Are you waiting too long to buy a home?

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home pricing, lock-in a good mortgage rate, pricing your home to sell, selling your home

If you know someone who’s waiting for home prices to drop even further before they buy, you might want to clue them in to the impact financing changes may have on those low prices:

Which do you think matters more when waiting for the right time to buy a home? Is it securing a low purchase price, or locking in a great financing rate?

Most buyers become focused on purchase price when they’re considering whether or not to buy. The question you often hear is the same: “Has the market bottomed out yet?” The idea of getting “the best deal” on a home is paramount to these price shoppers, and indeed for cash buyers, this may be the primary concern.

While negotiating a great price is an important part of the equation, the value of securing great financing terms cannot be overstated. The inherent risk in waiting for the market to hit bottom is that you’ll also miss out on the best interest rates available.

Imagine, for example, you’re waiting for homes to drop an additional X% in value. While you’re waiting, mortgage rates rise Y%. Sure, you might secure the home at a better purchase price, but what you’ll pay over the life of the loan will be significantly higher than buying when the market was more expensive (but rates were lower).

Perhaps the most punishing part of missing great financing is the net impact on your monthly payment. Even a 1% increase in your mortgage rate can end up costing as much as a brutal 10% increase in your monthly payment.

Buying a home is not like buying a nice coffee table. Price is not the sole concern. Given the complexities of price, property taxes, financing terms, and the larger tax implications of home ownership, it truly pays to consult with an agent who can help you weigh the pros and cons and help you make the right move.

We’re always happy to work with you to navigate the market, negotiate price, and put you in touch with mortgage professionals who will help you get the best rate possible. Contact us today and we can help you explore your options: Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners http://www.HanleyHomeTeam.com

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Cash vs Financing

Many of our clients (especially Baby Boomers who are downsizing or relocating) ask us if they should pay cash for their next house or finance it with a new loan. While the idea of owning a home free-and-clear is certainly appealing, we always present them with a series of questions to help them clarify the big picture. Perhaps you or someone you know may benefit from these as well:

How much will you be left with after an all-cash purchase? Maintaining a safety net of three to six months’ worth of living expenses can be a real comfort after you’ve done well on the sale of your home. How comfortable will you be if an all-cash purchase brings you near zero?

Are you retiring soon? This goes to two issues: First, whether or not the absence of a mortgage will significantly improve your monthly position, keeping in mind you’ll still need to make insurance, tax payments, and maintenance. Second, if you’re thinking about applying for a loan. It can be a challenge to qualify for a loan after you’ve retired, so if you think you’ll need a loan, it may be better to get it in advance.

What’s your tax and income situation look like? For some people, the mortgage interest deduction on income taxes has a significant impact on their annual tax bill and overall cash flow picture. It’s always a good idea to consult with a financial professional before you “write off” the write off.

Might you need to help someone out in the near future? Sometimes having the liquidity to help family members or close friends in need is important. Are you planning to help someone else with a down payment on a home? Is it likely you’ll have to help a close friend or relative through a tough time? Having cash on hand can be a comfort.

How important is “free and clear” to your mind? For some, there’s nothing that compares to the idea of owning a home free and clear. Sometimes the feeling of “no debt” simply can’t be overpowered by tax or liquidity benefits. It’s important to be honest with yourself, and if you’ve always dreamed of dodging a house payment, it could be the right emotional move.

Do you qualify for, and would it benefit you, to apply for a reverse mortgage on your current home or use one as a loan to buy a new home.

For all of these reasons and more you’ll want to choose wisely before you go in for an all-cash purchase of your next home. Naturally, if you need any help selling your current home or looking for the next one, we’d be happy to help: Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners 904-422-7626 http://www.HanleyHomeTeam.com