Some of you may not know that I am a Realtor. I've been thinking for a while that it may be nice to share a few tips regarding real estate on my blog. Hopefully this comes across as helpful and informative and not boring and blah....let me know.
I don't plan on this being a daily thing so don't freak out! More cute projects will be coming in the next few posts! I just frequently receive a lot of questions pertaining to real estate and so I thought, "Maybe there are others out there with the same questions." Or maybe not and you've stopped reading the moment you realized this wasn't a giveaway, there wasn't chevron involved and you can't re-create this recipe for dinner tonight...I kid, I kid.
SO! Today's Topic: Why is now a good time to buy?!
I'm sure you hear it a lot, "It's a Buyer's Market!" What A Great Time to buy a House!" But I'm also thinking that you might be asking yourself "Why?" Here are a few reasons:
- Interest Rates: Interest Rates for mortgage loans right now are at an all time low. Back in the 70's if you wanted to buy a house you were looking at paying about 16% annually in interest...right now it's more like 3-4% depending on your credit score. That's quite a difference! On a $200,000 loan a 1% change in your interest rate can effect your monthly payment by about $112! (Bankrate.com is an excellent web site to calculate your basic mortgage payment or to get a rough idea of how interest rates effect your payment)
- Housing prices have dropped: Because the housing market had not really inflated for so many years during the 80's and 90's it overcompensated for itself in the early years of the 21st Century. Once the market realized that these homes were way overpriced they started to take a downward turn and correct themselves. That's what has been going on for the past few years. You can buy most houses today for significantly less that what you would be paying for that same house 5 years ago...oh, and don't forget that you will be buying it with a smaller interest rate as well!
Here's a scenario: 123 Happy Street was for sale in 2007 and sold for $370,000. The buyers were very happy and received a loan with an interest rate of 5%, they had pretty good credit and so there annual principle and interest payment came to about $1986.00
That same house is up for sale today, it is only valued at $315,000 and the buyers would be able to get an interest rate of 3.6%. This would make there monthly principal and interest payment about $1432. That means that for the same exact house they would be paying $554 less than if they had purchased that house five years earlier.
Hopefully this helped and you can understand why it is a great time to buy. Also remember that while inflation affects almost everything else we pay for, it doesn't affect your fixed rate mortgage payement. The mortgage payment you start paying will be the same mortgage payment you are paying 10-20-30 years later. So while your gallon of milk will most likely increase by 25% over the next ten years, your mortgage payment will not...meaning you save even more money!
So get out there and buy some houses!! And remember, I can help you no matter which state you live in :)