Financial
"There couldn't be a more favorable time to buy a home or refinance than now. Rates are still at historic lows, which is allowing many people to own a home for close to what they would normally pay in rent, and in some cases, has proven to be cheaper than renting. With such programs as VA, FHA, and USDA, there are numerous opportunities to get into a new home with little or no down payment."
"There are also many programs out there for 1st time home buyers that allow for 100% financing. Homeownership is the greatest way to boost the economy, so with that, there is a major push to get as many people into homes as possible; guidelines have loosened, and home values have rebounded in a way that has given new hope and lifted spirits, which is welcomed given the events that took place a few years."
Matt Edwards
Mortgage Banker
Phone: 877.342.4850
Email: MEdwards@CtzHomeLoans.com
Matt Edwards brings 10 years of experience in the lending, finance and banking industry. He demonstrates a high level of professionalism and his attention to detail is bar none. Matt thrives on helping improve his customers’ lives. He is always there for his clients and is will to go the extra mile even when difficulties arrive. A graduate of Miami University, he has a Bachelor’s degree in Political Science. When he is not at working, Matt can be found helping out with his church’s Children’s Ministry.
NMLS Registry Number – 1026303
License Number – OH LO.024146.001
The Cost of a Mortgage Already Increased 15% in 2013
As you can see below on this mortgage rate chart, it has been a roller coaster ride for mortgage rates over the past 12 months. In 2013, the 30-year fixed mortgage rate increased from 3.25% at the beginning of the year, to roughly 4.75% as of today, which means the cost of paying a mortgage has climbed 15%.
A buyer who could afford a $500k home at the beginning of the year, can now only afford $425k using the same monthly payment today, so a buyer has lost 15% in purchasing power during 2013 alone.
In 2013, 30-Year Mortgage Rates Increased from 3.75% to 4.25%
I will not be surprised if this time next year 30-year rates are in the low to mid 5% range, and a buyer has lost another 10%-15% in purchasing power, especially now that the Fed is starting to wind down their support to keep rates artificially low.
Good News, Mortgage Rates are Still at 40 Year Lows
But there is good news. Even though we are moving into a higher rate environment, it is still important to put current rates in perspective.
As you can see below, the average 30 year fixed mortgage rate over the past 40 years is roughly 8.7%, and 6.5% over the past decade!
So for any buyers who are still on the fence looking at buying a home, a rate below or near 5% is still a good rate.
Tips for Buyers in 2014
Bottom line, all evidence suggests that rates and home prices are going to continue to increase over the next 12 months, which means the cost of purchasing a home is going to increase for buyers.
For anyone still on the fence about buying a home or refinancing, the time has come to make a move, otherwise that home or monthly payment you had your eyes on, may no longer be affordable.
A tip for buyers: If a buyer has been shopping for a home for a few months, make sure to get approved at a rate that is roughly .5% higher than normal. This will ensure you can still afford the payments on a house or price range if you do not get into contract for another month or so, in case rates continue to increase.
Another good tip for buyers too, is to focus on the monthly payment and NOT the rate. Yes rates are going to keep moving up, and that is very unfortunate, but is the monthly payment still affordable? If the payment is still affordable, do not focus on the interest rate.
Overall, it is still a great time to buy a home, as the Fed is still offering money at a discount, so take advantage of this while they are still doing their monetary stimulus programs.
