If you are looking for for a housing deal, it may be a good idea to wait.  Not too long, not past the April 30th Tax Credit expiration date, but just a few more days and you could find the annoyances of short sales begin to disappear.

Starting on April 5th, 2010 the federal government will start providing financial incentives to banks , and other lending institutions, to complete more short sales.

Currently for a buyer to negotiate a price with a lender the process could last several months.  The buyer would submit an offer, if that offer is less than what is owed the lending institution would then order a Broker Price Opinion or an appraisal.  The lender would then receive this appraisal, compare it with the amount currently owed with the price offered.  The lending institution would then either accept, make a counter offer, or do nothing.  The whole process could last several months, in the mean time leave the potential buyer waiting for something that may or may not come.

On April the 5th things will change.  Lending institution will see financial incentives for short sales.  Under the new rules lending institutions will have Broker Price Opinions and or appraisals done before the distressed property is put up for sale, and share all relevant information about the minimum amount they are willing to accept.  They are also required to accept bids that are equal to or greater than the minimum amount shared within 10 days.

Will this help stimulate the housing market?  If so, how much?

I think this is the question for every piece of legislation, mortgage rate decrease, or tax credit.  We really will not know until after the fact.  The bottom line is this should help lending institutions cut loses, free up credit, and speed up a process that has some buyers weary of approaching.  I know there are some brokerages and agents that have stayed away from short sales as they more often than not lead no where.

Is now the right time to buy?  Believed the be the question without an answer.  We’ve written about home prices raising artificially due to increases in demand because of the Home Buyer Tax Credit.  Is that a nationwide issue, or only in certain communities?  If it is significant, how much exactly?

Interest rates on 30 year mortgages are going to steadily increase from now until the end of the year.  Exactly how much?  No one really knows.  That increase, I believe, is much more important as far as keeping money in your pocket is.  If decide to wait until after the expiration of the Tax Credit you will miss out on either $8,000 or $6,500 in tax credits as well as increases in interest rates.

How much does interest rate cost me?  Well, that really depends on how much you borrow and for how long.  With residential homes, most loans are 30 year and to get a good interest rate you are expected to put 20% down.  So for a residential home, on a $250,000 loan a one percent variance in interest rate could mean an additional $70,000 over 30 years.  That is quite a bit.

Does this mean I should buy now?  Yes, and no.  If you’ve found the home that is right for you, it may be beneficial to roll up your sleeves and make sure you’re able to go under contract before April 30th, and secure the best possible interest rate.  If you haven’t done so, it could be a mistake as finding the right home for you is the most important part of home buying.  This is a 30 year major financial commitment.  It would be wise not to take the decision lightly.