December 12, 2012

Now and Then – Now is Better

Courtesy of McEnearney Associates

It’s December 1, 2006, and a couple making $140,000 just found a great house for $600,000. They call their mortgage lender and find that if they put 10% down, they can squeeze into that house. With 30-year mortgage interest rates at a very attractive 6.1%, they can just barely qualify for the monthly principal and interest payment of $3,272. The household budget may be a little tight, but they’re thrilled to be able to make their move. That was then.

And this is now. Another couple with that same income finds their dream home for $600,000 – but they’re cautious and aren’t looking to “squeeze” into anything. They’ve been talking about doing this for months, and they still blink twice every time they see that mortgage rates are less than 4%. Way less. Heck, their grandparents never saw the 3.32% loan that their lender says they can get. In fact, that rate means they can get a $770,000 loan. They’re really tempted to set their sights a little higher, but think about the cushion a $2,400 payment will give them, and they’re thrilled to be able to make the move.

Now is better. Now is unique. No one living today has ever seen mortgage rates this low, and the real estate market has turned the corner after some pretty rough years – prices are starting to rise. And that means the window of opportunity for buyers is wide open. First-time buyers can get in the game without having to push the envelope on their monthly income and can lock in a rate that few ever thought possible for as long as they live in that home. Move-up buyers can look at homes that a few years ago would never have been in their reach.

Years from now, we think we’ll look back on the winter of 2012-2013 as the best time to buy a home in a generation.