1. Lowest Interest Rates since the 1950’s - If you’re waiting to buy because you think prices may drop more, you may want to re think it. With the huge deficits the government is running, they will have to sell Treasury bills to cover the debt. This means the government will have to increase the interest rates they charge in order to convince more investors to purchase the securities. When the government increases interest rates, the cost of home mortgages increases along with them.

2. Home Prices May Go Down - If you believe prices will go down, the issue is by how much. If you believe there is another 25 to 50% depreciation, then you can run the risk of waiting and possibly  breaking even with the interest rate increase. (A 1% rate increase on $200,000 loan will cost approximately $50,000 over the life of the loan. A 2% rate increase will cost approximately $100,000.) What you need to know is that virtually all real estate experts are saying we are at or near the bottom of housing prices. (See post “DO YOU KNOW”)

3. It’s Cheaper For Me To Rent - The challenge with renting is that you are paying off the landlord’s mortgage instead of your own. Even if your house does not increase in value, each month you make a payment you accumulate wealth by paying down the principal. This is the equivalent of putting money in the bank, where as renters lose additional wealth as their rental payments increase over time. A homeowner with a fixed-rate loan has locked in his or her mortgage amount for the next 30 years. If there is inflation, the homeowner pays off the loan with inflated dollars. Renters have to keep payments at a pace with inflation.

If you elect to wait to purchase, you may be leaving money on the table - First, if interest rates increase, you will pay more over the life of the loan. Second, by continuing to rent you accumulate less wealth and experience less appreciation.

One last key issue to consider - the $8,000 tax credit to first time buyers (have not owned in the last 3 year period). If you do not act right away, you miss the opportunity.

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Although experts predict it will take time for the economy to fully recover, there has been a lot of encouraging news recently.

Do you know …

- Existing home sales were up by 7.2 percent in July, the largest monthly gain on record since 1999.

- First-time home buyers and distressed home sales each make up about 30 percent of those sales.

- Mortgage rates were back down close to 5 percent. Buyers who are waiting for an ultra-low rate may want to capitalize now before rates inch back up.

- The median age of first-time buyers is 28.

- Two out of three sellers paid at least part of the buyer’s closing costs

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Be sure to look at our new listing in NE Portland, just blocks away from Rose City Park & Golf Course!

NE Portland Capecod Gem!

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