If you have a good job and good credit, the next few months might be a great time to buy a house.  If you wait, you may miss out on the federal tax credit, or interest rates may rise. Before you jump into the housing market, consider the following three factors:

1. Low Interest Rates May Not Last:  The rate on a 30-year mortgage averaged 5% last week. Rates are low in part because the Federal Reserve has been buying up about $3 trillion in mortgage-backed securities and mortgage agency debt. Their goal is to hold down interest rates and keep mortgage money available. But the Fed is slowly pulling back and has no plans to buy any more securities after March 30, 2010. And the recoverinig economy itself should raise interest rates as the year goes on. Economists at the Mortgage Bankers Association predict a 6.1% interest rate by the end of the year.
2. Expiration of Home Buyers Tax Credit on April 30th:  At this point, no one knows if Congress will renew this tax credit for the second time. To qualify for the credit, you must sign a purchase contract by April 30, 2010 and close by July 1, 2010. First-time buyers (those who haven’t owned a home in 3 years) get $8000, and move-up buyers get up to $6500.
3. Home Prices May Be Rising:  There are indications that home prices are near a bottom in some areas and may actually be rising a bit.  Conditions vary by neighborhood, and data is tricky to interpret, but potential home buyers should keep an eye on what’s happening with home prices.

If you’re a home buyer on the fence, think carefully about these three factors, and perhaps you’ll get off the fence and go looking for that new home!

Coldwell Banker reported findings from a new survey that looked at how the recently expanded federal homebuyer tax credut might impact the economy. 83% of 1000 homebuyers surveyed responded that if they were to purchase a home and qualify for the tax credit, they would engage in “smart spending” of the money. This means they would put the money toward paying off existing debts, home improvements, savings/investments, or everydayhousehold expenses.

According to the survey, 34% of homeowners said they would use the tax credit to pay off debts, followed closely by home improvements (29%) and making investments (28%).

In addition, Coldwell Banker found that 20% of homeowners indicated they were more likelyto consider purchasing a home than they were six months ago, after learning about the federal tax credit.

The National Association of Realtors recently reported that 47% of 2009 home sales were to first-time buyers, so clearly the initial tax credit worked. This survey offers positive indicators that there are more existing homeowners considering a home purchase today  than there were six months ago.

Interest rates on a 30-year fixed mortgage have dipped to an all-time low giving consumers a big reason to consider buying a home now. Freddie Mac recently stated that the average rate on a 30-year loan was 4.71% with an average .7 point. This is the lowest rate since the agency began it’s weekly tracking in 1971. A point is equal to 1% of the loan amount, payable in a lump sum at closing.

Rates are so low right now because since early January of 2009, the Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. In September, 2009, the Federal Reserve said it would wind down this purchase program by March 20, 2010. In a recently published mortgage survey, loan experts predicted that rates will increase in the next 30-45 days. For comparison, at this time last year, 30-year fixed rate mortgages were at 5.53%.

Regardless of the survey, the general consensus is that interest rates are super low right now, and they may be the lowest the market will see for a long time. Remember also that these very low rates are offered to the most credit-worthy consumers who can make a sizable (usually at least 20%) down payment.

So should you buy now? It all depends on your personal situation. Homebuyers have a lot of factors in their favor right now — low interest rates, plenty of competitively-priced homes for sale, and an extended and expanded federal tax credit that will expire in the spring.

On the flip side, there is some sentiment that housing prices may fall further. Lenders are expected to get more specific at determining which buyers will qualify for loan modifications. If they don’t agree to a loan modification, lenders will move homes more quickly through the foreclosure process. And home values may depreciate in response.

So it’s your choice. Take advantage of all of the factors in your favor as a homebuyer right now, or wait for prices to fall further. Either way, the first six months of 2010 should be a great time to buy!

Lawrence Yun, economist for the National Association of Realtors, predicted Friday that home prices would begin rising next year for the first time in 4 years, as reported in the San Diego Union-Tribune. He based his prediction, given before the annual convention of the NAR in San Diego, on low interest rates, low prices causing improved affordability, and the federal $8000 tax credit for first-time home buyers recently renewed by Congress. Forty percent of the buyers who used the credit were influenced to buy because of the credit.

Yun feels there is pent up demand of first-time buyers for homes, both new and resale. While prices should rise, it is also likely that mortgage interest rates will also rise slightly to around 5.7% from the current 5.2%.

Other experts, such as Patrick Nugent of IHS Global Insight, Michael Lea of the real estate center at SDSU, and James Hamilton at UCSD, are not as sure that prices will recover next year, although there is a consensus that we are near the bottom.

This is an excellent time to consider buying, with low interest rates, low prices likely to rise in the future, and the federal first-time home buyer tax  credit.