Mortgage Rates Steady
Here’s some very good news for buyers. The average rate on 30-year fixed mortgages remained unchanged and near historic lows for a second week. Rates on 15-year loans also remained steady.
According to mortgage giant Freddie Mac, 30-year loans were at 3.53 percent for the week ended Feb. 14. That’s pretty close to the 3.31 percent rate in November, which happened to be the lowest since the company began tracking mortgage rates in 1971. Rates on 15-year mortgages were at 2.77 percent this week. The lowest on record is 2.63 percent.
If you are looking to buy, this could be a good time. The economy is improving and home prices are rising steadily. Mortgage rates probably won’t fall any further than what they are today. And chances are they will only go up.
The low mortgage rates have helped housing recovery tremendously by luring more buyers into the market. More buyers mean more demand. More demand helps stabilize prices and fuels home construction.
The number of homes entering the dreaded foreclosure process shrank in January, according to RealtyTrac Inc.
Nationally, foreclosure starts – when a home with an unpaid mortgage for a specific time gets in line for repossession by the lender – declined 28 percent in January compared to a year ago. On a month-to-month basis, foreclosures fell 11 percent.
This is the lowest drop in foreclosures since the peak of the housing boom, according to the Associated Press. A drop in foreclosures will help a faster turnaround in the market. Foreclosures or distressed properties affect home prices, thereby jeopardizing the supply and demand cycle.
Tips for Buyers
The economy is improving, the job market progressing and, as mentioned above, the rates on 30-year fixed mortgages are still hovering at the bottom.
Looks like the stars are finally aligning for homebuyers to take the plunge. But, buying a home is still a somewhat risky venture, says the International Business Times. It’s not your father’s market anymore. The economy is still volatile, and home prices aren’t what they used to be. So, make sure you’ve done your homework, researched the market you are buying into, and done all the calculations before submitting a deposit on the most important purchase of your lifetime.
The IBT offers the following tips for homebuyers about to jump into the market:
- Buy small: To minimize the risk, buy the minimum house you need. Don’t buy what you cannot afford. Luxury homes appreciate fast and big, but they also hurt the most when the economy shrinks.
- Do your homework on the location: Find out about the local economy. If it’s a growing market, it will work to your advantage. Try and have an idea on job prospects in the area. More jobs means more demand for housing, which will affect home prices and home equity.
- Never buy the best house on the block: You want to buy a home that’s roughly in the middle in terms of value. Don’t buy the most expensive home in the neighborhood; if your neighbors’ homes are not at par, they might bring down your home value.
- Factor in commute: Gas prices are volatile. Take into account gasoline prices, and see if it makes more sense to buy a home closer to work or a mass transit stop.
- Job opportunities: Study the job prospects in the area. Make sure you will find employment in case you end up losing your current job.
- Prepare yourself for an interest rate negative feedback loop: Research the neighborhood and the city, and ensure that the price of your home is not far off from the median price in your area. If interest rates skyrocket, that could affect home financing and in turn your home value.