Have you ever wanted a second chance - a do over? Well, right now you have a unique opportunity to be able to buy a home today and have your monthly payments be lower than they would have been had you bought a new home last year - thanks to substantially lower mortgage rates right now.
Why have rates been falling recently?
Mortgage rates have tagged along recently with interest rates on long-term Treasury bonds which have taken a big dive. Primarily this seems to be caused by traders that have felt more anxious about the U.S. trade war with China, India and other major trading partners.
This unique opportunity is all the more amazing because home prices are up across the Northern Virginia region - up overall about 3% - with the data for the individual segments of Alexandria, Arlington, Fairfax, Falls Church & Prince William mixed. This is primarily because the data looks at gross sales and does not consider the property size or type. So, if the sales for one period were primarily smaller, less expensive homes and the previous month a greater percentage of sales were of larger, higher-end houses then average sales price changes would be inaccurately reflected in the raw data. This would likely falsely give the impression that home prices were falling when the opposite is actually the case. So it's always important to understand the market direction over time more than just looking at a few data points. Home prices in general have been moving upward annually between 3%-7% throughout the Northern Virginia metro areas. The Northern Virginia Association of Realtors, whose members cover Alexandria, Arlington County, Fairfax County, Fairfax City and Falls Church City, information shows sales prices recently climbed to a record regional average of more than $621,000 - up almost 6% from a year earlier.
This increase in home prices means that renters LOST thousands of dollars every month in lost appreciation. Instead of continuing to rent, if they purchased a modest $400,000.00 price range home last year, their home would now be worth $12,000 to $24,000 more in just 1 year!
How does the mortgage-rate drop benefit home buyers?
From this same time last year to this the 30-year FRM is down by about 5/8 of 1%. While this might sound like a small insignificant change, because of how amortized loans are calculated even very small changes to mortgage rates have substantial impacts on your mortgage payments.
So last year you could have bought a house and had a mortgage of $400,000.00. This year that same house might require a mortgage of $424,000.00, but because of the lower rates this year, the P&I (Principal and Interest) for the greater loan amount will actually cost you less per month! Here's your unique opportunity for a second chance.
As you can see in the chart below even if a home sells for $24,000.00 more, the lower mortgage rates available today allow you to have a lower monthly payment!
Rates have been falling; should I wait to buy a house?
It might be tempting to gamble and think that since rates have been falling they will continue to fall and that waiting might save you even more money. There are a number of reasons why you shouldn't and don't need to take this risk at all.
Let's deal with the most straight forward reason not to gamble on rates falling further. Even if rates fall further you can refinance to take advantage. Refinancing often costs very little or nothing at all, so sitting on the sidelines waiting for rates to drop is not only unnecessary, it's a big gamble for no actual reason.
What to expect when buying a house today
Anywhere you are looking to buy in the area, whether it's Fairfax or slightly further out in Prince William County or maybe a bit more urban in Alexandria, Arlington or maybe Falls Church, all of these locations in Virginia have been experiencing very competitive home buying conditions. Often when home buyers find a home they want to call their own will be competing against more than one other buyer. So buyers need to be prepared and make their offers aggressive and get help Writing the Perfect Offer. Failing to be ready and not having a great buyer's agent to represent you could easily result in endless frustrations and losing your dream home.
Who is in the best position to benefit from the current market?
Probably the people in the absolute best position to benefit from the current real estate market in Northern Virginia would be those looking to move-up to high-end or luxury range homes. While there is a shortage of homes for sale in most price ranges, higher priced luxury homes are the opposite. These homes are currently experiencing a Buyer's Market, so people buying these homes have a negotiating advantage. While these move up home buyers might be in the best position, they aren't the only ones that can benefit greatly from the current mortgage rate drop and real estate market conditions.
Home buyers in other price ranges and renters who want a home of their very own will obviously benefit from mortgage rates this low. Don't wait another year and miss out on the great current rates and continue to give away maybe thousands of dollars every month in wasted rent payments, lost appreciation and equity growth.
Why you "can't" buy a house
Many would-be home buyers are waiting for things they think they MUST have in order to buy a house. Sadly, the waiting is likely not necessary and also extremely costly. What are some of the reasons for not buying a home?
1. Not Enough Money To Buy A House
Do you have enough money to buy your own house? This is the question most often asked and the reason most often why people say they are waiting to buy a house rather than buying one now. Having lots of money to buy a house is nice and gives you many more options, but the truth is You Don't Need A Big Down Payment...or actually any down payment at all. More information on Down Payment Myths — What Does It Cost To Buy A House?.
2. Bad Credit Issues
Is your credit score less than perfect? What credit score do you actually need to buy a home? Just like having more money gives home buyers more options so does a higher credit score. While higher is better, a great or even a good credit score simply are NOT required to buy a home is Your Credit Score Too Low To Buy A House? The odds are that right now your credit score is good enough to qualify for a mortgage. More than 80% of renters in the U.S. have good enough credit to buy today.
Unfortunately, home buyers looking for answers are often misinformed by information they find on the Internet or even from consults they have with a buyer agent. Every week I read about or talk to a realtor that is spreading bad real estate advice. Some do this from ignorance and a lack of experience; others may do so because they are only interested in EASY deals. In any case, please make certain you get advice from an experienced buyer agent. If you need to get started send an email or give us a call
Before you talk to a lender, look at an open house, or go to look at new construction homes, make sure the very first thing you do is to select a knowledgeable, experienced and professional Buyer's Agent to represent you, and not just guide you through the process, but negotiate the best possible price and terms for you. Remember, a buyer agent is the ONLY part of your home buying team that is actually working in your best interest.
Additional Helpful Home Buyer Resources
20 Mortgage Home Loan Disasters To Dodge — John Cunningham
Mortgage Rates And Purchasing Power — Jeff Nelson
Questions to Ask Your Lender or Mortgage Broker — Bill Gassett
6 Crucial Tips For First Time Home Buyers — Luke Skar
Home Mortgage Options For First Time Buyers — Anita Clark
"Buy A Home Today For Less Money"
is brought to you courtesy of Dave Martin Realty Group, your Northern Virginia residential real estate experts. If you're considering selling or buying a house in the Northern Virginia metro area, we'd love an opportunity to earn your business, provide you an outstanding experience, and demonstrate to you that:
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