Waiting To Purchase a Home Can Cost You

With interest rates as low as they are and home prices at the lowest level since 2002-2003 there should be a lot more home buying activity than there is. There is no doubt that the $8,000 Homebuyer Tax Credit inspired a lot of aspiring homeowners to accelerate their plans to purchase a home, but there are still a lot of people that got passed by the last time home prices were this low and I don't want to see those same people get passed by again.

What most aspiring homeowners may not realize or simply don't know is that waiting to purchase a home can cost them thousands of dollars or the ability to purchase a home at all. With lending guidelines constantly in flux you never know when a new guideline may disqualify you from buying a home when just days before you were qualified. Something as simple as an increase in the minimum credit score required to qualify for a home loan can end your bid for a home overnight.

Not only have minimum credit score requirements been increased, but debt ratios (the percentage of your income that can be obligated to your total debt payments) have been reduced from 55% to as low as 40%, which can significantly reduce your buying power. The minimum required down payment has been increased from 3% to 3.5% for an FHA loan and there is talk of raising it again to 5%. It has become very difficult, if not impossible to obtain mortgage insurance, which is required when you intend to purchase a home with less than a 20% down payment. Many loan programs have increased reserve requirements and some programs have reduced the amount of the credit a seller can provide to pay a buyer's closing costs.

While changing lending guidelines can have a disastrous effect on your ability to purchase a home, rising interest rates run a very close second to hurting your ability to purchase a home. The combination of rising interest and decreasing debt-ratios can have an exponential effect on your qualifications. Then there's the possibility that as the housing market recovers seller's may be less willing to negotiate on the sales price and/or a credit to cover the buyer's closing costs.

There are countless issues that can come up that can at best interfere with your ability to purchase a home and, at worst, prevent you from buying a home altogether. I recorded a short video that goes into more detail. Click here to view the video.

If you, or anyone you know, is interested in purchasing a home and would like to discuss how today's lending guidelines effect you please feel free to contact me to go over your specific situation by e-mail at Shawn@YourFavoriteLender.com.