First Time Homebuyers Profit from the Falling Market

Has the housing market bottomed out? Is it possible that home prices are going to continue falling? Will mortgage rates continue to go down? Will they go up? Aspiring homeowners most likely wonder what the market future holds and whether or not they should buy now or wait a month or longer. It is tempting to jump right in and make a bid on that beautiful – foreclosed – home down the block, but is this really the best time or will the time get even better in a short period of time?

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At the heart of this question is of course the other question: is there a bottom past which mortgage rates will not drop? If so, has this bottom yet been reached or is it still being approached? The secondary question that requires answering is whether or not home prices have dropped to their absolute bottom at this time. It is noteworthy that while speculation is running rampant, not even market analysts and those usually not shy to give their opinions about the housing bubble are markedly silent.

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What holds true, however, are the facts. Mortgage rates are extremely low, and housing prices followed suit. If ever there was a time for new homebuyers to enter the market it is now. With the governmental incentives for first time homebuyers, the deal is sweetened even further and there truly is no time like the present to buy that first primary residence. At the same time, with home prices further falling, there is the question if it is advisable to perhaps wait out the market to see if another drop in housing prices leads to a further lowering of the interest rates and maybe even further incentives.

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Savvy would be homeowners are counseled to research the home prices in the neighborhood into which they are hoping to buy into and see if the current prices are at – or close to – historic values. If so, it is a good idea to take a chance on the market. Moreover, the mortgage rate is unlikely to fall significantly more, and thus now is as good a time as any to get into the market. By the same token, since banks now require a substantial down payment, it is unlikely to be caught up in any further market correction if home prices continue to fall.

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Of course, new homebuyers need to come to terms with the tightening mortgage lending practices. For example, zero down loans and stated income mortgages are now virtually unheard of. As a matter of fact, it is now harder than ever to qualify for a new home loan. In this manner those with adverse debt to income ratios and also insufficient income will be kept out of the market, no matter how desperate sellers currently might be. This is also pointing to another interesting bit of market wisdom: if you have good credit and all your ducks in a row, now is a good time to go ahead and make that home purchase. There is no guarantee that in a month from now you will still qualify for a home loan.