What Does the Rising Interest Rate Mean?

What does the rising interest rate mean? For starters, it means that the house you were thinking of buying is now less affordable to you. For every 1% rise in the interest rate, that means that this dream home will now cost you $9,000 more. No, not because the current owners decided to put down fresh sod on the front lawn, or upgrade to brand new stainless steel appliances because they like you. It's because the interest rates are rising...!

Yes, interest rates are on the rise, and big time. I hope this means that the economy is starting to recover. We have noticed in the real estate market that things have picked up dramatically. There are multiple offers on properties now that have been sitting idle for months and months without a single offer. Of course the prices are dropping at alarming rates. The buyers are presenting very low offers on these properties, but I think this is about to change.

When buyers loose out on not one but two houses they presented contracts on because of higher bids, by the third house they find, they are willing to offer a price that the seller won't just laugh at. By this time they are offering a price that is more realistic and in line with the current market conditions. When this happens, there is something to work with.

If you want to take advantage of the $8,000 First Time Buyer Tax Credit, you should be out looking for a full-time Realtor who is committed to finding you the right house for the right price. We are professionals and know the market. There is a time frame involved in buying or selling a home. You more than likely will not find your dream home on the first run. Have your Realtor schedule not more than 5 homes at one time because after a while, you can't remember what house had one feature.

When you find the home you want to present a contract on, it may take a couple of days to iron out all of the wrinkles with the price and provisions in the contract. Then there is the attorney review period. Let's not forget, in order for your mortgage rep to submit your mortgage application, they need the a fully executed contract and completed application and required fee. You're looking at a approximately 45 days to settlement from the time you have a contract signed by all parties.

Sooooo, that brings us back to the $8,000 First Time Buyer Tax Credit. Don't wait until October to start looking for your new home. The fast approaching dealine to qualify is December 1, 2009. That means you have to settle on your new home by that day at the latest...no exceptions. I certainly would not reccomend that you sit at the settlement table on December 1. There may be some unforeseen delay that may bump you to the next day, and that could cost you. You don't want to be up against a wall to make a very large investment like buying a home. You want time to shop and be comfortable that you have chosen the right property. Give yourself plenty of time. Remember the early shoppers get the best deals.