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Current Mortgage Rates Could Make Now the Time to Buy

Posted by  on Apr 08, 2010
 

What to Do in 2010--Buy or Refinance

When experts at CBS Money Watch compiled a list of key goals for people's personal finances, they called their piece What to Do in 2010: Banking, Loans and Credit Cards, and they identified nine must-do points.

Point Number One was to refinance your home. Number Two was to buy a house.

Refinance--Why Now?

This is a no-brainer. It's still easy to find some of the best mortgage rates in history. If your interest rate is appreciably higher than current ones, you're paying more than you should and throwing away bundles of dollars every month.

There are some exceptions. If you're planning to move homes in the next few years, make sure the closing costs of refinancing won't exceed your potential savings.

And, right now, mortgage loans are hard to come buy. Nervous lenders expect you to have a good credit score, and they want your mortgage costs to be no more than 29 percent of your income.

Why Buy Now?

Of course, historically low mortgage rates are just as attractive to first time buyers, and anyone thinking of moving or upgrading homes. And home buyers have an extra incentive to act now--the home buyer's tax credit.

The credit is worth up to $8,000 for eligible first time buyers, and $6,500 for existing owner/occupiers who qualify.

But the tax credit scheme expires on April 30, 2010, and your purchase must have closed by that date in order to qualify. Given how long it can take to complete paperwork, finalize your mortgage loan, and comply with all the legal niceties, your home search should start soon.

Current Mortgage Rates Won't Last

Mark Vitner, a senior economist for Wells Fargo, told CBS Money Watch, "If you've been sitting on the sidelines waiting for the right moment to make an offer, 2010 will be the time. We're not going to see dramatic increases in interest rates, but they're likely to gradually move higher over the year."

Economists at the Mortgage Bankers Association agree. In their latest Mortgage Finance Forecast, published earlier this month, they predict current mortgage rates are going to go up to an average of 5.5 percent in 2010, and 6 percent in 2011. And, importantly for first time buyers, they also see residential real estate prices rising during those years.

Finding the Best Mortgage

Before you do anything, your first priority is to find the best mortgage for you. Check out today's mortgage rates, and get a mortgage quote now.

 

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