"Timing the market" in real estate doesn't work the way it does with stocks. Homes are bought and sold more out of necessity than to make an easy buck. However, some indicators give a clue when it's a good time to buy. Like now!
Despite the fact that rates are low and prices may still drop, now is the time to move if you have good credit and funds for downpayment. It would be a mistake to "wait and see" if rates or prices fall any more. Why?
Rates are low now because of federal bailouts, but continued low rates can fuel inflation. Fear of inflation causes "the Fed" to raise those rates. Waiting for a lower price on a home while interest rates rise could make the home more expensive.
Example: purchasing a home now for $177,000 at 5% could make the total cost around $370,000 by the end of the loan term. But what if you wait for prices to fall more, and next year you get that home for $160,000. You saved $17,000 - right? Wrong!
If rates rise 2% during that time, you could pay over $400,000 over the life of the loan - $30,000 more than if you bought now! If the math is still fuzzy to you, talk to an agent and crunch the numbers. You'll be glad you did.
Showing posts with label interest rates. Show all posts
Showing posts with label interest rates. Show all posts
6/4/10
9/14/09
One's Loss Is Another's Gain
While falling values are not good indicators for sellers, they’re great news for buyers, lifting affordability to historically high levels. For example, to purchase a median priced home of $164,600 with 20% down and an interest rate of 5.1%, a buyer would need an annual income of just under $35,000.
With the lowest interest rates we've seen in forty years, now is an opportune time to lock in a rate on a fixed loan. Rates are already showing signs of rising, and waiting too long could negatively affect your ability to secure such a mortgage.
In addition to rising interest rates, the fees on loan applications may also start increasing. This is because lenders have reassessed their risk to reward ratios in light of all the recent loan defaults. Around the corner, we might expect higher mortgage insurance premiums and closing costs, not to mention tougher and tougher terms for qualification.
With interest rates and loan fees still at very affordable levels, now is the time to make your move and secure your financial stability through home ownership. If you buy a $150,000 home today and it appreciates at a very conservative 3% annually, that home would be worth nearly $164,000 in three years.
Don't let all the negative stories about real estate blind you to the many positive factors for buyers in today's market.
With the lowest interest rates we've seen in forty years, now is an opportune time to lock in a rate on a fixed loan. Rates are already showing signs of rising, and waiting too long could negatively affect your ability to secure such a mortgage.
In addition to rising interest rates, the fees on loan applications may also start increasing. This is because lenders have reassessed their risk to reward ratios in light of all the recent loan defaults. Around the corner, we might expect higher mortgage insurance premiums and closing costs, not to mention tougher and tougher terms for qualification.
With interest rates and loan fees still at very affordable levels, now is the time to make your move and secure your financial stability through home ownership. If you buy a $150,000 home today and it appreciates at a very conservative 3% annually, that home would be worth nearly $164,000 in three years.
Don't let all the negative stories about real estate blind you to the many positive factors for buyers in today's market.
Subscribe to:
Posts (Atom)