Home Buyers don’t gain much by waiting, unless…

According to the recent article published in this week Bloomberg BusinessWeek, Home buyers don’t really gain much on the waiting game by postposning their home purchase.

Many buyers who were planning to buy their first home are either putting off till next year or delaying their decision. The reason, they are hoping the market will get worse more to bring down the home price down more than this year. If it happens, they are also hoping it will take down the interest rates much below 3.94%, we witnessed this month. But what they don’t realize is the fact that it is not easy to win by timing the market. Currently, Good houses at cheap prices are plentiful, and mortgage rates are at record lows—an average of 3.94 percent for 30-year loans during the first week of October. “It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,” says Dean Baker, an economist who in 2005 predicted that house prices would tumble. “Prices may go lower, but not by much.”

Buying a $300,000 home with a 4 percent mortgage means a monthly payment of $1,145, assuming a 20 percent down payment. The Mortgage Bankers Assn. predicts that prices may decline an additional 3.5 percent by mid-2012, while mortgage rates will increase by a half-point. If that proves accurate, that home would sell for $289,000, while the monthly mortgage bill would be $1,171. “Even if there is another recession, people who can qualify for a mortgage won’t gain anything by playing the waiting game,” says Nariman Behravesh, chief economist at IHS in Englewood, Colo.

If you see numbers above, you will notice that even with home price drop an increase in rate, buyer will end up paying more on the mortgage payment. Bottomline, Home prices down 31 percent since 2006 and mortgage rates averaging 3.94 percent mean bargains for buyers with good credit ratings. You cannot predict the future so just make use of the current low historic rates and low home prices and buy your dream house.

Just go ahead and buy it now unless you have control over rates and can predict much lower rates. You will sure to be satisfied that your rates are much lower than millions of Americans It is similar to any deals. If you think the deal is too good to miss by 30-50% from previous deals, just don’t expect for more and lose this opportunity.

Source: Bloomberg BusinessWeek

About Vijaianand Thirnageswaram

I am a Proud Realtor of Texas, trying to guide and help clients to find their dream home and educate them to buy them for right price. I am also a Candidate for CFP who has more financial knowledge which allows me share and educate clients in any financial decision making process.

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