Four HUGE reasons to buy or refi RIGHT NOW!

With the economy rebounding (albeit slowly), and housing markets coming to life (hopefully), many borrowers are choosing to sit on the sidelines and wait out the final convulsions of the credit crisis/mortgage bubble/housing slump.  Strategically speaking, is this the right decision?  Is it better to adopt a wait-it-out mentality, and make a move after we’re on the road to a full and complete recovery?

In a word….no.

Why is it a good idea to jump off the fence and purchase or refinance right now?  Well, there’s a good reason for that…in fact, there are FOUR huge reasons to purchase or refinance right now.

Reason #1: The Fed is taking their ball and going home.
The Federal Reserve has been purchasing mortgage bonds over the past year, all in an effort to keep mortgage rates low and help spur the housing market.  Know what?  It’s worked…beautifully in fact.  However, this mortgage bond purchase program comes to an end March 31st and there is an enormous amount of speculation in the lending industry surrounding how rates will respond come April 1st (ironic date eh?).  Some think rates will bump up 0.50%, while others see an immediate 1%+ jump into the low to mid-6’s.

What will happen?  We don’t know.  What we do know is that rates will begin to rise sometime after that cutoff date, making now the perfect time to capitalize on an artificially low interest rate environment for would-be purchasers and refinancers.

Reason #2: No more free money.
The home-buyer tax credit for first timers and current owners ($8,000 and $6,500 respectively) will expire on April 30th (you need to be under contract by then to qualify for the credit), and as of 2/10/2010 the IRS has released no word on whether or not it will extend the program.  Anyone looking to capitalize should speak with their Lender and Realtor immediately.  Don’t have a Lender or Realtor?  Feel free to contact me – I’m an active loan officer lending in OR/WA/CA and would be happy to help.

Reason #3: Newton’s law works for markets too.
What goes up, must come down.  The same principal applies to markets and the economy, only in both directions.  The housing market is no exception: markets that are down come back up.  This constant ebb and flow is what makes economics so interesting (or maddening depending on your perspective).  What we can take from this is an almost certain knowledge that the housing market will rebound, prices will recover, and homes will be more expensive down the road then they are today (eventually).

What we’re seeing now in housing is a classic “buy low” opportunity.  Prices are low – in some areas historically so – and there is no better time to buy then when prices are down.  Low rates + low prices + tax credit = a housing trifecta that could be an absolute home run for a prospective owner.

Reason #4: Guidelines and programs are a-changin’.
Guideline changes to the ever-popular FHA program are going into effect April 5th.  These changes reduce the amount a seller can contribute to the transaction, and increase the amount of the up-front mortgage insurance premium; both of which have a profound impact on a borrower’s wallet (in a bad way).  In short, all FHA purchases will be more expensive to close after April 5th – another reason to act quickly if you’re in the market for a new home and an FHA loan.

With all the changes, program discontinuations, and fluctuations in the market coming down the road, NOW is the time for a prospective borrower to capitalize on an upcoming purchase or refinance.  The window is closing a little more each day – connect with your real estate team immediately to review your options.  Don’t have a team?  Contact me and I’ll be happy to analyze your scenario with my team.

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Nick Mallory is an active loan officer in Portland, Oregon.  Have any questions or comments about this post?  Visit the contact page and drop Nick a line.