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October 9, 2007 by kodgerPerfect Time to Buy a Home!
September 27, 2007 by kodger
Perfect Time to Buy a Home!
You have decided this is the time you wish to purchase a home. You have seen about 25 homes with your Realtor and have decided on a home that is perfect for your family. You plan to put 5% down on your purchase so you will need a $200,000 mortgage loan to complete the transaction. If given the choice, which of these monthly house payments would you choose: $1,687.71. $1,271.72, $1167.15, or $1,088.36? Picking the lowest amount may not fit your long and short-term goals. Each amount represents a different mortgage program available today by which you can complete the purchase. Yes there are still many, many choices available when it comes to deciding which mortgage instrument you wish to use in purchasing your home.
Mortgage rates are currently at very low rates historically and would be considered the lowest ever except for the years following 9/11/01. That scenario will never happen again, even if we suffer a serious attack as 9/11, we as a Nation will respond much better since it will not be as much of a surprise and the Federal Reserve will probably not have to respond with as low a rate as we saw during 2002, and 2003. One reason not to do that again is evidenced in the present turmoil within the housing industry which was primarily caused by the excessive low interest rates during those years.
Our current 30 year mortgage rate of 6.5 is probably as low as rates will be for the foreseeable future. The FED reduction in the prime rate on 9-18-07 has virtually no effect on mortgage rates but will help to keep our economy moving forward thus causing the money supply be reduced which may put pressure on increasing mortgage rates. Couple these low mortgage rates with an over-supply of homes “on-the-market” and you have the perfect buyer’s market, the opportune time to invest in your future.
Low interest rates usually result in strong demand and rapid inflation of home prices, making it difficult to afford the home of your choice. The choice is usually limited to buying at high prices with low rates, or lower prices with high rates (and payments).
But right now, both rates and prices are at favorable levels. Now is the right time to buy a home! All the proverbial “ducks are in a row”. The exceptionally wide selection of available homes in all price ranges is the icing on the cake.
If you have not purchased a home lately, you may need to update your knowledge of the buying process and the potpourri of mortgage vehicles still available today. Choose a real estate agent with the experience to provide a list of reliable lenders with whom to discuss your mortgage options.
Be prepared to share your expectations about the home you would like to purchase, and expect the agent you choose to research all the housing available for you. Then simply make the commitment to buy now.
The monthly house payments noted above for the $200,000 mortgage are based on the following: $1,687.71 is a 15 year mortgage at 6%; the $1,271,72 is a 30 year mortgage at 6.55%; the $1,088.36 is based on a 1-year adjustable teaser rate mortgage at 5.12%, while the $1,167.15 amount is based on an interest only 3-year loan at 5.75%. All of these loan programs are available today and each will achieve certain goals. You need to work with a mortgage lender who can guide you to understanding your goals so you can understand which of the many loan programs available is right for you. These last two programs were used extensively during 2003 and 2004 and are the causes of much of the foreclosure difficulties you hear about everyday in the news. So be very careful that you fully understand the terms and conditions and the CONSEQUENCES of those terms and conditions as they will apply to you over the time you believe you will own the home.
