to new buyers last year has been extended to April 30 and expanded to include current homeowners too.
23 percent of California home buyers purchased a home in 2009 due to the perception that interest rates will rise and they would be priced out of the market, according to C.A.R.’s 2009 Survey of California Home Buyers. But for all the motivation to act quickly, buying right now is not a no-brainer. In some areas home prices may fall further. If you own a house now, it may take longer than you expect to sell it, and you may walk away with less cash than you thought.
It's a good time to buy, but it's still a really difficult market. As the clock ticks toward the tax-credit deadline, answer these questions to decide whether it's time to get off the sidelines.
Can you really nab that tax credit?
Current homeowners who sign a contract to buy a home on or before April 30 get a dollar-for-dollar reduction on their taxes of 10% of the purchase price of the home, up to a maximum of $6,500 (first-time buyers can get up to $8,000).
But according to the National Association of Realtors, buyers spend about 12 weeks home shopping before making an offer, so if you haven't already started looking, you may be pressed to meet the deadline.
Plus, to qualify for the full credit, your household income must be under $225,000 if you're married and less than $125,000 if you're single; repeat buyers must have lived in the home they are selling for five of the past eight years. The good news: Once you've signed the contract, you have until June 30 to close the deal.
How much could you lose by waiting?
Besides the loss of the tax credit, the biggest game-changer facing buyers is a potential jump in mortgage rates. The Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac since early last year. The purchase program has helped maintain low interest rates for borrowers. As planned, the Fed this week announced it will stop purchasing these securities at the end of this month. Many analysts anticipate this will result in a slight rise in rates by year’s end.
What does this mean for you? Interest rates have hovered at or near historic lows for much of the past 18 months, resulting in lower payments for many borrowers. With the Fed discontinuing its purchase program, some analysts believe a rise in interest rates could range from 0.25 percent to as much as 1 percent by the end of 2010.
How quickly can you sell the home you now own? Even in markets that are recovering, sellers must price aggressively to make a fast deal. Everybody thinks their house is worth more than it is. Before you sign a contract for a new place, ask me to give you a realistic figure that will generate a quick sale. Can't bear to part with your home at that price? Waiting may be your only option.
This may be the best time in history to buy a home! Call me today to discuss your options: 858-344-2632