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Given that rates seem to be held at an artificial low, im wondering whether I should just give in now at 10% down or wait about 9 months to save to a 20% downpayment. does anyone have some foresight into what direction rates are headed for 2012?
Asked
5 months ago
Anonymous
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Let’s put it this way – if rates on an FHA are at 3.75% today and you are waiting on them to hit 3.00% —well the only thing that could drag them so low would be a catastrophic event in Europe or the US – if that happens a low mtg rate will be the least of your worries. I would move on something now www.johnmcclellan.com
It’s unlikely rates can get much lower, even if the Fed steps in and does another round of MBS purchases. Only advantage of having the 20% down would be eliminating the PMI, but if your rate ends up ½ point higher in 9 months, what have you gained? The other aspects of buying now versus waiting would be property values in your area (still declining or stable?), and how motivated a buyer you are. Worst case scenario, if you were to buy with 10% down and rates went lower, you can always do a cash in refi, lose the PMI, and benefit from the lower rate. Unless there ends up being blood in the streets in Europe, can’t see rates significantly lower though….
The Federal Government said that they will ensure that rates stay low until the middle of 2013. But then again, the government says a lot of things. The housing market hasn’t hit bottom yet, despite what many think. Rates are really good right now and if you hold off for 9 months, you’ll most likely be looking at about the same rates as today.