If you bought a house in the early 1980s, then you likely can’t believe how low home loan rates are today.  Federal Reserve records indicate the 30-year fixed rate was an astonishing 18.45% in October of 1981.  Few borrowers took out mortgages at that high rate, yet the average contract rate in November of 1981 was 15.8%.  Those double-digit interest rates made home loans extremely expensive, and risky, 30 years ago.

The picture today is radically different, with home loan rates less than 5%, where they have been for many months.  Another plus for house hunters is that there are many houses for sale, making it a buyer’s market.

The weak economy understandably leaves some prospective homeowners reluctant to make such a big financial commitment.  Some analysts will even scoff at the desirability of owning a home anymore.  They suggest that, since houses are not appreciating in value as they were four or five years ago, the investment is no longer prudent.  But that’s a short-sighted viewpoint.  

 

♦ Homes are affordable.  Prices have come down about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities.  Values have come down about 20% in some areas and as much as 50% in particularly hard-hit communities.
 

 ♦ Home inventory is high.  This means you can buy more house now than you could have at the peak of the housing market a few years ago.  You have considerable leverage to negotiate the price of a house for sale.

♦ Home loan rates are at historic lows.  Again, this makes it possible to buy more house.  Consider a home loan of $120,000.  At a 5% annual percentage rate (APR) on a 30-year mortgage, your monthly payment is $644.  The same loan at a 6.5% APR would come to $758 a month.
 

♦ You may still qualify for a tax break on interest payments.*  While this benefit alone is not a good reason to buy a house, it does sweeten the arrangement if you itemize deductions.

♦ You’ll own it.  You can design it, remodel it, and paint it any color you choose.  You never have that freedom in a rental.

♦ It’s forced savings.  You’ll build equity, even if more slowly than in the past, in a house you own; rent money is just…well…gone.

The combo of low loan rates and low home prices is too good to pass up.  If you’re ready to explore your housing options, talk to a Coosa Pines FCU loan officer.  We’ll help you clear up the mixed messages about home owning and can even prequalify you for a mortgage.  That way, you’ll know exactly what neighborhood to start shopping in.