Napa Solano Yolo real estate blog

Low interest rates, cooler weather, holiday recovery period makes buyers a little slower to go out and look at homes and place offers this week. Might be opportunity time for some of the fha and va buyers who were pushed out of the bidding wars of December.

Perhaps investors are in no more of a rush right now to get their investment purchases closed by years' end?

No doubt the slow period will soon end as the conventional 30 year fixed interest rates are starting to slip on up the hill from 4.75% into the 5s.

1- FHA loans dominate our local real estate market these days. Mainly because this is a loan insurer that guarantees to lenders the loans made under their criteria.

Lenders can increase the restrictions of fha requirements if they choose to. Currently (January 2010) there is a low down payment for this loan program, 3.5% of the loan amount. There is a 6% cap on the amount of money that a seller can credit to the fha buyer. This limit is about to be capped at a maximum of 3%, this means that soon, buyers will have to have more money to close their loan because other than the down payment, buyers are required to pay closing costs on their loan, this is over the 3.5% down payment.

Also, there is a mortgage insurance premium that buyers can include in their loan amount but this premium will increase in the coming weeks to at least $1000 more than it currently is.

2- Interest rates have held steady for a few months now, hovering at an all time low for 30 year conventional loans around 5%.

This will soon change due to economic stimulus packages and factors which will soon take no effect on this mortgage rate. You will see an increase in mortgage rates which will affect your monthly payments.

3- If you qualify for it, the First time homebuyer Federal Tax Credit ($8000) and the repeat homebuyer credit ($6500) will expire if you are not in an active escrow and buying a home before April 30.

4- Inventory of homes on the Northern Solano county market is very low right now. Choices of homes to buy is pretty low, many homes have multiple offers on them. This will probably not get better until mid-April. By then, rates and loan down payments, costs to close will all be less desirable than today.