As published by the American Society of Administrative Professionals at http://www.asaporg.com (member only site)
You have an unprecedented opportunity right now to buy a home and capitalize on the following 5 key factors all working to your advantage:
1. Record low mortgage rates- Mortgage interest rates have not been this low since they started tracking rates in the mid-1950’s. Based on a recent snapshot of national average mortgage rates from Freddie Mac‘s Primary Mortgage Market Survey on July 22, 2010, the national average rate is 4.56% with 0.7 points on a 30-year fixed-rate mortgage. At the same time last year, the rate was 5.2% with 0.7 points. Even a 2% swing in interest rates can cause a significant impact. Here is a quick comparison for a $200,000 loan with a 30-year fixed term:
|Interest rate||Mortgage/ Month||Mortgage/ Year||Interest over life of loan|
|Savings with current low rate||$251/ month||$3012/ year||$90,276|
You may even be able to afford a shorter term mortgage, like a 15-year fixed mortgage, as rates are usually lower for a 15-year than a 30-year and your home will be owned outright 15 years faster. Lastly, just a few years ago you needed to do an adjustable rate mortgage, such as a 3/1 or 5/1 “ARM”, to get the best interest rates. Now you can have more certainty by fixing in the rate for the entire term of the loan at similar rates.
2. Low prices mean higher value- Homes are truly “on sale” and you can benefit from this. As inventory increases, you can often get the best value in price, location, and quality of your new home. Additionally, the new and increasing availability of homes selling at extremely low prices from foreclosures and short sales has contributed to the temporary decline in home prices and helps the new home buyer get the most home for their dollar.
3. Owning may be cheaper than renting- Even once you include all of the costs of home ownership, owning a home may actually be cheaper than renting. Like buying a car vs. leasing, each payment you make for your mortgage helps you build equity in your home and create a tax deduction for the mortgage interest paid, instead of spending money to get a roof over your head without any future return on investment.
4. Houses are often in move-in condition- To ensure their homes command the best price the market will support, homeowners are continuing to spend on repair and maintenance according to the Harvard Joint Center on Housing.
5. Real Estate is still a great long-term investment- Despite the recent reduction in housing prices, real estate continues to be a better investment than the stock market, as shown in the table below:
|Return on Investment||Jan 1, 2000 to Dec 31, 2009|
|Stock Market Key Metrics:|
Key to the equation though is your job security and ability to consistently pay your new mortgage and related new home costs. Once you run the numbers and make sure these reasons hold true for you, go for it and invite us to your first backyard barbecue!