Is Time Running Out For Home Buyers?

With the news focused almost exclusively on the April 30th deadline of first-time home buyer and repeat home buyer credits looming, one would think that time is running out for home buyers to take advantage of this offer. Sales contracts must be signed by April 30th, though the final closing of the sale can occur until June 30th in order to take advantage of this government sponsored program. This deadline is causing many would-be home buyers to panic and struggle to find the right home, but does it mean that time is actually running out for them?

There are several factors that come into play when home buyers are looking into the market and planning on making a purchase. Of course, although the home buyer tax credit is an impressive incentive and one that has helped the housing market stabilize and show life in recent months, it isn't cause for everyone to run out and purchase a home before April 30th.

Nor is the fact that the Federal Reserve plans to cease buying mortgage-backed securities on that same date. This program, as many mortgage brokers and real estate agents understand, has managed to keep interest rates at near record low levels to encourage real estate purchases. Coupled with the fact that the FHA will increase the insurance premiums that it charges for mortgages that it ensures, it appears at first glance that perhaps the time is running out for home buyers to purchase a home and save thousands of dollars in the process.

Yet, despite all of this information, the answer to this question is a definitive no. Time is not running out for home buyers, regardless of the factors presented here. It's never a good idea to rush into buying a home, regardless of the incentives, deadlines, or rates. At the time of this article's publication, there are signs across the country that housing prices will continue to fall this year and into the early part of 2011. Depending on the location and the amount of the decrease, a home buyer could potentially make up for these financial incentives with a great deal on a home. They could, in fact, cancel out the effects of the aforementioned factors.

Another point to consider when discussing the time limits on buying a home has to do with a home buyer's credit score as well as their personal financial situation. For those individuals who have less-than-ideal credit scores or limited financial resources, then it may be best to wait a year or two before purchasing a home. The money they may save with the home buyer credit or low interest rates would readily be negated by higher points on their mortgage. Add to that the FHA increase, which could potentially add another half a point to their monthly payments, and this indicates that it would be best to wait to buy a home.

If a home buyer is in a positive position to buy now, if their credit score is above 720 and they have 20% to put toward a down payment, then the time is certainly right to make a purchase now, and yes, the time will be quickly running out to take advantage of these incentives, but it doesn't mean that they are out of luck if they miss the April 30th deadline.

Markets throughout the United States will remain soft for some time, even though they appear to be bottoming out. Another glut of foreclosures is expected in the coming months that will help drive down prices some more. Some areas could expect to see a decrease of 50-10 percent more in 2010, which would make up for missing out of the tax credit and low rates.

Buying a home, for most people, is the single largest investment they will ever make and it's not something that should be rushed. The best advice to offer clients looking for a home is to forget about the April 30th deadline and instead focus on making the best decision for their family and their finances. The real estate market will continue to be a buyer's market for several years, so getting the right deal, and the right home, is the most important factor in any home buying decision.

Time is not running out to buy a home and get a great deal; it's only just beginning.

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