It's good to be a buyer. Times are few and far between when I find myself telling people that I wish I didn't already own a home, but this is one of them! My belief in home ownership goes far beyond my job as a realtor - it's really how I feel. I love coming home every night to a place that is my own. I love knowing that, good or bad, this is my place and I'm responsible for it. And I love being able to share my story of home buying with my clients, because I want them to know that I understand and remember what it is like to be doing what they are doing now.
So, why do I wish I didn't already own my home? There are a few reasons right now that make it really good to be a buyer, especially a first time buyer. You may have seen or heard news lately about interest rates, tax credits, and fluctuating markets. It seems like the country is watching the housing market, waiting for the uptick that gives us a little hope that we are looking at economic recovery. In the meantime, the government has made it very attractive to buy now.
The first thing that makes it a good time to buy is the interest rate. Right now, rates are hovering at about 5 percent, which is a very low rate. An interest rate plays a large part in the monthly payment you will need to make to pay for your new home, but many people misunderstand why it is so important. For example, a nicely sized home in the town of Clay might sell for around $150,000, and the average length of a mortgage is 30 years. At the current interest rate of 5 percent, that would mean that your payment for the principle (the amount you paid for the house) and the interest (the fee you are paying the bank for borrowing the money) would be about $805 - if you put no money down on the house. If you took out the same loan amount, but the interest rate was 7 percent, the payment would jump to $998. That means that, over the life of the 30 year loan, you would pay an additional $69,480! This makes a very compelling reason to purchase a first home, a larger home or even refinance your current home to save money.
The tax credit offered to first time buyers is what makes me really think, though. The government is offering an $8000 tax credit to first time homebuyers this year, as long as the loan is closed by December 1st, 2009. The credit offered last year required a repayment, but this is a true credit and belongs to the buyer as long as he or she stays in the home for a minimal amount of time. First time buyers are often looking for homes where the major costly repairs are taken care of so they know that they will not need to spend a large sum of money on their new home in the first few years. While it is very possible to find properties that fit the bill, almost every home has a little something that a buyer would like or need to change. An $8000 credit means that, assuming that the buyer would already be expecting a refund, they will have that additional money to spend on the new home. That could be worth a new roof, a house full of windows or siding, or replace a furnace. Any of those improvements would increase the buyer's equity in the home and enjoyment of the home as well. In this way, a new buyer can benefit doubly with the credit. A buyer could also choose to roll that $8000 right into a large principle payment on the mortgage, thus collecting an instant increase in equity and reduction of the length of the loan if the home didn't need any repairs.
The third part of the buyer's decision should be the market. In Syracuse, we have been very fortunate to not see the huge swings in value, both up and down, in housing costs. For that reason, a buyer today can rest assured that they will collect modest appreciation of the value of the home over time. A few years ago, the market was moving very quickly and houses were selling for more than their list price in a few days. Now, we are seeing homes selling at a reasonable rate and close to their asking price, but bidding wars and multiple offers are not as common as they were. This means that buyers can be a little more relaxed when they choose their home and not feel rushed.
Combined, these are great reasons to be a buyer! Conversely, they are great reasons to be selling homes, too. Now more than ever, I can confidently tell new buyers that I am the biggest fan of home ownership. In fact, I wish I could start all over and do it again!
May
05
Home buyers are in the driver's seat
Christina Lackey 05/05/09
CATEGORY: Real Estate