In investing strategy, an investor always seeks to buy low, and sell high. But because home ownership is such an emotional decision for would-be buyers, they often ignore this maxim.
This is truly unfortunate, because the real estate market has begun to rally and according to the Mortgage Bankers Association, interest rates are rock bottom. In other words, the cost of home ownership will never be lower than it is now. Housing is a permanent need, and the sense of security that comes with home ownership is hard to discount. If your family has considered buying a home, now might be a good time to make the investment.
In a recent report, the Mortgage Bankers Association revealed that the average interest rate at the moment is 3.88%
- 30 year fixed interest loans are 3.71%
- 30 year fixed interest loans (less than $417,500) are 3.88% (3.87% is the lowest rate recorded in the history of their survey
- 30 year fixed interest rate (for loans greater than $417, 500) are 4.12%
- 15 year fixed interest rate loans are 3.23%
(source: http://mbaa.org/ResearchandForecasts/)
It’s a mistake to think that home-ownership is a vehicle for riches. The only metric that really makes sense is whether it is cheaper to buy than it is to rent. The rule of thumb adhered to by many real estate economists is to think about buying when the housing prices are about 15 times the annual cost of rent. The extremely low interest rates only add further incentive.
Home ownership is a big decision, an emotional decision, but it can also be made with a rational approach to the numbers.
To discuss whether buying a home makes sense for your family, please contact Northern Virginia’s #1 Real Estate Solution by calling us at 703-485-HOME or by email [email protected].
703-485-4663
