Wednesday, February 25, 2009

How is the market doing these days?... (2)...

...or: another way to ask the question may be: “how are the mortgage rates these days?”

How much home you can afford is affected by mortgage interest rates. Where the interest rates are right now, for each additional percentage point, the payment on a $600k loan would be an additional $381 per month, which is roughly equivalent to a purchase amount of $64,000. Interest rates are at an historical low as shown below, and the consensus among the financial specialists is that it will not continue that way for ever. … The fear of inflation is real.

During the last downturn, a lot of people started to get in the market as soon as it was evident that interest rates were increasing. The same phenomenon might occur again, reducing the comfort and purchasing power for those waiting to “time the market”.

As written recently in an article in Realtytimes®, “the average homeowner is worth 35 times more than the average renter”.

Owning a home becomes part of your investment portfolio, provides tax benefits, allows you build equity (yes, it still exists), and … if you buy now, you may get an excellent deal. Of course, you need to consider how long you would be in the home. You need to plan on staying at least 3 to 5 years in a house. Although even if you have an unexpected move, a valid strategy is to keep the property and rent it out.

Finally, with the last changes from the administration, new home buyers will receive substantial subsidies, just to make the step to homeownership. Definitely something to consider… For more information on this subject, do not hesitate to contact me.

As always, I advise buyers to find the place they love, and buy it for many years to come in a safe, affordable way.

Francis C. Rolland