Low Interest Rates, Low Housing Prices and Lower Down Payments. The Home Buying Stars Have Aligned.
Want to start off the New Year with some good news? (We thought so.) If your New Year’s resolution centers around buying a home, there are THREE big things going on that you should know about.
The home buying stars have aligned, and they’re telling you to take advantage.
#1 Mortgage interest rates have dropped to the lowest they’ve been in 50 years. With mortage interest rates at historic lows, the number of people applying for mortgages has hit near record highs. (If you've never been one to jump on the bandwagon, now's a good time to start.)
#2 Low housing prices. This isn't “new” news by any means, but it's an important part of the equation (which equals 'perfect time to buy a home'). Housing values have fallen steadily over the past two years and in turn, so have their sale prices.
#3 Low down payments are available on FHA loans.FHA loans (safe, government-backed loans) let you purchase a home with 3.5% down. Let's consider this: If you're buying a $200,000 home, your down payment (not including closing costs, taxes, etc.) is only around $7,000. That's a goal that doesn't seem quite as far out of reach.
With these three things working together to your advantage, this is the best time to buy a home in decades.
Putting Yourself in the Best Possible Financial Position
WIth that in mind, the next step is making sure you're in the best position to buy a home. An article on CNN.com based on an appearance by Suze Orman, one of the country's most recognized financial experts, on The Oprah Show outlined the best financial position to be in when you're purchasing a home.
First, make sure you have a substantial 'emergency fund', also referred to as a 'rainy day fund'. A rainy day fund should have enough for eight months of expenses including your mortgage payment, bills and incidentals — should you ever be without income for that period of time. Your rainy day fund should be money you have saved in addition to the money you have to put toward your down payment. Make sure you don't dip into your rainy day fun to put toward your down payment. Otherwise, if something needs fixing, you may not have the money on hand for repairs.
Second, you should also make sure you don't purchase a home that's outside of your budget. Use a trusted real estate agent who will help you stay within your budget by showing you only the homes that make sense for your finances.
Third, now more than ever, it's important that you use a mortgage company you can trust today. Make sure your mortgage banker is an expert in mortgage programs that suit your needs and that the company has been in the mortgage industry for a long period of time.
Fourth, make sure the home you choose is one you can handle. Do your research. Did you know you can find out the ballpark of the heating bills for a particular home? Make sure to check the cost of utilities in addition to the mortgage payment and factor that into your monthly expenses.
By positioning yourself to buy a home today and taking advantage of all the 'lows' in the real estate and mortgage markets, you can enjoy your new home best in the new year.
Happy House Hunting!
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