When Should I Buy A Home?

 

I’ve been thinking about how complex some of the systems in place for buying and selling a home can be and it’s got me wondering how I can bring a little more transparency in the process to you guys (my devoted blog readers!) Many first-time home buyers have never been through the loan process and they have no idea what to expect. Others have never heard of a Title company and still others are unsure about what to expect of the process in general. So, my team and I have decided to put together a series of guest bloggers from the industry that we think you might like to hear from – and if it ever sounds confusing or complex, don’t worry! We are here to help you through the process.

Today’s guest blogger is one of our trusted partners in residential mortgage lending, Mark Townsend. Below he answers his team’s most frequently asked question:

“When is the best time to buy a house?”

This is a question I get quite frequently from my Clients.  My answer...sooner rather than later! 

Most experts expected interest rates to rise in 2014.  Instead, mortgage rates ended the year about one-half percent lower.  Lower interest rates give buyers more purchasing power.  For example, a buyer who qualified for a maximum loan amount of $300,000 in January of 2014 would now qualify for a loan of $318,000…a borrowing power increase of 6%! 

While the experts turned out to be wrong in 2014, they are bound to get it right eventually.  Most expect mortgage rates to increase anywhere from ½ to 1% in 2015.  A 1% increase by December 2015 would reduce our buyer’s $318,000 loan to $282,800… an 11% decrease in borrowing power!

RISING HOME PRICES ARE AN IMPERATIVE TO BUY SOONER

Rising home prices are another reason to buy sooner rather than later.  Even though decreasing mortgage rates in 2014 allowed the typical buyer to increase their borrowing power, the average increase in area home prices in 2014 still meant most buyers were able to afford less of a house as the year progressed.  While it appears price growth may level off a bit in 2015, home prices in most areas are still expected to increase throughout the year. 

With the experts predicting an increase in both home prices and mortgage rates in 2015, many buyers could find themselves priced out of neighborhoods they are currently considering.

Many times, a client will plan to defer a home purchase while they work to save money for a higher down payment.  In my experience, most buyers are unable to save fast enough to keep up with rising home prices, increasing interest rates, or the combination of the two.  While most loan programs require a down payment, there is a USDA program available (subject to income and location limitations) with zero down, while other programs require as little as 3 to 3.5% down. 

One of the most important services The Mark Townsend Team provides to our Clients is helping them discover the loan program that will best meet their short and long term goals.  Once we have identified the ideal program, we take the process a step further.  We use the Mortgage Coach Edge software program to help analyze various loan structures.

We welcome the opportunity to help you identify a comfortable price range, the best mortgage program, and the ideal loan structure.  Even if you aren’t ready to buy now, it’s never too early to go through our free pre-qualification process.  If there are actions you can take to improve your credit score or other areas of qualification in order to improve your loan options, identifying these actions as early as possible will increase your chance of success!

Please call us with any questions at 512-336-2121 or you can begin the pre-qualification process at www.MarkTownsendTeam.com.

Stay tuned for more from our team as we welcome more local area experts as guest bloggers. If there is a part of the home buying/selling process you think is mysterious or would like to see us write about, we would love to hear from you! Post in the comments below, tell me on Facebook, or send an email to homes@russ-phillips.com

The Russ Phillips Team specializes in Central Texas Real Estate.