A Window of Opportunity
I was talking with my fellow “Weight Watcher”, friend and real estate colleague Bill Weidacher the other day as I was sampling some of his famous “Rotissary chicken soup”. Bill mentioned he was going to contact all of his clients and let them know that interest rates have come down and there was a “window of opportunity” to buy or refinance at low, low rates!!! As we were talking I got to thinking… Everybody wants a deal, but most people think in terms of price and rarely terms. Do you realize that by having a mortgage interest rate 1% lower on a $200,000 home, it is equal to buying that home for about $180,000. Here is an example, lets say you are thinking of buying a home for $200,000 and financing the whole amount at today’s low rate of 5.5%. Your principal and interest would be $1,136 per month. Lets say you decide to “wait for the bottom” and you don’t buy, but instead wait a year after interest rates climbed to 6.5%. Do you realize that the $200,000 home will now cost you $1,264/month (P & I). Another way to look at it is that the price would have to drop to $180,000 to have the same payment with the new interest of 6.5% (versus 5.5%). In terms of payment, the lower interest rate is worth about $20,000 in house value. I am not convinced that we are at the bottom of the market yet, but I am sure that interest rates will be higher someday soon. My advice is while interest rates are low and inventory is high, that you consider buying NOW.
I don’t have a down payment?
In this economy who does?...lol Did you know that in the U.S.D.A offers “Rural Housing” loans that allow you finance 100% of the purchase AND closing costs. Don’t let the word “rural” fool you. Any town (Bedford, Goffstown, Auburn etc) in New Hampshire is eligible except for Manchester and Nashua. A good portion (atleast 1/3) of the appraisals I do for home sales is for the U.S.D.A. It is a great program.
So you have heard that it is “a bad time to buy”….and that there is “no money available”……and that you “need a down payment”.. Well, hopefully you now know that those are myths.
I tell my clients that it is ALWAYS a good time to buy real estate if it is for the right reason and the right terms and NEVER a good time to buy if its for the wrong reason and the wrong terms.
Choose a real estate professional that will make sure you are buying for the right reason.