Online tool helps you decide whether to buy a home now or wait

By JEFF LAZERSON / CONTRIBUTING COLUMNIST

For some renters, it must feel like chasing ghosts in a bad dream.

Do you know exactly what is required for a down payment? And, can you lock down today’s priceinstead of possibly higher prices in the next year or two?

A National Association of Realtors survey last fall revealed most home shoppers don’t know what is needed for a down payment.

“Eighty seven percent of non-owners believe they need more than 10 percent down. Thirty nine percent believe they needed more than 20 percent down, said Jessica Lautz, managing director of NAR’s survey research and communications. “This is one of the most shocking results of the survey.”

The short answer is you don’t need 20 percent down. You can get in with as little as 3threepercent down on a conventional loan or 3 1/2percent down under Federal Housing Administration rules.

And you can even piece together a zero-down loan that has some income and other restrictions through the California Housing Finance Agency. Those with veteran’s benefits can get in with zero down as well.

This week, MGIC mortgage insurance company released a consumer accessible buy now vs. wait calculator that you can find at www.mgic.com. This is different than buy vs. rent calculators.

You input your monthly rent, monthly savings contributions, desired home price, current down payment and an estimated mortgage interest rate.

You get to see exactly what the cost of buying now vs. waiting to buy looks like. The preset assumptions show that it’s going to be more expensive if you wait to buy.

The best thing about this is you can make your own assumptions about yield on your savings, your annual rent increase, annual home appreciation and other housing expenses. So, if you think prices are at the top of the market, go into the optional settings and change the home appreciation assumption to a lower number than its preset 3 percent appreciation number.

“(This is) not meant to talk someone into buying something they are not ready for,” said Vance Edwards, MGIC’s marketing program director.

What is missing from the calculator are the benefits of deducting mortgage interest and property tax payments from your income taxes. Ask your tax advisor to explain what those real dollars look like for you.