Should I buy a house now?

This is a great post:

Why Buy Now … Buying Power!

For home buyers with a long-term housing plan, today's mortgage rates are an incredible value as compared to even February of last year.  Last February, the 30-year fixed rate mortgage averaged 5.05 percent nationwide and today you are around 4.00 percent. If you are one of the many that have waited, you will have saved 13% on your mortgage payment. Take a look at the math :

February 2011 : $539.88 principal + interest for every $100,000 borrowed

February 2012 : $477.42 principal + interest for every $100,000 borrowed

That's $62.06 monthly savings for every $100,000 borrowed.

Same Mortgage Payment ~ 77% More Home

 When you buy a home, you think in terms of "monthly budget" and that's why mortgage rates are critical to home affordability. Your purchasing power is a direct reflection of the mortgage rates of the day. As mortgage rates rise, purchasing power falls. As rates dip, purchasing power rises.  This is why your mortgage dollar goes so much farther today as compared to 20 years ago -- mortgage rates are scraping rock-bottom in 2012 at levels that were previously unthinkable to economists. 

Let's say you have a monthly budget of $1,700 for your mortgage.

In 1991, a $1,700 mortgage payment gets you a loan size of $200,000

In 2011, a $1,700 mortgage payment gets you a loan size of $353,000

In other words, in 2012, for the same monthly payment, you can borrow 77% more from the bank than you could in 1991. Talk about a great deal!   

While property values rose, the affordability index dropped. With rates low and property values stabilizing, this becomes as close to the “perfect time” to buy as we can accurately estimate. No one knows when the bottom or top of any market comes until after it is long gone. Whether we are moving up, down, or laterally the forecasts say that now is the time.

Jim Harmelink

ERA Mortgage
NMLS# 283201
Office: (719)535-7405
Toll Free:(866)820-5526
Fax: (719)535-7393
Mobile: (719)651-0291http://jimharmelink.eramortgage.com/