Interest Rates at Mostly Lowest of Historic Lows--This is Money In Your Pocket

One perspective many buyers and sellers (who are able to sell now) could benefit from right now is the long-term historical perspective to realize just what this point in time can mean for them. While many articles may directly address buyers, the flip side is for the sellers who are looking for the right buyer, and the more buyers that fit in a seller's net, the greater chance each party has for a successful catch . . . I mean, sale!
I could hardly say the following points better, so I'm just going to give you Pat Zaby's post on buying,

You Can Afford to Buy and Haven't...Are You Crazy?

This may be the best buyer's market that we'll see in our lifetimes. There are lots of legitimate reasons why a person should be taking advantage of this market if they are able.
Obviously, if a person doesn't have the down payment or credit score, they won't be able to seize this opportunity. If a person is concerned about losing their job, that would be a valid reason for not buying now. If you are planning on relocating in the next year or two, maybe now isn't the time to buy.

On the other hand, if a person doesn't own a home, has good credit and job stability, they should seriously consider capitalizing on this unique combination of opportunities. A qualified real estate professional can explain all of the reasons and even suggest some very interesting financing alternatives.

Top Ten Reasons to Buy a Home NOW

Interest rates incredibly low – the rates are hovering at near historic lows. Interest rates play a huge part in the cost of housing together with the price and shouldn't be overlooked. The average mortgage interest rates for the past four decades were: 1970's 8.9%; 1980's 12.7%; 1990's 8.1%; 2000's 6.3%. Most experts agree that they're going to rise this year.

Lower Prices - Recent price adjustments have made good values that haven’t been available in some situations for years. Current buyers are able to take advantage of the discounted prices.

Selection is good – In a seller's market, buyers sometimes have to accept a home that may not meet their needs completely because of short supply. Inventories in most markets and certain price ranges are higher which allow buyers better choices.

Negotiate financing concessions – FHA, VA, and Conventional allow the seller to contribute towards financing concessions for the buyer. The money can be used for buyer's closing costs, pre-paid items or interest rate buy down.

Costs for FHA loan going up – Currently, a seller can pay up to 6% of the sales price in financing concessions but the number will be reduced to 3% later this year; the date has not been announced yet. The annual MIP for FHA loans will also probably be going up this year which will increase the monthly payment. Buyers who get in now will pay the lower fees.

Interest and property tax deduction – the U.S. is one of the few countries in the world that allow an interest and property tax deduction for homeowner/taxpayers.

Source of funds with deductible interest - a homeowner can borrow up to $100,000 above their acquisition debt and deduct the interest regardless of what purpose the money is used. This is a great opportunity to consolidate debt at a lower interest rate and be able to make the interest deductible that otherwise may not have been.

Capital gain exclusion – the U.S. allows qualified homeowners to make a profit on their home without having to pay tax on the gain.

Borrowing against equity is non-taxable event – taking money out of the equity in your home does not require recognizing capital gains income.

The combination of reasons to buy a home may never be stronger than now.

Interest rates are going up; it is just a matter of when. Inventories are starting to be absorbed by current demand. New home construction is down considerably which could lead to higher prices due to not enough annual housing units to keep up with the population. Prices have started to climb in some markets; others will surely follow.

A basic rule of investing is to buy low and sell high. There will be some buyers who take advantage of the current opportunities and will look back and remark how fortunate they were to act when they did. There will be others who look back on these conditions and say "We should have bought then." Hindsight is always 20/20. Evaluating the present and acting takes equally clear vision. The help of a trusted professional can make the difference. (reprinted with permission by Pat Zaby; emphases in bold and italics are mine)

In the meantime, the federal tax credit for $8000 is over, and the California tax credit is almost gone, the FHA seller negotiation cap will be reduced soon, but right now, a buyer with good credit will probably get an interest rate under 5% and even 4.5% in some cases, meaning over the life of a 30-year loan, you can save thousands of dollars.

And, most Americans just don't realize this, but this country is one of the few that allows a 30-year loan, most other countries require payment in 1/3 to 1/2 that time.
To easily find properties on the market, go to http://www.juliahuntsman.com/, "Find Properties".

The Cost of Waiting to Buy

I couldn't possibly say this any better, and I've been saying it in the past in several different ways, so I'm going to give you Pat Zaby's article on the topic:

Cost of Waiting to Buy by Pat Zaby

The financial news is full of stories warning about the inability to predict the bottom of the stock market. A 40% decrease in stock prices in one year have uncovered some great values available for investors and buying them at their absolute lowest price will not make much difference for the people who hold them for a while.

Home prices are very much the same. There has been a correction in the market and prices are down in most parts of the country. Combine these with the attractive rates currently available and it is a bargain that everyone will look back on saying that "this was the best time to buy."

Let's make an assumption that the prices may still decline 5% more before they start appreciating again. If while a buyer was waiting for the price on a $250,000 to go down 5% to $237,500, and the interest rate goes up one percent from 5.25% to 6.25%, which is entirely possible, the buyer's monthly payments will increase almost $79 per month.

For most buyers, the monthly payment to control the cost of the home is much more important than the price paid or even the equity in the home.

Or, read on about Warren Buffett's response to the current economic situation, where he says he's never seen people so fearful as now, BUT, he's buying.

The Best Buyer's Market in 35 Years

In April of 1973, mortgage rates were about the same as they are today. Since that time, we have only had mortgage rates this low during 2001 and 2002, the height of the seller's markets where there was little inventory. In the last two major buyer's markets, one in the early 1980s and the other in the early 1990s, the rates were much higher. When I started in the business in 1994, interest rates were at 9.5 percent, (and they were at 18 to 21 percent in 1980). In the early 1990s, the rates were hovering in the 11 to 12 percent range. Thus, today's buyer's market, with exceptionally low mortgage rates plus a substantial supply of inventory, is the best time in decades to purchase.

(Thanks for the plug from Berniece Ross!)

Long Beach long beach real estate 'Voice this!