Things to know about buying a home now...

Things to know about buying a home now...

With the start of the new year, there's lots of talk about where home prices, mortgage rates and home sales in general are headed. If you're thinking about buying a home in the near future, here are some points to ponder: 

Prices are now at all-time lows. According to the National Association of Realtors (NAR) housing affordability index, home prices are more affordable now than during any other time in our history going back to 1970. In addition, this time of year is especially good for buyers, because activity has slowed down. The school year in full swing and the holiday season cuts the number of active buyers, so sellers are especially motivated to make a deal. 

It's a good time to buy if you plan to stay awhile. A home is still a good investment, just don't expect the house you buy today to deliver a big jump in value right away.  The NAR's chief economist says, "Despite very attractive affordability conditions, a housing market recovery will likely be slow and gradual...." But if you plan to stay in your home more than a few years, your investment should beat inflation. According to Department of Labor statistics, for the ten years from 7/1/2000 to 6/30/2010, the average home increased in price 3.4% per year in the US. Inflation measured by the CPI (Consumer Price Index) went up 2.4% per year in the same period. 

Mortgage rates are still at historic lows. National average mortgage rates are at their lowest levels in history. You may have heard about rates inching up a little lately, but "inching" is truly the operative word. National average mortgage rates are still below where they were at the start of last year. The important thing to remember is that lower rates increase your buying power by allowing you to qualify for a larger loan amount. 

You're in the driver's seat. It's still a buyer's market, so many sellers are prepared to negotiate to close the sale and move on with their lives. Price and appliances for instance are all things that can be up for discussion - you just have to test the waters. But remember, when home prices stabilize and start to head up, sellers won't be in the same bargaining mood. At that point, sellers could regain the upper hand as buyers compete with each other to purchase before prices go up more. 

Don't forget the tax benefits. Buying a home gives you some nice tax breaks. Interest on your mortgage and real estate taxes are both tax deductable. If you pay points to reduce your loan's interest rate, that money may also be deductible. Please consult with a tax advisor to find out how these deductions apply to your circumstances.

You want choice? Now you've got it! In many areas of the country, home buyers are feeling like kids in a candy store. There are many nice options to explore. Just don't get overwhelmed. Figure out what you want in a home, a neighborhood that's right and what you can afford to pay - then go enjoy the shopping experience.

It's easy to get started. The first thing to do is to get qualified for a mortgage. This tells you how much money a lender is willing to loan you, so you know exactly what you can afford. Being qualified also strengthens your position when making an offer because the seller knows you're a pre-approved borrower. Please contact us and we'd be happy to help you through this process.

There may never be a better time to buy. One thing's for sure, mortgage rates and home prices won't stay at these historic levels forever. When you find a home you fall in love with, don't let it get away. Remember, you want the best home, not just the best deal, and holding off on a purchase for things to improve, could lose you the home of your dreams.

Feel free to call or email us about these or any matters relating to home financing or refinancing. We're glad to talk further about any of these topics... Have a great day!