Pinetop White Mountain Blog

Good Morning Everyone,

Well, the word is out, the Government says it is going to stop subsidizing the banks by buying down interest rates.  According to reports I have been reading this will become effective the end of March 2010.  It may be only a temporary measure to determine if the Banking World and the Economy can stand on it's own.  We really won't know what the effect will be until it actually happens.  However, predictions are that interest rates will rise. 

If you are in the market to buy, the time for fence sitting or waffling about your decision is coming to a screeching halt.  You need to get moving!  3/4 of a percent may not sound like a lot but it will make a difference if you are tight in qualifying right now.  Increased interest rates means higher monthly payments.  If your ratios are tight now, it could reduce the amount the bank is willing to lend.  To buy the house you want, you may have to come up with additional down payment to buy that interest rate back down.  Only your lender can tell you how it will affect you but you need to find out before the subsidy ends.  

The good news is that so far FHA has not made any decision to raise the down payment requirements or make any change to the amount the seller may contribute to closing costs on FHA Loans.  There have been grumblings for months that because the FHA reserves are getting low, there were plans afoot to raise the down-payment requirement and decrease the amount a seller could contribute to closing costs.  So far that hasn't happened but be aware, things change in the lending world on a daily basis and what it true today might change tomorrow. 

If you are a buyer, you need to start getting serious.  Time is running out on a lot of benefits to you in the current market.  The tax credits expire at the end of April, Banks may start raising interest rates, and in some markets those great deals on the REO's are getting kind of scarce.  As more troubled homeowners either negotiate Short Sales on their homes or finally manage to get some workouts done with their lenders, those great buys are going to get harder and harder to find.

Bank Owned properties are not being offered at Bargain Basement prices any longer either.  The days of Banks "giving away" properties is starting to show signs of slowing.  Low ball offers are being rejected outright and they are staying much closer to their original listing prices, especially if it is a desirable property.  

I am not trying to discourage you from buying, it is still a great time to buy.  You just need to be aware that the Real Estate industry is very unpredictable right now.  Lending changes from day to day.  Bank Owned properties are not showing up in the marketplace as readily as they were a year ago, and those same Banks are pretty firm on their prices these days.  If you want to buy, you need to get moving before all the goodies from the past year or so go away. 

Call me, let me help you get started.  I know my market and I can help, just give me a call and let me show you how. 

Sandra Paulow, Associate Broker, GRI

Your High Country REALTOR®  (928) 242-0300