Choosing The Right Time To Buy in Seeley Lake

Mortgage rates in the United States have dropped to their lowest levels since the 1940s, and homebuyers in Seeley Lake should be taking advantage.  Historically, it is highly unusual for mortgage money to be available below 5 percent.  In the 1940s, average rates fell as low as 4.7 percent, as the government held down interest rates to finance World War II.  They stayed just below 5 percent until the early 1950s, then rose above that mark in 1952 - and stayed there.  Until recently.

The Federal Reserve program has driven rates to historically low levels.  This has involved buying $1.25 trillion in mortgage-backed securities, and is scheduled to expire in March - Fed leaders have said that it would not be renewed.  As a result, some analysts believe rates could jump as high as 6 percent in the spring.
 
I also believe that interest rates may be rising soon and urge you to consider the difference between an interest rate increase vs. a drop in property price.  For example, in Seeley Lake, let’s assume the average sale is $250,000.  With a 5% down payment at 5% interest on a 30 year fixed loan, your monthly principal and interest (P & I) payment would be $1275.  If rates rise to 7%, your payment increases to $1580 a month. 

As a buyer, you may be on the fence because you think that prices may drop further and you can secure a lower monthly mortgage payment.  I do expect our market to drop again this spring as sales pick up, however, a rise in interest rates demands our consideration.  Think about this - if there is a 10% decrease in price so that the $250,000 home falls to $225,000, but you wait to purchase and the interest rate rises to 7%, your payment will be $1422 a month.  You then end up spending more money per month, and at a higher interest rate, thereby spending more money over the life of the loan. 

Real estate appreciation is always a cycle, and as the economy stabilizes, values will level out.  Making a home purchase is a decision that should be weighed carefully and has different considerations for each individual homebuyer, but right now is definitely a great time to buy a vacation property or second home in Seeley Lake.  Not only will you gain a retreat for family and friends, you’ll be making a great investment! 

If you’re ready to take advantage of some great deals and find a house in the Seeley Swan Valley?  Contact me, Kim Koppen, and let me assist you with all of your real estate needs.  I’d love to be your local real estate expert!