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Purchasing - Is this is good time to buy ?

 

If you’re asking yourself,”is now the right time to buy a house?” I congratulate you for considering this.  It’s a smart question to ask yourself. While rates are low now — and they are expected to remain low for awhile– they won’t stay this low forever.  At some point, rates will rise.  So if you’re considering a home purchase now, you have to wonder how prices will be impacted once rates rise.

At first, a rising interest rate market may actually drive prices up. That’s because people who are sitting on the fence will get motivated to lock in rates sooner rather than later. But some experts fear that once rates peek above 6%, demand will shrivel and so will prices. At that point, housing affordability is reduced. The pulls people out of the market and reduces demand.

With so many houses for sale, such a dearth of homes owned by banks and so many people owning more on their homes than they are worth, the likelihood of a spike in real estate prices in the near term is low.

Conclusion – real estate prices are not going anywhere soon. If you live in the boom states like California, Nevada, Arizona or Florida, get ready for a flood of new foreclosures to hit the market over the next 12 months. Nationwide, more than 1 in 45 homeowners are in some part of the process of being foreclosed on. Don’t count on appreciation. If you are sitting on an adjustable rate mortgage, it’s time to lock in a fixed loan now if you have the credit score to buy a house. The difference between a 30-year fixed and 5-year adjustable is about 1% so it’s just not worth the risk of higher interest rates if you are going to stay in the same home for awhile. In fact, the only way to justify an adjustable rate mortgage now is if you are almost delusional. The numbers work out like this.

If your rate goes up (and stays ) at  5.75% but it takes 5 years to do it, you break even with the adjustable vs the fixed rate loan according to the Investors Business Daily. But if rates go up to 5.75% sooner than 5 years and you live in the house for 10 years, you are far better off if you lock in a fixed rate mortgage now.

At the end of the day, you can decide if now is the right time to buy a house by considering your housing cost alternatives  (buying vs renting), availability of credit now vs some time in the future and long-term lifestyle plans.  But if you are considering making such an investment in order to get a fast return on appreciation, I’d think again if I were you.

 

Owning your own home provides several benefits. In addition to the satisfaction of being a homeowner, you can build equity, enjoy  tax deductions , say good-bye to your landlord and take control of your living environment.Whether you are a first time home buyer, renting or are purchasing a new or second home, we have an assortment of tools and loan programs to meet your individual financing needs. Use our easy-to-navigate site, or contact your mortgage loan specialist, Lani Vu at (408) 568-4323 today to discuss and obtain your loan pre-approval . In today's real estate market, you can assure sellers of your viability and negotiate more effectively when you're pre-approved . Apply-online now to be pre-approved.

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