ST. LOUIS, Mo. — If you have a good job and good credit, the next few months might be a sweet time to go house hunting. Then again, maybe not.

Fence-sitters take the risk that Congress may let a rich tax credit expire, and that interest rates may rise. So, let’s walk through some factors for buyers and sellers to consider as they think about jumping in.

• Mortgage rates are blissfully low, and that may not last. The rate on a 30-year mortgage averaged 5 percent last week, according to Freddie Mac. Rates are low in part because the Federal Reserve has been buying up about $3 trillion in mortgage-backed securities and mortgage agency debt. The aim is to hold down interest rates and keep mortgages available. But the Fed is slowly removing that financial crutch as the economy improves. It has no plans to buy any more past March 30. The likely result is an uptick in rates.

Meanwhile, the recovering economy by itself should raise rates as the year goes on. Economists at the Mortgage Bankers Association expect to see a 6.1 percent rate by year end. Such a rise would add about $104 to the monthly payment on a $150,000 mortgage.

• The home-buyer tax credit expires April 30, and no one knows if Congress will renew it a second time. Expect a clash between the real estate lobby and fiscal conservatives worried about the $1.35 trillion federal deficit.

To qualify for the credit, you must sign a purchase contract by April 30 and close by July 1. First-time buyers get up to $8,000. “First-time” is defined as someone who hasn’t owned a home in three years. Move-up buyers get up to $6,500 when they purchase a new primary residence. To get the credit, you have to have lived in the old home for at least five out of the last eight years. The credits start phasing out at $125,000 in adjusted gross income for singles and $225,000 for joint filers.

For more information about buying or selling Real Estate in the Cape Coral/Fort Myers area, please contact Cape Coral Realtor Pat Eberle at 239.220.2389 or pat@rasorealty.com.

News-press.com

Last update: 08-02-2010 19:18