On Mondays, we post questions from our readers and answers from Dan Danford of the Family Investment Center. If you'd like to ask a question, please post it in the comments or send it to us on Twitter @family_finances.
QUESTION: I am thinking of taking advantage of the incentive to buy a home that’s being offered this year. But it seems that the terms for lending have very much changed. What should someone with good credit expect when they go to buy a house? How much down payment is typical now? What other terms should you expect?
ANSWER: Mortgage terms are very fluid right now. Thirty year rates are around five percent and you might do a little better with a fifteen year mortgage or exceptional credit. Usual down payments are 20 percent, but you may do better with an FHA or VA guarantee. Things change very quickly as the credit markets and economy evolve from the earlier meltdown.
Remember this. Banks are looking for good loans. They make their profits from loaning money and the past several years haven't been very profitable for them. If you have good jobs, good credit, and a history of paying off the loans you take, bankers are anxious to meet you. House sales are picking up some, but there are still a lot of Realtor signs in yards. The government will give you a $8,000 tax credit for buying this year, too (first-time home buyers, only). It's a great time to buy and a great time to borrow - if you qualify.
Bookmark a decent lending site like bankrate.com and watch as rates change. Find a good local lender to help, and start shopping. This could be the housing bargain time of our lives!
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