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If you’ve been sitting on the sidelines of the housing market but your ultimate goal is to own a home, Money Talks News founder Stacy Johnson has a few words for you:
"When it comes to buying or refinancing a house, I’ve got some advice. Do it. And do it soon. I can’t say what’s going to happen in next few months. But over the next few years, odds are home prices with increase, and so will interest rates. If you don’t buy now, one day you’ll look back and wish you had."
Stacy explains why now is the time to buy.
Prices have seen their lows
It’s no secret the nationwide housing market took a dive during the Great Recession, with prices plunging and Americans walking away from, or losing, their homes.
Fast-forward to today: Pent-up demand, decreased supply and an improving economy are showing up as higher home prices. According to the S&P/Case-Shiller Home Price Indices, housing prices nationwide were 10.2 percent higher in the first quarter than they were in the first quarter of 2012. And prices in some of the hardest-hit and most active markets jumped even more. Phoenix saw a 22.5 percent increase, followed by San Francisco with 22.2 percent, and Las Vegas with 20.6 percent.
While every real estate market is local and it’s unlikely the recovery will continue at such a blistering pace, it’s safe to say the bottom in housing prices is behind us.
Another buy signal is the cost to own vs. rent. Trulia found it’s cheaper to buy than rent in many markets. For example, they say it’s 58 percent cheaper to buy in my hometown of New Orleans, assuming a 3.5 percent mortgage rate. In Detroit, it’s 70 percent cheaper to buy than rent. Statistics like these suggest more demand on the horizon.
Rates have seen their lows
Just a few weeks ago, mortgage rates were bouncing along at historic lows – less than 4 percent for a 30-year fixed-rate mortgage. Today? You’ll be hard-pressed to find anything as low. (Use our mortgage search and see for yourself.)
According to HSH.com, the days of rates below 4 percent may be fading. It wrote at the end of last month:
"While there is some reason to expect a little settling of rates after the market upset subsides, there is probably not a whole lot of space for rates to fall, and given the sensitive and nervous nature of the bond and stock markets at this point, probably somewhat more room to rise. As such, over the next nine-week period, we think that the average overall 30-year fixed as measured by HSH’s FRMI will wander a path between 3.82% and 4.16%."
HSH found that the average rate for a 30-year fixed-rate mortgage was 4.63 percent on Monday, the Los Angeles Times says.
Nothing’s guaranteed. If the economy weakens, both interest rates and home prices could pull back. But if the recovery stays on track, it’s likely both rates and prices could rise further, suggesting it’s time to get off the fence and either take out a mortgage or refinance one.
Should you buy?
It’s never a good idea to buy anything — especially something as expensive and complicated as a house — without thoroughly thinking it through. Consider these points before you start shopping:
How to get started
If now’s the time, here are the first steps:
Get preapproved for a mortgage. Preapproval means you’ve applied for a mortgage and the lender is prepared to cut the check. Because it takes more time to qualify for a mortgage than some houses remain on the market, shopping without preapproval is a waste of time.
Think before you shop. Make a wish list, including number of bedrooms and bathrooms, and yard size. Focus on the features you need, then those you want. And don’t overbuy. Remember, every extra square foot costs more to buy, maintain, heat, cool, furnish and clean.
Find a real estate agent. While you can certainly buy without one, an agent familiar with your favorite neighborhoods can save a lot of time. Just be sure to take your time finding the right pro.
Have you been waiting on the sidelines for the right time to pounce on the housing market? What are market conditions like where you live?
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