The last few years have if nothing else has given us a greater appreciation for the value of saving money. A challenging real estate market, weak employment picture, and a lack of good ideas from our elected officials has put some financial pressure on all of us. The stock market volatility and lack of regualtion over the past few years has left little confidence in our retirement fund. Saving money for a child's education, retirement or just that bucket list adventure, can place anxiety on Americans of any age or income demographic. But, what if I told you buying a home might just be the easiest way to save money for the future!!! 
That's right, opening the door to home ownership in 2012, is going to be your key to growing piggy bank in the years to come.
From Home to Piggy Bank:
Trying to save money when the cost of food, fuel, and education is going up can be difficult, but the "forced savings" created by home ownership makes that savings account attainable. When you make a mortgage payment, a portion of that payment goes towards the principle and a portion will go towards the interest. At the beginning of the mortgage period, more goes towards interest and as you get further along the mortgage timeline more will go towards principle. Each monthly mortgage payment that you make creates a "forced savings", meaning that a portion is going towards the principle to build equity. For those who don't know what equity means; its the difference between what is owed on your mortgage and what the property is valued at. When you are buying in a down market there is a lower risk of further depreciation, so the confidence of getting an increase in home value is greater. Buying in 2012 means more "forced savings" because we are close to a housing bottom, which means we are closer to an up-swing in home values.
I can say with confidence that the housing bottom is within our sights. We are within a couple of percentage points of either side of this housing mess. Sure, we could have a wave of foreclosures that brings the prices down another notch, but we could just as easily have a couple of good months of unemployment data, which would push money into the stock market and out of bonds. This would result in mortgage rates moving up. When considering buying a home, it's imperative to look at both the PRICE of the home and the COST of the home. If home prices came down and mortgage rates went up, chances are it's costing you more.
An Example:
- There are 360 payments in a 30yr fixed mortgage
- A $200,000 loan at 4.25% will cost you $983.88 per month
- A $200,000 loan at 4.75% will cost you $1,043.29 per month
- That's a difference of $59.41
- If we multiply 360 payments x $59.41 we get a savings of $21,387.60
- This means that $200,000 would have to drop in price another 10% (NOT VERY LIKELY)
So you can clearly see as demonstrated in this example, that evaluating the cost of the property has to be considered. According to Freddie Mac; mortgage rates are at historic lows, which means they are much more likely to go up than down. When statistical charts look at the combination of the median income, home prices, and interest rates, the result is the "affordability index". Incomes have not dropped nearly as much as home prices and interest rates, leaving the conclusion of the affordability index being NOW IS THE TIME TIME TO BUY.
Banks are lending and there are mortgage products of all types to help potential home owners. Don't fall victim to the negative hype on the news. Take advantage of this once in a lifetime opportunity for home ownership, and start saving money for you and family's future by buying a home.
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