The housing data is showing the cost of buying a home is starting to increase again. Interest rates were at their lowest in many years in November and since then have been on the rise.
According to the National Association of Home Builders' quarterly Home Opportunity Index, 73.9% of all homes sold between October and December 2010 were affordable to families earning the national median income of $64,400. Until 2009, the Home Opportunity Index rarely topped 65%, never 70%. We have now had eight quarters over 70%. That was an all time high in home affordability, however since then interest rates have increased and loan costs are starting to increase. As interest rates have increased, home buyers have lost about 10% of their buying power.
Interest rates are now at ten month highs – but still very low! The housing market is showing more consistent gains. Due to changes coming with FHA and Fannie Mae, mortgages are getting more expensive. If you are thinking about using an FHA mortgage, the changes are effective on April 18th. Fannie Mae/Freddie Mac changes have already taken affect.
If you are thinking about buying a new home, there are more reasons then just the interest rates and home prices. A home is typically a family's largest net worth along with a place to raise a family and create lifelong memories. With a large selection of homes on the market, you may have more to choose from. You will also see savings on your federal income taxes with possible deductions for mortgage interest and property taxes paid.
Make sure you check your credit score and are aware of any errors so you can make sure your score is as high as possible. Talk with a loan officer and see what you can qualify for. As interest rates increase, your buying power will be reduced. As the market continues to stabilize and improve, home prices will also increase. That will also affect your buying power.
Now is awesome time to buy a new home. Check with your real estate agent to see what is available for new homes and talk to your loan officer about a preapproval.
Leslie Vanderwerf, NMLS ID#335509, Advisors Mortgage - Email – Website
