There are, of course some very legitimate reasons. But one big reason that would be hard to argue with is that you want your home to cost you more than it could if you buy now. There are at least three factors that nearly guarantee waiting will be expensive and you’ll get to pay more.

1. Mortgage Rates are very likely going to increase soon. There’s a consensus among the experts supporting this because rates have been artificially low for the past fourteen months. This is due in part to assistance from the Federal Reserve though the mortgage-backed securities purchase program. The feds have consistently maintained the program will end March 31^st. While predictions of the result are vague, most concur that a rise of .50 to 1.00% soon after April ^t wouldn’t be unreasonable.
2. First time home buyers have been receiving tax credits of up to $8,000 and repeat buyers up to $6,500. The “catch” is buyers will need to have a home under-contract by April 3oth (that’s only two and a half months away as of this writing) and close by June 30^th. Lenders are now suggesting it takes 45 days to close on all but strictly conventional mortgages. If you haven’t started looking, you might want to lay this out on a calendar. Unless you are counting on another extension of the program “times awastin’.”
3. FHA is also promising an increase in upfront costs effective April 5^th. The cost of the mortgage insurance premium (payable at closing) will increase from 1.75% of the loan amount to 2.25%. Yes, this can be financed. But remember you’ll be paying more to pay more since interest rates will likely have risen.

Without getting too complicated, let’s use a property requiring a $100,000 mortgage purchased after these programs run out. A 1% increase in mortgage rates will create a $62 increase in the monthly payment and will cost nearly $6,000 more during the first seven years. If the mortgage is an FHA loan, the .5% increase in the mortgage insurance premium adds $500 (we’ll assume it’s not financed—that would add more cost). A first time homebuyer has missed the $8,000 and proved the value of “waiting” a few months was worth nearly $15,000 in total.

Smart move?

The only financial argument would be that it’s a good bet home prices are going to drop further and offset the additional costs. In this example, you’d be betting the home price will drop at least 15% in the next few months.

Smart bet?

Obviously your numbers may be different, but one thing that would be smart is to sit down and figure them out—or get some help from a real estate or banking professional to see what makes sense for your situation.

The sooner, the better!