There are many buyers in the market currently who aren't sure if they should buy because they fear we haven't "hit the bottom" of the market. Sometimes it makes sense to consider more factors than just the pricing of homes currently on the market.
The Federal Housing Administration announced earlier this week that it is increasing its annual mortgage insurance premium one quarter of one point on all 15-year and 30-year mortgages backed by the agency.
The hike is in response to a congressional mandate that gave the FHA permission to increase premiums and keep its insurance fund liquid. The higher premiums also were outlined in President Obama's 2012 fiscal budget, which estimates the FHA will insure $218 billion in loans during the 2012 fiscal year. The changes will effect loans issued on or after April 18.
What this means is that, after the change takes place, the increase on a 30 year fixed rate FHA loan will be $33/month. For buyers who are already maxed out in terms of their loan qualifications, this would decrease their buying power by approximately $6000. This, in addition to rising interest rates, can mean a significant difference in buying power.
As an example, just a couple short months ago a 30 year FHA rate was 4.25%. On a $150,000 purchase price a buyer's principle and intrest payment plus mortgage insurance would have been about $827/month. After April 18th, assuming that rates remain around the current 5.25%, that same mortgage payment will be about $944/month.
If you are considering a move in the near future it pays to look at all of the factors which impact the wisdom of waiting or buying. Rates remain low and we are entering the spring market when inventories historically have increased so now may be the perfect time to get started!
Give me a call or email me and we can discuss your situation and what makes the most sense for you right now.