Ana Fonseca's Blog

Real Estate news is everywhere!  What we are hearing more often is that we are on a Real Estate recovery and more so in the Silicon Valley. 

Our free seminar will share with you - why you should buy in 2012 and how to get the deal closed! 

Reasons to buy:  Low Interest rates and home prices -making home ownership affordable.

Our free seminar will focus on the following topics:

1. Why you should buy today: Market conditions, interest rates, supply is limited, local job market is very strong

2. Credit and Affordability

3. Rent vs Buy

4. Your offer is accepted - what happens next?

4. What are the initial and long-term costs as a home owner?

Visit us at  http://www.meetup.com/Bay-Area-Informed-Home-Buyers/?a=wm1&rv=wm1&ec=wm1

Space is limited to 40 people. 

Location:  Hobees @ the Pruneyard Shopping Center 
1875 S. Bascom Ave Ste 190,
Campbell CA 95008

Date:  May 10, 2012

Time:  6 p.m to 8 p.m 

Is today the best time to buy? How long do I see myself living in one place? Should I buy what I can afford or should I stretch myself a little? Are interest rates really low? Will home prices fall even more? Are banks holding off on foreclosures?

According to Fannie Mae’s March 2012 National Housing Survey on consumer attitudes, consumer’s attitudes toward home buying is shifting in several key ways.  Most importantly, Americans now expect both home rental and home purchase prices to increase over the next year.  In fact, nearly half of consumers expect higher rental prices (this is the highest number recorded since monthly tracking began in June 2010).

A report from Zillow indicates that median rents rose 2 percent from February 2011 to February 2012, but home values declined 4.5 percent during that period.

These reports suggest that buying a home today may make sense while interest rates and home values remain low as home affordability remains high.

If you are like me, I prefer to get a good deal and pay less money in interest and keep more in my wallet rather than waiting for the market to improve let’s say a year or two and be stuck with a higher interest rate and higher purchase price.  Like many experts say “buy low and sell high.” Do it while you still can.

Let me illustrate the effect of low interest rates on the cost of home buying. Let’s start with a purchase price of $450,000

1ST scenario:  Borrower has 10 percent down or $45,000 and borrows $405,000@3.98% (30-yr. fixed). Your mortgage payment is $1,929 and for the life of the loan you would pay a total of $694,400.

2ND scenario: Borrower has 10 percent down or $45,000 and borrows $405,000@6.25% (30-yr. fixed).  Your mortgage payment is $2,494 and for the life of the loan you would pay a total of$897,840.

That total difference in monthly payment is $565 or over the life of the loan, $203,400! 

That’s a significant difference and it doesn’t take a genius to figure out the savings and benefit of locking a low interest rate while you can!  Imagine what you can do with that extra savings! 

So, if you think home prices are going up and interest rates can’t drop any further, BUY NOW! It’s up to you to decide what to do with all the money you’ll save!

Ana Fonseca, Realtor
ana@usspaces.com
Silicon Valley and SF Bay Area

Given all the information on the Internet about buying your “dream home,” what’s really important for a first-time home buyer? 

1. Financial security – Do you feel reasonably secure about your job or your job prospects?  Will you qualify for a mortgage?  As a general rule of thumb, you will need 20% of the purchase price of the home as a down payment.  So, if you want a $500,000 home, you will need a $100,000 down payment.  In addition, your monthly mortgage payment should not exceed 30% of your monthly discretionary income.  If your amount borrowed after putting down a $100,000 down payment is $400,000, and you have a 30-year fixed loan at 4.50%, your monthly payment will be approximately $2,027, so you will need a monthly disposable income amount of approximately $6,756.

2. Location and affordability— When determining where to buy, you need to consider where you can afford to buy.  While you may want to live in Menlo Park, unless you’ve got millions in the bank, you probably will need to live elsewhere.  So, affordability in Silicon Valley and the Bay Area is key.  You don’t have to settle though – focus on a place that fulfills your must-haves.  If you have kids that will be school age in the near future, make sure the community’s safety and school ratings are up to snuff.  If you’re single and want to mingle, find a place with a lively nightlife or a good social scene.

3. Your View of the Economy— Nobody wants to buy an asset that quickly loses its value.  So, do you feel confident about the Silicon Valley economy?  If not, then you may not be ready to buy a home.  If, however, you think housing prices will stay close to today’s levels or will increase over time, then you may be ready to buy.

If you’ve assessed the items above and feel ready to buy, I think you’ve really lucked out on timing.  Not only are housing prices at a record low, but mortgage rates have hit historic lows as well.  What’s not to like about low prices and low interest rates?  For those of you with a strong financial background, the real estate market is your oyster.  Take advantage of this unique opportunity to achieve the American Dream!