To Buy, Or Not To Buy – Is That Really The Question?

Foreclosures down, short sales

Sacramento housing market headed for a more normal pattern? In early 2013, Elk Grove saw a 45 percent gain in new-home permits and a 73 percent drop in foreclosures, while Roseville saw a 23 percent gain for new homes permits and 9 percent drop in foreclosure starts.

In case you haven’t heard, interest rates increased literally overnight and the market is set to take another turn in the next 12 months. However, interest rates are still at their lowest even with the recent increases. New construction will assist in increasing inventory and reducing prices – making home buying more affordable than ever.

To put it in better perspective for you, in 1981 the average home price was $82,500 with a 16.63% interest rate equaling a mortgage payment of $1,147/mo. In 2011, the average home price was $242,300 at 4% interest and a monthly mortgage payment of $1,093. $1,147 in 1981 is equal to $2,838 today.

So what am I saying? Take the time to position yourself to be in the drivers seat of your home purchase. If you go in as a desperate buyer where your lender has to “fix” a few things, and the file is touch and go (and very stressful for you), you will end up with a higher interest rate, and you miss the opportunity to learn to be a good steward of your finances before walking into the largest purchase you might ever make in your life. Moving too soon, you could also be setting yourself up to default on your loan in the future.

Take the time to be a stronger buyer – history shows the market gets better with time.

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