According to a recent Fannie Mae survey, only about three in ten Americans believe that now is a good time to buy a home. Roughly the same number of people believe that mortgage rates will stay relatively flat into the new year.
About four in five survey respondents say that they think their personal financial situation will either stay the same or improve in 2011, and they're willing to ride out an underwater mortgage or a rental contract instead of jumping head first into the real estate market.
We're finally at a point where mortgage rates have stayed so low, for so long, that a blip of a few hundredths of a percentage points can send pundits into a frenzy. Fannie Mae's numbers reflect a more pensive and practical America, one that's getting its ducks in a row in time for an upward swing in property values.
If you find yourself sharing the opinions of the majority, the next few months can determine whether you'll get to enjoy one of the lowest interest rates of all time, or if you'll have to wait on the sidelines of a mortgage rate spike.
If you're thinking of buying a home in the next year, take some action now to prepare for a wild market:
- Check your credit report. Take time during a market slowdown to ensure that you've eliminated any negative or incorrect items.
- Compare mortgage rates in your desired neighborhood. Some lenders' quotes can vary wildly, depending on whether your property lies in a troubled sub-development or on a parcel that's poised for rapid recovery.
- Stockpile cash for your down payment. As real estate prices recover in most parts of the country, expect some of the recent "seller assist" deals to vaporize. Instead of using someone else's money to shore up comparative sales in the neighborhood, you'll need to bring cash to the closing table.
- Avoid opening new lines of credit. Resist the urge to say "yes" to a discount shopping pass in exchange for a new retail credit card. Lenders set mortgage rates based on risk, penalizing borrowers with relatively new credit accounts.
Even if the pessimistic respondents from Fannie Mae's survey watch their worst case scenario play out, you'll still have positioned yourself for a good deal and a great mortgage rate when it's finally time to close your deal.