Mortgage Market Update:
Mortgage rates held to historic lows in February as Congress passed the American Recovery and Reinvestment Act of 2009. Interest rates for a 30-year fixed-rate mortgage have hovered near historic lows and have been offered recently in the low five percent range.
For a limited time home buyers can claim a special tax credit worth up to $8,000. The American Recovery and Reinvestment Act offers qualifying homebuyers a tax credit equal to 10 percent of a home's purchase price, up to a maximum of $8,000. The tax credit is offered to first time homebuyers, and those who have not owned a principle residence in the past three years. Homebuyers with annual income of up to $75,000 are eligible for the full credit, as well as couples making $150,000. Partial tax credits are available to home buyers making slightly more. To claim the tax credit, the purchase must be recorded between January 1 through December 1, 2009.
The National Association of Realtors anticipates an additional 900,000 home sales will result from the housing stimulus, and expects housing inventory to fall below an 8-month supply by year end. The reduction in inventory points to strengthening conditions in many markets across the country.
Finance Q and A:
Q: Why do some buyers opt for 15 year fixed rate mortgage when they can get lower payments spread out over 30 years?
A: The 15 year fixed rate loan permits you to own your home, debt free, in half the time and for less than half the total interest cost of a 30 year fixed rate mortgage. Because interest rates are often lower on shorter loans, the monthly repayment is only about 25% higher than a comparable 30 year loan. The 15 year mortgage can be a great financial planning tool for many investors. Ask your mortgage planner if this type of loan is right for you!
Tip of the Month:
With credit markets tightening as financial institutions deal with recent liquidity challenges, it is now more important than ever that home borrowers get their financial house in order when applying for a loan. Be sure to review your credit report with your mortgage professional and get pre-approved for your loan before making an offer on a home. A little preparation goes a long way and can mean all of the difference when it comes to closing on that dream home.
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