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Real Estate

2008-02-01 14:05:00

Timing is everything…does that include buying a house?

Answer: There are a lot of approaches to answering that question. Such as, in no particular order or importance: How long have you been in your present home? Does that home pretty well fit your family’s needs right now, and/or are those needs about to make a change one way or another? Is the home value average in your present neighborhood staying static, going up, or going down? Has your financial position changed from when you moved into your present home? Is it about to? Has there been a dramatic shift in your debt to income ratios putting you into a better position to afford a larger, or newer home? What is the interest rate on your present home mortgage? Is it a fixed rate mortgage, or is it an adjustable ARM. How long have you been on your job or in your present line of work? There are as many considerations to this question as there might be numbers of TV or radio lenders trying to tell you that you’re better off dealing with them on the phone or the internet, than dealing with someone local who actually has an office right in your city, where you can go in and sit down with him or her and visit about what you need to be doing. Start by comparing your needs and wants. Review what has happened to the market in your current area. Inspect your current house to see if any deferred maintenance needs to be finished. Put some thought into the family plans for the next 5 years to determine if your current home will meet your future needs. In most cases a person needs to own a home for at least 3 years. If your financial position has changed in a positive way, I think it makes some sense to get on out and move on up with your real estate, for no other reason that it will improve your net worth for the future. It’s a fact that more expensive housing will generally go up in value more in a given time frame than a lower valued property. So to get more of an increase in value, it’s important to buy and live in a more expensive home as you go. It’s also more fun for most folks to live in a better home in a better location. Real estate also offers the power of leverage and with rates back down below 6% this can give the financial side a powerful boost. If your current mortgage is one of those ARM’s, or adjustable rate mortgages, then now, right now today, you could get out of that situation simply by buying another home, and selling the one you now have, and that old ARM will be paid off in the process. Then make sure your new loan is a fixed rate loan. Your lender can explain the differences to you, and will be happy to point out the reasons for the ARM’s in the first place, and the advantages you’ll enjoy with a fixed rate loan. Remember this! On a mortgage loan of $100,000, at 6% interest for 30 years, the Principal and Interest portion of the monthly payment is only $599.55 per month. The total payment would include 1/12 of the annual taxes and homeowners insurance each month. So, as you’re paying your monthly payments on your house, early on in the life of your fixed rate loan, the actual monthly principle reduction on your loan is very small. So to really get on top of your home loan, just pick up an additional principle or two each month, and each month you do this, you cut one month off the length of the loan, and save one month’s interest! Interesting? I thought you’d agree! So…is the timing right for you to consider moving up in your housing? With the rates at or below 6% right now, I think it’s a perfect time to get moving on your own little piece of Heaven known as the Wichita area. As I said last month we are very fortunate to live in Wichita. Out current economic situation and real estate situation is much better than much of the US. For more information about different kinds of financing for homes, just get hold of your mortgage professional, and he or she will be more than happy to update your information vault on this subject. More next month….