Just got off the phone with a home buyer. Its a lower end, low money down first time home buyer, limited funds, limited options. But it is totally doable. That's fine, I love first time home buyers. The buyer expressed the desire for a home for his growing family. There really was't anything he was interested in and he finished the conversation with:
I am in no rush, I will wait for the right home. I don't care if it takes two years.
So what you are really telling me Mr HomeBuyer:
- I am not a serious buyer.
- I have no idea what I am talking about and am in serious need of professional help (REALTOR that is not a psychologist!) But you need to realize you need help before one can help you.
Mr Home Buyer here is the grim reality. You do care if it takes two years, you desperately care!
You wait for the right home and your dream of home ownership will dwindle away until you can afford nothing.
This is currently what is happenning in most market across the country.
- Home prices are appreciating, so conservatively every year that goes buy you are losing 3% of your buying power.
- Realistically, mortgage interest rates are still at a historic low. They can not go down, they can only go up from here. As the economy improves interest rates will rise... its a fact.
Let me lay that out. For every 1/8 of a point mortgage rates go up you add $8 to your payment or you lose $1500 in buying power. So an 1/8 of a point in interest rate rise on a 300,000 just caused you to 1.5% in buying power.
So an 1/8 of a point not a big deal but did you know interest rate rose approxiamately 1 percentage point in about a month this spring?
That translates into either an extra $64 a month in mortgage payment or a loss of $12,000 in buying power, over 10 %of your purchasing power.
So Mr Buyer, what makes you think if you can't find a condo for $100,000 that works for you now, that you are going to find something for $100,000 next year when you lost $15,000 in buying power or worse yet $20,000?
Here is my advice to you if you are committed to buy.
- Revaluate your commitment to buy. Is it truly the right time and circumstances?
- Put a plan in place. What I tell buyers if they are truly committed to buying a home, is we will have you in a home in 3 to five months. And for most buyers that holds true.
- If you have looked at 15-25 homes and nothing works.... it probably doesnt exist. It is time to revaluate your expectations.
- Find a buyers agent who can help you with your expectations, manage reality and find the best home you can afford!
Kevin Vitali has been working with many happy home buyers for over 12 years and can bring the experience of 100's of closing to your transaction. Kevin is a Buyer's Agent that covers most of Essex County and Morthern Middlesex County in Massachusetts.
Kevin Vitali - EXIT Group One Real Estate