Buy Now, Refinance Later
The dilemma facing would-be buyers today is to wait until things settle down or move ahead in this unsettling economic environment. More specifically, the question should be, what are you waiting to settle down: mortgage rates, or prices or both? Mortgage rates haven’t been this high since 2002, so it could be considered plausible that the high rates are temporary. That leads to the question of how long before they do start coming down. If we look back further, the average 30-year fixed-rate mortgage, dating back to April 1971 is 7.81%, so the current rate is lower than the 50-year...
Read MoreDoes high inflation discourage your from buying a home?
Inflation devalues the purchasing power of money and the interest earned on savings is almost always less than inflation. Tangible assets like your home consistently become more valuable over time. In inflationary periods, a home is a good investment and a hedge against inflation. Borrowing money at fixed rates during times of inflation can be very advantageous…like buying a home. The rate stays the same over the term of the mortgage and so does the payment instead of going up at the rate of inflation. In September 2022, rents rose by 7.2% according to NAR Chief Economist, Lawrence Yun...
Read MoreDid you know this about your credit?
Credit scores are used to assess risk and determine whether a borrower is approved or declined for a mortgage, credit card or some other type of credit. The score is a numerical value ranging from a low of zero to a high of 850 or 900 depending on the credit bureau. The higher the score, the more likely the lender will be repaid in a timely manner. A higher credit score could help you get a lower interest rate You can get a free credit report from all three major bureaus at www.AnnualCreditReport.com. Your credit score doesn’t have to be perfect to get a loan … most lenders want...
Read MoreWaiting for the Mortgage Rates to Come Down
Waiting for the mortgage rates to come down before you buy a home may not be a good decision. If you are correct, and the rates do come down by two percent, the savings you benefit from a lower rate will most likely be devoured by the appreciated price increase. As of 12/8/22, the 30-year fixed-rate was at 6.33% which is close to the highest level since mid-2008. If the rate drops to 4.7% in three years but the price increases by 5% a year, a $400,000 home today, will cost $463,050 three years from now. An increasingly, popular option that more buyers are considering is to purchase the home...
Read MoreDownsizing Options
Opportunities exist for a subset of homeowners, possibly in their 60’s to 70’s, who want to downsize to smaller homes for convenience, less maintenance, change of lifestyle, or to save money. These homeowners are more likely to have large equities and will not feel the same constraints that are keeping younger owners in their homes due to the substantial increase in mortgage rates in the past year. In some cases, there may be enough equity in their relinquished home to pay cash for the replacement. In other situations, the loan-to-value may be so low that even with higher...
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