DO THE MATH
The time to buy a home is now. Never have sellers been more flexible or financial terms more favorable. The simple math below shows that the opportunity of your lifetime is now.
Lower mortgage rates Right now 30-year fixed mortgages are lower than they’ve been in five years and as low as they’ve been at any time since 1973.1 On Wednesday, December 10, rates hit 4.875%. Just four months ago rates were at 6.29%. The difference to you? Now you can either buy the home you’ve wanted while paying less than you planned or buy a higher-valued home for the same payment you originally budgeted.
Example 1: Four months ago a $320,000 loan would result in monthly payments of $1978.63 (not including taxes and insurance).2 NOW that same loan amount would cost $1693.47, a savings to you of $285.16 a month.3
Example 2: Four months ago the $1978.63 payment would have bought you a $400,000 home (after a 20% downpayment). Now that same payment will buy you a $467,000 home.4
1Source: Freddie Mac. 2 Assumes a down payment of 20% and a 30-year fixed rate. 3 Source: Landover Mortgage.
4 Source: Landover Mortgage.
Lower home prices In many areas of the Northwest home prices have been falling. In fact, the median price of homes in our area is now more affordable to the average family.
Example 1: The median price of homes listed for sale in Western and Southwest Washington is now $318,500, versus $344,000 a year ago.1
Example 2: At this time last year a median income family in Metro Portland could only afford 94% of the monthly mortgage payment of the median-price home in the area.2 Now that same family can afford 109% of the monthly mortgage payment.3
1 Source: NWMLS Median Home Price as of 12/11/08. 2 Based on 20% downpayment and 30-year fixed rate.
3 Source: RMLS Market Action Report.
Financing bottlenecks ahead The lending pipeline is suddenly very busy. In fact, the weekly refinance index recently jumped a whopping 203% in one week alone, according to Northwest based Landover Mortgage. And, as currently configured after closings, mergers and layoffs, the mortgage industry is not equipped the way it once was to handle this heavier volume of new loans and refinances. It will pay to get ahead of the line – and not stuck in it – by at the least getting prequalified for a mortgage now.
First-time home buyer tax credit Are you a first- time home buyer? Thanks to this year's Housing and Economic Recovery Act, when you purchase a home you may qualify to receive a tax credit of up to $7500. But don't wait! The credit expires June 30, 2009. For more information, click here. More buyers = lower inventories As more buyers jump at today’s unbeatable mortgage rates and make offers on their choice of homes, the selection of properties on the market – especially those most priced to sell – will go down. Once again, those buyers who act sooner will benefit by locking in at low rates and moving more quickly throughout the transaction process. And those buyers who choose to remain on the sidelines? Quite simply, they’re just not doing the math.