Time to move

One doesn't need to look far to find positive news about the real estate market these days. National and local sales figures continue to improve and buyer competition is increasing over a variety of price ranges. Of course this activity ultimately leads to diminishing inventory, leaving fewer options for those ready buyers.

All these factors indicate a slow, but sure recovery in the housing market, but you would have to look far to find anyone who thinks we will soon, if ever, return to the boom market of the last decade. Still, it appears that interest in home ownership is building, while many cautious buyers wait patiently on the sidelines for just the right bargain. With mortgage interest rates languishing around 4 percent or less for the last several months and the lack of increases in housing prices, who could blame them for taking their time?

Now there may be a compelling reason to act. Last week the Federal Housing Administration (FHA) announced it will raise the fees for its guaranteed mortgages. More prospective home buyers have been turning to FHA as other lenders tightened their requirements after the real estate market decline in 2008. The agency does not make loans, but insures mortgages that meet its guidelines: People with credit scores of 580 or more can put down as little as 3.5 percent. These insured loans often have less stringent credit requirements than traditional loans. As a result, the number of mortgages backed by the FHA has ballooned, accounting for 40 percent of all new purchase mortgages in 2010, up from 4.5 percent in 2005 according to FHA.

A buyer of a $200,000 home, with a 3.5 percent down payment will have a mortgage of $193,000. After April, they can expect to pay an upfront mortgage premium of $3,377, compared to the prior $1,930. Although that can be included in the mortgage it will increase the monthly payment. Borrowers with good credit, like a credit score of 700, who can come up with a slightly larger down payment of 5 percent are likely to pay about $44 a month less with a traditional loan backed by Fannie Mae or Freddie Mac (assuming an interest rate of 3.875 percent).

People who cannot qualify for a conventional loan will still go to FHA, but for people who could qualify for both and can come up with a little more down payment, a conventional loan is going to save them money in the long haul.

Buyers who submit their application with a purchase agreement before March 31 can still get the lower cost loans, even though they won't be funded until after the April deadline, according to Ela Conner, a mortgage loan originator with local Mountain West Bank. Just another compelling reason to get moving.

Trust an expert... call a Realtor. To find a Realtor to represent you visit the Coeur d'Alene Association of Realtors website at www.cdarealtors.com. There you can also search available properties in the Multiple Listing Service.

Kim Cooper is a real estate broker, Realtor and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your commentary and feedback. You may contact them by calling 667-0664 or by writing to them at 409 W. Neider, Coeur d'Alene, ID 83814.