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Information on mortgages, home equity loans, and consumer credit to help you use the power of financing to your advantage.
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Real Estate > Purchasing Real Estate
Is it a good time to buy a house?
JOHN CUNNIFF, AP Business Writer. Associated Press.
Copyright Associated Press
Q. With the economy slowing and interest rates higher than they were a year ago, is this a good time to buy a house? Or should I wait?
A: Economic conditions are but one factor in deciding whether to buy a house now, or later. Personal variables, such as family size and income, also enter the equation.
But in a strictly financial sense, new homebuyers today have several factors in their favor, including interest rates, flexible mortgages and steady incomes. It might not always be that way.
Fortunately for buyers, the system also favors them, allowing local real estate taxes and mortgage interest to be deducted on income taxes. Banks favor them too in offering equity loans.
That said, there are caveats in dealing with real estate, one of the most important being geographical. Home prices can vary greatly by neighborhood, state and region. And tax rates may fluctuate too.
Such considerations, however, exist in the worst as well as the best of markets. And while today's market might not be the best that has ever existed, it is certainly remains better than most.
Much has been made recently about "high" mortgage rates, but high is relative. From 1979 through 1990, fixed mortgage rates were in double digits. Now, in September, they average under 8 percent.
Today's buyer also has many more options than earlier buyers, the most important being that of fixed vs. adjustable rates and standby credit in the form of equity loans. Such advantages were rare or unknown as recently as the mid-1980s.
In fact, nowhere but in housing are you likely to find better credit terms and opportunities, which explains why home ownership has traditionally been the most important step in creating family assets. And it likely will remain so, since a well maintained house in a good neighborhood generally rises in value over the long term.
To illustrate: The median price of a new, single-family house in 1980 was $64,000. To match that house in 1999 would have cost you $130,600. Historically, homes at least maintain their value against the dollar's declining buying power, and generally exceed it.
Averages and medians, however, disguise the wealth building power of homes. Homebuyers in what once were considered the suburbs of growing cities have often quadrupled in price within 15 years.
And that's without counting the greatest benefit of all, a roof over one's head.
End adv for use anytime
Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission.
Dateline: Undated
Text Word Count 402
The tips on this website should be considered food for thought only. Lendingtips.com is a clearinghouse of ideas, not a professional adviser. Before any important decision, please consult the appropriate professionals (lawyer, accountant, real estate agency, broker etc.).
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• Real Estate > Purchasing Real Estate Archive
• ARM vs. Fixed Rate Mortgage. Use this calculator to compare a fixed rate mortgage to two types of ARMs, a Fully Amortizing ARM and an Interest Only ARM.
• Mortgage Loan Calculator. Use this calculator to determine your monthly payment and amortization schedule.
• Mortgage Qualifier. Can you buy your dream home? Find out just how much you can afford!.
• Refinance Breakeven. Should you refinance your mortgage? Use this calculator to determine when you will breakeven!
• Rent vs. Buy. Are you better off buying your home, or should you continue to rent?.
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