5 or 10 years from now, when the financial crisis is over and home prices are up smartly once again, many will use hindsight and realize that they missed a golden age for first time home buyers. Anyone who sat on their “down payment savings account” for too long will kick themselves, realizing that while they waited for “the bottom”, that they missed it. Just as with the stock market, this time will arrive just when everyone is at their MOST pessimistic.
With rates at somewhere around 5%, anyone who follows financing will realize that this is a truly incredible time to lock in for a 30 year mortgage at a rate that may not been seen again for another “cycle” of real estate. Remember, as a first time home buyer, you have the advantage of not having to sell your old home before buying a new one. While creative financing like lease options will continue to grow in popularity for credit challenged folks, the BASICS are important to remember; like spending no more than 28% of your pre-tax income on mortgage payments, taxes and insurance. Even if a lender doesn’t hold you to this, hold YOURSELF to this. You will also want to be mindful of credit score improvements now, as it may take several months to get it above the 720 level that qualifies for many of the best mortgage rate plans.