For those waiting to save for large down payment that strategy may not be the best. Mortgage rates are no longer being held artificially low by Quantitative Easy which was in effect since 2009. That was the program where the Feds were keeping rates low by buying toxic mortgages from banks and buying Mortgage Back Securities in the tune of billions. They program ended last October and going forward the rates are going to be much more volatile and react to market conditions more quickly. With the unemployment numbers going down, consumer confidence going up and the DOW at 17,800 my opinion is it’s only a matter of time before the interest rates go up. Most economist are predicting rates by end of year to be in the 4.5% to 5% range. While that is still phenomenal (40 year average is over 9%) and real estate will continue to sell it will be a shock to payment for the first time home buyers who are the ones that are predominately the ones on the fence. A couple of hundred per month can mean the difference between a condo purchase and a town home.
For those that are waiting on credit to improve, my suggestion is start working with an loan officer now even if the plan is to wait a year or two. This allows them to evaluate their credit and give suggestions on how to clean it up now and put you in the best position to buy when the time comes. It may also turn out that you can purchase now even with some credit blemishes. We have an FHA program that can go down to a score of 600. Time heals all wounds and the sooner you get help with credit the sooner you will be able to buy.
For those that have very little or no down payment do no let that deter you from exploring financing. Both VA and VHDA offer 100% financing, Conventional starts at 3% down payment and the best part is this can all be GIFT. FHA offers financing with as little as 3.5%. Going back to point one, if you are waiting for 5-10% down payment potential rate increase while you are waiting can completely offset the advantage of putting a larger down payment.
For more information on options tailored towards your situation please feel free to reach out to Terry Schenck with Prosperity Home Mortgage.
NMLSR ID 193123
Senior Loan Officer
Prosperity Home Mortgage | 13135 Lee Jackson Mem Hwy, suite 100 | Fairfax, VA 22033
Phone (703)408-3978 | Fax (703) 293-4298