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Even though interest rates have been repeatedly mentioned lately, the rates are so unprecedented that we need to bring them up again. Just look at any market and you will see that mortgages continue to cost less than ever, despite the expected rise after our recent debt ceiling scare and subsequent stock market volatility. For anyone even remotely considering the purchase of a new home, an investment property, a second vacation home or a rental income building – this could not be a better time. In this article, we talk about and compare some of the advantages of buying now and the reason why these rates translate to thousands of dollars of savings in the long run.
Low Interest Rates Plus Great Housing Prices
When you factor in the very low rates available these days, in some markets as low as 3.875% on a 30-year fixed rate mortgage and 3.375% on a 15-year fixed rate mortgage – reduced housing prices these days look even more attractive. Since we are in a down market, and have been in one for a while now, housing prices have continued to plummet and though it is a very grim picture overall, it means affordability for buyers. Coupled with the lowest cost in recent history to borrow, buyers have it made.
Historically Low Interest Rates Plus Lots of Inventory
The current economy has unfortunately meant many homes on the market with millions of distressed sales going on throughout the country. Though we are seeing fewer foreclosures and more short sales, still the number of houses available – housing inventory is quite high in many markets. As a buyer, when you are armed with a locked-in low interest rate, the selection of homes to choose from with currently high inventory levels is an added bonus.
Little Down Payment and Low Mortgage Costs
The government is trying very hard to make it easier for consumers to become homeowners. Even though the mortgage industry has gained a bad reputation lately for being “too picky” and scarcely offering new mortgages, the reality is that now is a great time to buy. Government insured home loans, like FHA loans, make it possible for homebuyers to get in with as little as 3% down. As opposed to the conventional thought that 20% is needed, 3% is a far more attainable goal for many and makes the difference of being able to get in on a home purchase. Merging low interest rates with a small down payment makes it even more attractive to buy these days.
Leverage With Sellers and Low Interest Rates
Since sellers are competing against countless others and there are buyers out there actively seeking homes, the market is not as stagnant as news reports may have you believe. One advantage that buyers do have, however, is leverage that they had not enjoyed as much during previous markets of stability. These days, buyers can obtain considerable concessions from sellers, ranging from getting them to pay their entire closing costs, to paying for buyer-initiated appraisals to even throwing in extras. Again, adding in these factors with all the other advantages of buying in today’s market and low interest rates is added icing on the cake.
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Each family is different, with a different set of circumstances affecting each outcome. Some may be concerned with needing to pay a large amount of cash down, while others may find that there is not enough equity in their home to take advantage of the low rates and refinance their existing home – but by consulting with your Realtor, you will discover what opportunities do lie in the existing market so you are not one who might live to regret not availing this fantastic chance to buy and own a home for so little. After all – what comes down, must come back up; that is true not only for interest rates but also for housing values, making it a win-win situation for those who jump on the bandwagon.
