- To Buy Or Not To Buy?
Should I buy now or just wait? In the spring of 2011, those of us in the business hear that question frequently. There was the mortgage meltdown, foreclosure crisis, high unemployment and many other very unsettling economic issues. The country is still trying to work our way out of these problems. What does this mean to the average person today who might be contemplating a home purchase? I think it means opportunity. Home prices have come down from the record highs of 2006-2007. Interest rates are still near 40 year lows. There are still some great first time buyer programs out there. The real estate market in 2011 has both low prices and low interest rates which is a rare combination. In fact, the last published Home Affordability Index – Feb 2011 – was the highest on record.
Many people believe that you cannot get a mortgage today without perfect credit and 20 percent down. That is not true. You do need to demonstrate a steady income stream and a fairly decent credit history. However, it is not as difficult as many people believe.
Will prices fall further? No one knows for sure. Home prices have seen declines in prior decades. The 70’s & 80’s had price dips. Nationally, real estate prices have appreciated at an average of 6% a year for the past 50 years. Prices will go up once again. Real estate is a long term investment. If you keep a house for 18 months, you will likely lose money. However, if you keep it for 10 years, you should see the average historic appreciation. Remember that real estate is local. The Delaware Valley typically does not have the severe highs & lows like many other parts of the country.
In the past 18 months, I have done loans for people whose monthly mortgage payment was only $200 more than their rent. After you take the tax deductions into consideration, the cost of the mortgage is actually cheaper. Many renters are surprised to find out that the mortgage interest, property taxes and mortgage insurance are fully tax deductible.
If you are curious to find out about the current market, meet with a reputable lender and a licensed Realtor. Most will give you a free consultation where you can determine if the time is right for you.
Steve Madonna
Weichert Financial Services
610-566-2045
NMLS #140438
