How can you get an Interest Rate as low as 2.75%

Dated: 03/12/2020

Views: 43

Yes, You Can Still Afford a Home

Call me about the low interest rates.  949-244-0444

Yes, You Can Still Afford a Home | MyKCM

The residential real estate market has come roaring out of the gates in 2020. Compared to this time last year, the number of buyers looking for a home is up 20%, and the number of home sales is up almost 10%. The increase in purchasing activity has caused home price appreciation to begin reaccelerating. Many analysts have boosted their projections for price appreciation this year.

Whenever home prices begin to increase, there’s an immediate concern about how that will impact the ability Americans have to purchase a home. That thinking is understandable. We must, however, realize that price is not the only element to the affordability equation. Mark Fleming, Chief Economist at First American, recently explained:

“When demand increases for a scarce (limited or low supply) good, prices will rise faster. The difference between houses and other goods is that we buy them with a mortgage. So, it’s not the actual price that matters, but the price relative to purchasing power.”

While home prices have risen recently, mortgage interest rates have fallen rather dramatically. At the beginning of last year, the 30-year fixed-rate mortgage stood at 4.46%. Today, that number stands over a full percentage point lower.

How does a lower mortgage rate impact your monthly mortgage payment?

Michael Hyman, a research data specialist for the National Association of Realtors (NAR), explained in a recent report that, even though home values have increased over the last year, the monthly cost of owning a home has decreased:

“With lower mortgage rates compared to one year ago, the payment as a percentage of income fell to 15.5%…from 17.1% a year ago.”

When purchasing a home, the price is not as important as its cost. Today, the monthly expense (cost) of purchasing the same house you could have purchased last year would be less. Or, you could purchase a more expensive home for the same monthly expense.

Fleming, looking at all aspects of the affordability equation (prices, wages, and mortgage rates), calculated the actual numbers in a recent blog post:

“Low mortgage rates and income growth triggered a 13.5% increase in house-buying power compared with a year ago.”

Since wages have increased and mortgage rates have dropped to historically low levels, this is a great time to buy your first home or move up to the home of your dreams. As Tendayi Kapfidze, Chief Economist at LendingTreerecently advised:

“If you are in a point in your life where you’re considering buying a home today, it’s a better time to buy than 10 years ago. If you can get a mortgage, you’re getting much lower interest rates, and it enables you to afford more.”

Bottom Line

Whether you’ve considered becoming a homeowner for the first time or have decided to sell your home and buy one that better suits your current lifestyle, now is a great time to get together and discuss your options.

Blog author image

Arna Freedman - DRE#00925320

Looking for a Pro? Someone who will listen, negotiate and get the home you are looking for with the least amount of stress? I have been successfully working for buyers and sellers in Orange County for....

Latest Blog Posts

REAL ESTATE EXPERT OPTIONS ABOUT 2ND HALF OF 2020

What Are Experts Saying About the Rest of 2020?One of the biggest questions on everyone’s minds these days is: What’s going to happen to the housing market in the second half of the

Read More

Are Home Prices Going Up or Down in 2020

What Are the Experts Saying About Future Home Prices?A worldwide pandemic and an economic recession have had a tremendous effect on the nation. The uncertainty brought about by both has made

Read More

Are You A Millennial on the Move

Millennials Are on the Move as First-Time Homebuyers [INFOGRAPHIC]Some Highlights:According to NAR’s latest Profile of Home Buyers & Sellers, the median age of all first-time

Read More