If you are considering a home purchase and don’t have a ton of money for a down payment, now may be the best time to apply. Why now?
Changes to Mortgage Insurance
When buyers, especially first time home buyers, don’t have a lot for a down payment they often opt for an FHA loan. FHA loans are government backed loans that require borrowers to pay mortgage insurance. Mortgage insurance on FHA loans typically drops off once you have enough equity in your home and have a established a good payment history. So what’s the big change? On June 1, 2013 – mortgage insurance will no longer drop off. As of that date, mortgage insurance will be required for the life of the loan.
What does that mean to you? More money out of your pocket.
House Prices on the Rise
Home affordability continues to remain high – but home prices have begun their inevitable rise with high demand and scarce home inventory levels. Home prices rose 9.7 percent in January from a year ago, according to data released today by CoreLogic. This is the biggest annual gain since April 2006.
Why should you care? The obvious answer is that you will pay more for a home. Another reason to care is that once that home is yours – you will appreciate the increasing value of your property in the form of long term wealth accumulation.
Rent or Buy – Which is Better?
Ultimately, the decision to rent or buy is based upon a number of factors. Maybe you’re ready to be a home owner, maybe you’re not. However, it never hurts to understand your options. Contact me today to discuss your specific home financing needs. Consultations and mortgage loan pre-approvals are free.