Buying a home in turbulent financial markets: A good idea?

Given the turmoil in the financial markets this week, you might be wondering: Is now a good time to buy a home? 

At least mortgage broker not only says it is but that this is actually one of the best times in years to buy -- if you meet certain criteria.

Twenty-five year old Tim Cooper is just one such person. For three years, he's been saving up for a down payment on his first-ever home.

Last week, Cooper learned that interest rates had edged down to near six percent. So he locked into a better rate, saving himself $80 on his projected monthly payment when he closes on the home this October.

"My monthly payment dropped," said Cooper. "It made me happy. Now I have X number of dollars to do something better with."

Still, Cooper and others point out that while interest rates have dropped, credit is tighter than it has been in years. 

"Stressful," is how Cooper describes filing the paperwork and giving documentation of his creditworthiness. "They want everything.  You have to have paychecks, everything like that."

His mortgage broker Drew Aiello concurs, but says this is a good time to buy if you have good credit and can make a down payment. 

"If you're looking to purchase a home, finance a home -- this is the best it's been in 3 years," says Aiello.

Down payments are "in," but 100-percent financing has gone by the wayside. Aiello expects interest rates may drop even more.  But he also warns banks and lenders will be much more strict and expect you to jump through hoops to prove you're worthy of the money. Is the credit tightening good for the overall economy?

"I think it's going to be good," says Aiello. "Before, it was too loose. Now the pendulum is swinging the other way," though he admits "it may be too far the other way, making people with decent credit jump through an extra couple of hoops."  

Money is still plentiful, Aiello says, and first-time homebuyers can get a $7,500 federal tax credit.

"It's good to hear," says Cooper. "When I tell my parents the interest rate -- well, they're not jealous, but they're happy I found the deal I did."