Is Now The Right Time To Buy a Home

If you are considering buying your first home, is now the right time? 

First time home buyers are challenged with questions and few solid answers.  Interest rates seem to be going up.  Home prices are going up.  If I wait, will prices and interest rates, drop back down?  Will there be another housing bubble burst and will I be stuck with a loan I can't pay?  How stable is my job? 

When you are struggling to make ends meet and yet you have been saving for a down payment on your first home, it's hard to take that saved money out of the bank and use it for a down payment on a home with a 30 year loan commitment. It seems like every day a couple will come to me wanting to buy a home but worried about what is coming around the corner. 

As a realtor you might expect me to push the value of "getting in now" before it's too late.  Buying a home is a big decision and I would like to think that my approach is to always do what is in the best interest of my clients. 

I live in the same home my wife and I purchased 29 years ago.  We paid $80,000 for our home and it would now sell for between $650,000 and $700,000.  On the face of it, it would seem that we did all right.  But the interest rate at the time we purchased was 13% and many months it was difficult to make those high payments.  We ended up refinancing 3 times and the last interest rate we had was 6.6%.  Over the course of the 29 years we have probably put an additional $250,000 into the property.  There is the advantage of the interest rate deduction but you have to be making enough money to pay property taxes, mortgage payments, insurance and upkeep to then take advantage of the deduction.  But the house is paid for now and I can sit on my deck and know that I no longer have house payment and the home is mine.  Even though I still have to pay property taxes, insurance and upkeep, I'm glad I own my home.  No one is going to up my rent. 

There is something about owning your own home that even with all of the challenges I think it makes it worth it, at least to me.  Also - even with home prices going up, and interest rates moving in an upward direction, interest rates are at an all time low.  If you think you might want to own your own home at some point - now is probably a good time to get very serious about moving forward.  The biggest risk in waiting is not only home prices increasing but possibility of the Federal Government changing the deductibility of home interest rates (see below).

C.A.R. opposes bill that would reduce availability of mortgages
Yesterday, the House Financial Services Committee approved H.R. 2767, the Protecting American Taxpayers and Homeowners Act of 2013 (PATH). C.A.R. and NAR strongly oppose this bill because it would severely reduce the flow of capital to the mortgage market. When capital is reduced, the cost of mortgages increases, and the burden of the increases is passed on to consumers who could be priced out of the market and unable to purchase a home.

Other consequences of H.R. 2767 include:

• The 30-year, fixed-rate mortgage could become less readily available.
• The elimination of the conforming mortgage due to the abolishment of a government guarantee.
• Limiting FHA financing to first-time home buyers or low- and moderate-income home buyers.
• Lowering loan limits in high-cost states, such as California, forcing California home buyers to pay higher mortgage rates.