One of the most frequent objections I hear from potential home buyers is that they're scared of the market, and what will happen in the near and not so near future to home prices. I recently saw this article from Steve Harney of Keeping Current Matters that gives potential home buyers something else to consider.

"It appears that there is at least conversation about eliminating the 30 year fixed rate mortgage which has been a staple in this country’s housing industry for some time. Some in government want to duplicate the mortgage process of other countries. In Canada, for example, they don’t even have 30 year fix rate mortgages available. The vast majority of Canadian home loans have a 25 year payout but the interest rate is renegotiated every five years. If rates go down, you will wind up with a lower rate. If rates go up, you end up paying a higher rate. If you want a fixed rate mortgage for 25 years you pay a rate approximately two percentage points higher than the going rate at the time of your closing."

So why is this important?

Home prices are not the only consideration to make when purchasing a home.  Home buyers need to also evaluate the cost of lending and what type of mortgages are available now or will be available in the future.  The long term effect of higher interest rates on the overall cost of buying a home could be much more if buyers wait. If you're considering buying a home and can reasonably afford to do so, you owe it to yourself and your family to take advantage of the current market.

With rock-bottom interest rates and price to income ratios historically low, one can only wonder if now might actually be the best opportunity for people to obtain the American dream of home ownership.

 

Alan Bayle

The Todd Tramonte Home Selling Team