Mortgage Loan Rates and Housing Prices Make it Buyers Market

First time home buyers may be entering the market of a lifetime. Mortgage rates are already at a record low 5.5 percent, and the Treasury is determined to make that 4.5 percent. Housing prices are also at record lows and plentiful. If you are looking for your first home, now is the time to start getting serious.

Back to Mortgage Basics

Preparing for that first mortgage in today's market means getting back to basics. Hear are a few traditional elements of homeownership that are making a comeback:

• 30-year fixed-rate mortgages. However, at 5.47 percent these have never been more appealing to borrowers--payment security and super low rate. Even better news may be coming as the US Treasury continues to push for even lower rates.

• 20 percent down payment. Of course this means you will have to have more savings stored up to buy that home of your dreams, but (believe it or not) investing your home may be the best return. Local bank savings and money market accounts are dropping below 2 percent and Treasury bonds hit 0 percent last week.

• Debt-to-income ratio between 28-38 percent. Actually, this is just prudent personal finance management. Exceeding this ratio gives very little room to enjoy your new home. Ever heard of heard of "house rich, cash poor?"

But, those are just the basics. The economic crisis and government are throwing in a lot more goodies to make your first home purchase irresistible.

Economic Crisis Mortgage Incentives

The mortgage meltdown and resulting global crisis have provided several reasons to go looking for that new home. Almost every market in America is flush with new and existing homes--all at bargain prices.

• Foreclosures and bank sales. This is probably the leading cause of plentiful home choices and bargain prices. As homeowners have been hit by a combination of exotic mortgages, declining economy, and lost jobs their homes are unfortunately going on the bidding block. This means banks looking to sell at nearly any reasonable price.

• Homebuilders sitting on new homes. The housing slowdown caught many homebuilders by surprise. This means brand new home sitting vacant and homebuilders stuck. Another buyers market deal, for sure.

• People relocating for jobs that need to sell. This is the newest economic opportunity for first time home buyers. With many Americans losing jobs or relocating to keep theirs--there are homeowners forced to sell in a bad market.

Government Assisted Mortgages

Even the government wants you to buy your first home. More and more focus is being turned to the individual consumer, as the key to economic recovery. That means new home buyers are going to get all the benefits.

• 4.5-4.0 percent mortgage rates. This is the biggest opportunity on the horizon. US Treasury Secretary wants 4.5 percent mortgage rates and has the tools to make that happen soon. But, the deal could get even sweeter as Director Lockhart, the supervisory regulator for Fannie Mae and Freddie Mac, thinks 4.0 percent would be even better.

• $7500 federal tax credit. If a low mortgage payment weren't enough Uncle Sam wants to help you pay for it--giving you $7500 to go toward your down payment.

• Numerous FHA loan programs. Add to your government subsidized down payment an FHA mortgage loan and you only need 3.5 percent in down payment, versus the conventional 20 percent. And with new FHA loan limits you can buy in any market.

The facts are obvious, it is a buyers market. Enough of the doom and gloom--it looks like there should be a lot more buyers in the market.