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    North of NYC North of NYC By Houlihan Lawrence By Houlihan Lawrence by

    Today, everyone  looks for the "bottom of the market" when they are in the market for a home. But it's not just the price that determines the real cost of buying a home. Interest rates and financing options also have a huge impact on monthly costs.

    Should you buy now or does it make sense to wait? While  there's no doubt that property values have declined vs. a year ago, the rate of decline has slowed significantly in the past few months. And while there are endless predictions, the exact timing on when prices will stabilize is unknown. But waiting for the lowest possible  purchase price could ultimately end up costing you more if the rates and financing opportunities are not as favorable as they are today.  Here are a few important factors to consider before you make a decision.

    Interest Rates - The Good News

    The Federal Reserve initiated a program to buy mortgage-backed securities, which control the rates that people pay for their home loans. Over the last 7 months, rates have been bouncing between 4.625% and 5.25% for 30-year fixed rate loans.

    Interest Rates - The Bad News

    Rates are artificially low. The Federal Reserve will not continue to buy mortgage-backed securities indefinitely. Economists are predicting that rates will increase significantly in the first quarter of 2010. Historically, interest rates have been above 6%. The opportunity to obtain a home with an interest rate in the low 5's will not be available for much longer.

    Mortgage Financing

    Fannie Mae and Freddie Mac have set temporary loan limits in "high balance" areas of many metropolitan areas at $729,750.  This limit is probably going to be reduced on December 31, 2009.  Although not confirmed, the new limit could be as low as $417,000.

    The Clock is Ticking on Free Money

    From now until November 30, 2009, first time home buyers are able to take advantage of an $8,000 Tax Credit. The transaction must close and fund by November 30th in order to take advantage of the credit.