Every real estate agent you ask will always tell you that “now is the time to buy!”
To a certain extent, that’s a true statement. Once again, we have a special circumstance on the horizon that makes “now” more important that ever. There are proposed new regulations that would require a 20% down payment in order to obtain a mortgage. This class of loans is called qualified residential mortgages.
Qualified residential mortgages (QRM) are beneficial to lenders because they can sell the entire loan to investors. The biggest benefit to buyers is that they will have less interest to pay on their loan. Unfortunately, there’s a bigger downside for buyers — coming up with a 20% down payment might be tough.
If you are planning to buy a $100,000 home, that means a down payment of $20,000. In addition to the down payment, you will also need money for closing costs, inspections and moving. Sometimes, closing costs can be negotiated in the purchase agreement so that the seller will pay some or all of those .
Often, buyers are more concerned about the cost of the house than the cost of the money. A difference of $10,000 in the cost of the home may have much less impact than the difference in out of pocket costs or increased interest expenses.
Right now, there are all kinds of mortgages available. Some of those require 3.5% as a down payment, but some are available with no down payment. Wouldn’t it make more sense to keep some cash available for improvements, new furniture, or just as a cushion? If the proposed regulations go into effect, you may need to save for many more years to be able to afford the home you want.
Can you see why this makes now the time to buy? If so, please feel free to call me directly at 661.375.REAL (7325) or email me to discuss how best to fulfill your home-ownership needs. If you’re not convinced, I’d still love to hear from you. You are also encouraged to post your questions or comments below.