5 Reasons to Buy A Home Now Instead of Spring

Based on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five major reasons purchasers should consider buying:

Supply Is Shrinking

With inventory declining in many regions, finding a home of your dreams may become more difficult going forward. There are buyers in more and more markets surprised that there is no longer a large assortment of houses to choose from. The best homes in the best locations sell first. Don’t miss the opportunity to get that ‘once-in-a-lifetime’ buy.

Price Increases Are on the Horizon

Prices are projected to appreciate by over 25% from now to 2018. First home buyers will probably pay more both in price and interest rate if they wait until the spring. Even if you are a move-up buyer, it will wind-up costing you more in net dollars as the home you will buy will appreciate at approximately the same rate as the house you are in now.

Owning a Home Helps Create Family Wealth

Whether you are rent or you own the home you are leaving in, you are paying a mortgage. Either you are paying your mortgage or your landlord’s. The Fed, in a recent study, revealed that the net worth of the average homeowner is 30 times greater than that of a renter.

Interest Rates Are Projected to Rise

The Mortgage Bankers Association, the National Association of Realtors, Freddie Mac and Fannie Mae have all projected that the 30-year mortgage interest rate will be over 5% by the end of 2014. That is an increase of almost one full point over current rates.

Buy Low, Sell High

We would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’ compared to where it will be next year. It’s time to buy.

Courtesy: Keeping Matters Current.

Boomerang Buyers: The Newest Group of Home Buyers to Hit the Market

According to reports, “boomerang buyers” are the latest new buyer group to emerge. These are former homeowners who had gone through a short sale, foreclosure or bankruptcy in the past few years and are now ready to buy a home.

So, how soon can they buy a home?

Past homeowners who had FHA loans may need to wait only three years provided they can prove that a hardship, such as job loss or death of a wage earner, led to their foreclosure or short sale.

Freddie Mac’s wait time is usually four years following a short sale or deed-in-lieu, and seven years after a foreclosure. Fannie Mae may require a seven-year wait for a foreclosure, but only a two-year wait following a short sale as long as the borrower can provide a 20 percent down payment.

Most lenders required buyers to wait 5 – 7 years to qualify for another loan, but mortgage giants have begun to change their rules to allow homeowners who underwent a foreclosure or short sale to qualify sooner. For those who underwent a short sale, it may be sooner.

Question is why would homeowners with such past histories want to buy again?

General conception is that renting a home is akin to throwing money away, and with a more stable economy, pride of homeownership has raised its head again.

But the 3 most important reasons cited are:

• Rents are on the rise
• Interest rates are on the rise
• Home prices are on the rise

Boomerang buyers are coming. Most have saved up for a down payment and qualified to purchase a home again. The hardest hit areas of 2008 – 2010 will see the most. That includes South Carolina.

Which is good news indeed!

Source: Realtor Magazine, July 2013

Knee-jerk Reaction by Home Mortgage Interest Rates

With the Fed’s announcement last week that there may be a tapering of its bond purchase program sooner than later, stock market indices reacted by dipping by a few hundred points. A stock that I had bought with careful thought also took a dive! As an aside, the minute I buy a stock (a meager 100 shares), its price will go down!

With the Fed's announcement, home mortgage interest rates jumped up. This was to be expected – interest rates had been ridiculously low at around 3.5% for over a year. According to Freddie Mac, interest rate for 30-year fixed mortgages took ‘its biggest leap in 26 years’ from 3.93 percent last week to 4.46 percent!

"Higher mortgage rates may dampen some housing market activity but the effect will be muted by the high level of buyer affordability, and home sales should remain strong,” says Frank Nothaft, Freddie Mac’s chief economist. 

I don’t see how there can be a higher level of affordability. For the same monthly payment of principal and interest, home buyers will now afford a slightly smaller home (or lower priced home). But what will happen is that home buyers who were vacillating will be galvanized into action with the fear that interest rates may go up further.

 

With all the knee-jerking that’s going on, we might as well be watching the cancan at the Moulin Rouge!