Financial Reasons to Buy

#3 Qualifying for a Mortgage will be more Difficult

Here are proposed changes to the requirements for a ‘qualified residential mortgage’:

• Certain mortgage types would be eliminated
• You would need to put a minimum of 20% down
• You would need a minimum 690 FICO score
• The ratios of income to both the mortgage payment and overall debt would become much more conservative (28% and 36%)

There would be loans available to purchasers who don’t qualify under the new rules. However, they will probably be more expensive to the buyer by a higher interest rate and higher closing costs.

#4 Rents Are Expected to Increase

The supply of available rentals is decreasing and the demand is increasing. That will lead to an increase in rental costs throughout the year. The Wall Street Journal this week quoted a report by Reis, Inc:

“Expect vacancies to continue declining, and rents rising through the rest of 2011 at an even faster pace.”

You may be waiting on the sidelines to see if prices will continue to depreciate before you purchase a home. Consider the monthly cost if you purchased today instead of waiting and interest rates increase. With today’s prices, your mortgage payment will be less than the rent for a smaller unit.