Waiting to Purchase a Home until the Spring? It will cost you!
Posted by Larry Jensen on Monday, February 22nd, 2010 at 8:28pm.Waiting to purchase a home this spring could cost you thousands of extra dollars. No, we are not expecting home prices to shoot up. This has everything to do with financing your purchase.
The office of Housing and Urban Development (HUD) is getting ready to implements several changes for loans guaranteed by the Federal Housing Authority (FHA). Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year),
So what is happening?
- On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965.
- Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.
There is only one way to avoid this. Just submit all FHA mortgage applications by the last week of March!
There is no need to wait until Spring. We have plenty of inventory and few buyers right now. Even at that we are still seeing an increase in Multiple Offer Situations. More about that tomorrow.
Lawrence "Larry" Jensen, Principal Broker ~ NY & CT
St. Lawrence Properties, LLC
www.SLPNYCT.com
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