Many first time homebuyers try to predict the price of homes and whether they are on the rise or fall based on federal mortgage rates. Historically, low mortgage interest rates have been an inducement for first time homebuyers who were on the fence, and the increase in prices in recent years have been an added bonus. However, just about any mortgage broker will tell you that low interest rates are on the rise in the near future, thereby raising the important question: is it time to buy or not?
Let’s look at the facts:
- Today’s 30 year fixed mortgage rate is about 4%
- Fannie Mae forecasts 4.4% in 2016
- Freddie Mac forecasts 4.6% in 2016
- Mortgage Bankers Association forecast 5.2% in 2016
- National Association of Realtors forecast 6.0% in 2016
While the forecasts form the big names are higher, the rates will ultimately be determined by Janet Yellen and the Fed and how they see our economy and the recovery in the near future. Janet Yellen, Chairman of the Federal Reserve, has also indicated a slight increase in the rates.
There is a saying on Wall Street: “Don’t try to time the market.” It’s nearly impossible and most likely a recipe for disaster, in fact, in doing so, as the number of people who have lost money far exceeds the number of people who have made money.
The bottom line is you should buy the home that you can afford.
And you may want to consider a few of the following tips:
- Don’t buy the most expensive home in the neighborhood – by the time you are ready to sell, your home will likely appreciate less than the average home in your area
- Don’t get into more debt at least six months prior to buying a home. Lenders like to see stability.
- Get pre-approved so that you understand how much home you can afford and so that you don’t look at homes outside your price range (for more information on how much you can afford, see “How Much Home Can You Afford”).
- Drive around the neighborhood you’re interested in buying at different times of day. Make sure you like the neighborhood, see how far the home is from your job, and if you are thinking about kids or schools, check for a good school district.
If you’re considering buying or selling a home, or if you need an introduction to an excellent mortgage broker, or if just want to discuss whether this might the right time for you to buy or sell, please contact me at any time!
Questions or comments? Please feel free to reach out to me any time at 424.333.0557 or plissia@pslrealty.com.