5 Reasons to Buy a Home NOW in Wellesley and Metrowest Boston
This article was written by Michael Deery
http://www.michaeladeery.com/blog/5-reasons-to-purchase-a-home-soon/ Why you Should Buy Your New Home Now!
In 2013 alone, the cost of paying a mortgage has climbed 13%, which means a buyer has lost 13% in purchasing power.
Mortgage rates were at 3.25% in April and today sit at 4.5%.
So if you were approved at $500k at the beginning of the year, this means you can now only afford $435k using the same monthly payment.
With home prices also surging between 10%-20% in most housing markets during 2013, the cost of waiting to purchase a home has increased considerably.
Here are 5 reasons to purchase a home soon:
1.) The Cost of a Mortgage Increased 13% in 2013.
It has been a rough ride for mortgage rates over the past 9 months. 30-year fixed mortgage rates have increased from 3.25% to 4.5% during 2013.
2.) Home Prices are Continuing to Rise Everywhere.
Home Prices are on the rise everywhere, as limited inventory is driving prices up. It is the old law of supply and demand, with limited supply demand will rise, and this is why we are seeing bidding wars for properties going on in most local markets, and this in turn is driving prices up.
3.) Tougher Underwriting Rules are Coming in January 14th 2014.
On January 14th the CFPB, (the Consumer Financial Protection Bureau), is due to enforce new tougher qualifying rules for mortgages.These new laws will be known as “Qualified Mortgage” (QM) and the “Ability to Repay” (ATR).
4.) As Mortgage Rates Increase in 2014, Your Purchasing Power Will Fall.
A question that all buyers have is, where will rates be in a year and how will this affect my affordability? There have been several experts out in the past few weeks who are convinced the Fed will taper their bond purchases early next year, now that economic data is improving, and predict mortgage rates will be north of 5% by this time next year.
5.) Buy A Home When the Fed is Offering Money at a Discount.
I think a great time to buy a home is when the Fed is applying monetary stimulus into the economy, via their Quantitative Easing or “QE” program, which essentially is giving people the opportunity to borrow money at a discount. But now that recent economic data has been improving, The Fed will start to pull back on their monetary stimulus soon, which will automatically increase the cost to borrow money.
All evidence above suggests that rates and home prices are going to continue to increase over the next 12 months. This means the cost of purchasing a home is going to increase and it looks like qualifying for a mortgage may get more difficult as well.
The positive side,
You should know that the average 30 year fixed mortgage rate over the past 40 years has been 8.7%, and 6.5% over the past decade! So for any of you who are still on the fence about buying a home, a 4.5% rate is still a terrific rate to get on a home loan.