For many, now is the time to buy. Here is a combination of factors that begs to be taken advantage of:
1. Property values have become more reasonable. According to an index of 20 major metropolitan areas, property values have fallen some 16.6% since their peak. In some areas, the decline exceeds 20%.
2. Buyers have bargaining power. Besides lowering their prices, sellers have found they have to make other concessions to close a deal. Whether it's paying the closing costs or throwing in some new appliances, there are extras that buyers are in position to negotiate.
3. New home loan providers are anxious to find qualified borrowers. While lenders have tightened new home loan qualification standards, they are also eager to make up for the bad loans they now have on the books by making new home loans to qualified borrowers.
4. Mortgage rates are relatively low. Historically, mortgage rates have ranged from 5.23% to 18.45%. At recent levels just above 6%, mortgage rates are at the low end of that range.
5. There's no guarantee that affordable conditions will last. If you can afford a new home at current property values and mortgage rates it might be wise to take advantage of that. You can't be sure of finding conditions as favorable next year.
New Homes Now: Why Wait?
While there are good reasons to buy now, that doesn't mean you should jump in blindly. Take care of the following tasks before you start dragging your family through open houses every weekend:
1. Budget before you borrow. Understand how your new home loan payments will fit your budget--and whether those payments are subject to change.
2. Buy for the long run. Don't expect to be able to "flip" your house for a profit in the near future. Buy to have a place to live, not to make a quick buck.
3. Asses your assets. Bigger down payments can improve your chance of getting a loan, especially if your credit rating is a little shaky. Or you might want to pay off some debt or add to your savings for extra security before buying your home.
4. Fix up your credit rating. Interest rates for borrowers with bad credit can be 3 or more percent higher than those for borrowers with good credit. Pay on time to show you've cleaned up your act.
So don't let the newsmongers scare you. If your situation makes you a good candidate for home ownership you may not see a better opportunity than now!
Comments(1)