Mortgage Rates Are at Record Low. Is It Time to Buy a Home?Francine L. Huff
People who are ready to buy a home are in a good position. Not only are homes more affordable right now, but mortgage rates are at a record low. If you've been sitting on the sidelines of the housing market, now may be the time to step up to the plate and find a good deal on a home.
The National Association of Realtors (NAR) Affordability Index rose 0.9 percentage points to a record high of 173.5 in February 2009 from the previous month. That means that a family earning $59,700 could afford a home priced at $285,600 with a 20% down payment. Under that scenario, only 25% of the buyer's gross income would go toward mortgage principal and interest.
"The drop in mortgage interest rates and home prices mean the buying power of a typical family has never been better," NAR President Charles McMillan said in a statement. "If you have a good job and long-term plans, it's unlikely that you'll find a much better time to buy a home. This is especially true for first-time buyers who can qualify for an $8,000 tax credit this year, have a great selection of homes to choose from, and are in a favorable negotiating position."
So what should you do if you're ready to buy?
- Shop around for the best mortgage loan deal. The 30-year, fixed-rate mortgage averaged 4.78% for the week ended April 2. Mortgage rates for 15-year fixed mortgages loans averaged 4.58%.
- Get approved for a mortgage loan before going house hunting.
- Only visit homes in your price range to avoid wasting time.
- Find a Realtor who is reputable and can show you a list of homes they've actually sold.
If you find a home you want to buy, don't be afraid to negotiate with the sellers. Chances are they've been trying to sell their home for a while and will be willing to work with you to close the deal.
Francine Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows. Visit her Web site, www.Huffwrites.com.
Investopedia Staff • Understanding the Mortgage Payment Structure
Gain Seen in Pending Home Sales, Housing Affordability Sets New Record • Apr 01, 2009
Long-term mortgage rates at record low • Apr 02, 2009
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.