Susan Costello: Buying a home – Now is a good time
Q: Is this the right time for me to buy a home?
A: This is perhaps the best time in recent history in Nevada County to buy property. We have the perfect alignment of low prices and irresistible mortgage rates. It’s one of those rare blips in time when those who buy will be called visionaries and those who don’t might look back and say “I should have.”
Waiting for the “bottom of the market” is probably not a savvy strategy, in part because the bottom is impossible to predict. Forecasting the bottom in any market is challenging, be it stocks, gold or hog futures. I strongly believe that by the time everyone is talking about and reading about the “bottom of the market,” it has long since passed and you can wave goodbye to it.
The buyer that gets fixated on purchasing at the absolute lowest price will possibly lose the window of opportunity we’re currently seeing with low interest rates. $20,000 is a lot of money but as a percentage of what you’re paying for a home, it’s rather small. Financed it is even smaller, especially with the low rates we’re blessed with today. Assuming you pay $380,000 for your dream home rather than the $360,000 you were holding out for, on a 5.875 percent 30-year loan with 20 percent down you’d be paying $1798.27 a month rather than $1703.63 a month.
You could wait and gamble on prices coming down. But interest rates will likely not be where they are now. What if housing prices come down a smidge more in the future and you’re able to buy your dream home for $370,000, with 20 percent down, but supposing the 30-year fixed rate at that time has risen to 6.75 percent. Your monthly payment would now be $1919.75. So waiting and taking that gamble might cost you in a higher interest rate which in turn costs you thousands of dollars more over time.
A general rule of thumb is, if you plan on staying in your new home for more than five years you’ll likely ride out any downturn and make money down the road. For those of you who are renting now is your opportunity. Realtor Lynn Stanley at ERA Cornerstone Realty Group sent me this: “One of my projects is communicating with renters of single family homes in the area to share with them some of the unusually good bargains that exist today. With verified employment it’s possible to own a home, even with a loan down payment and low credit score.” Lending programs abound for first-time buyers plus you’ll get the mortgage-interest deduction on your taxes and be building equity at a fast pace because you’re buying low.
Focus on purchasing the right home for you in the right area, at a price you can afford and with the right financing terms. Mark Weyman, Realtor at Coldwell Banker Grass Roots Realty says: “There are some terrific deals out there in all areas of the county. Buyers thinking about purchasing their personal residence, in particular, should look at the rich inventory of active listings converging with fabulous interest rates, and move to find a deal now. No bell is going to ring at the bottom of the market. When we all recognize it has turned, will you be wishing you had acted sooner?”
Susan Costello is owner of Home Sweet Home Loans, dba Empire H.L.C. in Grass Valley. You may reach her by calling (530) 273-8658.
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