A few days ago I wrote about the cost of delaying a home purchase now, when mortage interest rates are rising and home prices in Austin and Central Texas are likely to hold firm or increase slightly in 2011. (See Will higher interest rates cost you your dream home?) In other market areas where home values suffered more during the recession, prices are likely to rise faster, so the incentive to buy soon should be even greater.
Soon, payments on new mortgage loans will increase for another reason -- an increase in the monthly Mortgage Insurance Premium on all FHA loans. Since the "mortgage meltdown" in 2007, FHA loans have become the primary vehicle for borrowers who wanted or needed to minimize their down payment requirements. For more see:
In addition to the dramatic increase in monthly payments (and reduction in buying power) that come with higher interest rates, this change will increase mortgage payments by $30 to $45 per month for "typical" first-time homebuyers in the Austin area.
This change will be effective on loans issued on or after April 18, 2011. That's just sixty days away -- plenty of time to find and purchase the right home, but not much time to remain uncertain about whether to buy or not. If home ownership is in your plans, and if you can qualify for a mortgage loan today, now is the time to get busy.