I just listened to a great call with an eye towards what we can expect in the year 2010 in the housing and rate market. A great point was brought up about the cost of waiting. Right now the government has pushed some major incentives into the market. In December of 2008 the government announced a purchasing program that pushed rates roughly 1% lower than where they were the previous month, and had been for almost a year.
The Government is also allowing for a TRUE TAX CREDIT of $8000 for first time home buyers that is set to expire in April. These 2 things can make a huge difference for a first time home buyer. If you wait to buy and rates go up the roughly 1% that most experts are forecasting, you would be looking at a cost of about 5% of your loan amount upfront to buy down your mortgage rate back down to current levels, on a $200,000 loan that is $10,000. Add to that the loss of the tax rebate, that is nearly $20,000, or about 10% of the purchase amount. A more impressive number is the lifetime cost of a mortgage that is 1% higher than the available rate today. The 30 year cost of a $200,000 loan with a 1% rate increase is $45,000.
This is a call to action, if you are debating buying your first house, or moving up to a larger home, please consider the cost of waiting.