If you are thinking about buying a house right now, there are two things working in your favor: the low mortgage rates and the falling prices of homes. These two things combined together make homes very affordable these days. But does that mean you should jump into the mortgage market right now? Or would you be doing yourself a favor by waiting? There is no easy answer to that question because there are several things you have to consider.
According to Jed Smith, a managing director with the National Association of Realtors, it is very affordable to get into the home buying market right now. In fact, the median home prices throughout the country fell nearly 5 percent during the first three months of 2011.
When talking about the median home price, though, we have to remember that the median is an average. This means that there is a high and a low figure that is used to calculate the median. In Miami-Fort Lauderdale, Florida, home values dropped by about 20 percent during the first three months of 2011 when compared to last year. That’s a huge depreciation compared to many of the other local markets in the country. But in the Buffalo-Niagara Falls area in New York, median home values jumped by nearly 11 percent.
Analysts with Fannie Mae predict that housing prices in most of the country will continue to fall for at least the next three months, but may stabilize at the end of the year. Many economists are more pessimistic about the situation and they say the housing market won’t recover until at least 2014.
Waiting until 2014 before jumping into the home buying market could be a mistake if you are ready to buy a home right now. Home prices may stay low for a little while but mortgage rates aren’t expected to stay low for much longer. By the end of next year, many mortgage analysts predict that the mortgage rates will be up as high as 6 percent. If this happens, you could end up paying more over the term of your mortgage loan even if you bought a home that had dropped in value.
Here’s an example: If you buy a home today that costs $150,000 and you get a mortgage rate of 4.75 percent, you will have a house payment of about $780 if you get a 30-year fixed rate loan. But if you wait until the mortgage rates jump up to 6 percent, the home price may drop to $135,000 but your payments are going to go up to about $810 per month for the term of your loan.
Of course, the timing for buying a home always depends on your financial situation. If you don’t feel you are ready to buy right now, there is nothing wrong with putting it off until you are in a better financial situation. But consider the emotional benefits of owning your own home now. You can make changes to it without consulting a landlord and you have much more freedom. Besides that, you are making an investment in your future buy purchasing a home right now. If you are financially ready, now may be the best time to purchase your first home!
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