This is the best time to purchase a home. Home buyers that have been on the fence should jump at the opportunity to purchase while interest rates are low, and before values go up. Throughout the country home values have evened out and are starting to rise. In Q3 of 2012 home values rose by 3.6%. This is an incredible gain considering that in Q3 of 2011 values declined by 3.5%. This swing is fantastic news for existing home owners but should cause prospective buyers to act quickly.
Home prices make a huge difference in your monthly payment, as does mortgage interest rates. Using the value data listed above, buyers that purchased a three bedroom home last year could have paid $197,000 for the same home that would have cost $207,000 in Q3 of 2012. At a 4% interest rate that is a payment difference of $48 a month over the life of the loan. More importantly rising home prices also mean that your down payment goes up as well.
Homes will be in greater demand as the economy improves. Unemployment has been on a steady decline and more jobs, mean more buyers. Many people remember the bidding wars of the early 2000’s. While the market as a whole is not at that point, buyers are getting into bidding wars over the lower priced entry level homes. As more jobs enter the market place home buying will become even more competitive. Getting pre-approved by a mortgage lender, prior to submitting your offer, can give you a leg up in the negotiations process as you can waive the financing contingency clause.
Another sign of a rebounding housing market is how many new homes are being built. In fall of 2012 new housing starts jumped by 15%. This is the greatest increase since 2008. This is fantastic news for home buyers. As construction companies are bringing more houses online, buyers have the opportunity to purchase and customize their home. Companies are often willing to negotiate and give away free upgrades if you are one of the first families to purchase in a community. Selling homes helps them to get the bank to release funds for them to build more so they are highly incentivized to make those initial sales. While you may have to live with construction noise for a while, the savings could be worth it.
Mortgage interest rates are incredibly low right now, making it an even better time to buy a home. With 30 year fixed interest rates below 4% buyers can save thousands over the life of a loan. In the early 2000’s interest rates hovered around 6.5%. A buyer with a mortgage loan of $300,000 at 6.5% would have a monthly payment of $1,896. A buyer with today’s mortgage rate of 3.75% would have a monthly payment of $1,389. Buying today would save that same family over $500 a month in interest! Combining low interest rates with the rise in home values, makes 2013 the perfect time to purchase a home. Call a mortgage lender today and get pre-approved so you can start shopping.
