Don't miss (or try to call) the bottom...

Tue Jun 3 2008, 06:16

Beth:

I agree with others who state that much of your decision depends on how long you intend to stay in the home. It is impossible to predict the absolute bottom of any market, stock or real estate. Investors look for good deals in any market with the intention of holding on for a while. If that's your intention - on average you are likely to be rewarded for doing so.

Contrary to the way they are advertised, mortgage rates are not a "one size fits all" commodity. There are lots of personal varibles that will determine your rate in addition to market conditions. Please consider viewing my blog titled "what' your rate" for more.

http://localism.com/article/203111/What-s-Your-Rate

Mon Jun 2 2008, 16:34

Really? You don't think they will drop below 6%? That's funny b/c I was quoted today at 5.875% with no points. Since I have a background in the financial markets I tend to pay attention to trends, and support and resistance levels. Late last week the yields (rates) moved higher to where they were at the resistance level. However since then the yield has fallen a little bit. Rates have been in a range of 5.625-6.25% Until rates break this trend and close higher or lower than these levels for at least a week I wouldn't be too worried about it.

Mon Jun 2 2008, 15:54

Hi Beth,

As a Realtor and a resident of Crystal Lake, I believe it is a good time to buy in this area. Crystal Lake and Cary both have great schools, easy access to shopping and public transportation (Metra). If you're willing to put in a little work you can get some exceptional deals. If you have any additional questions about properties in the area, feel free to contact me. You can also search listings on my website, http://www.chicagolandrealestatelistings.net/

Mon Jun 2 2008, 11:00

I'd like to add to the previous answers...think about how long you plan to stay in the home. If you think you'll be staying for several years, then this could be a GREAT time to buy. If you think you'll be moving in a year or two, it might not be such a good time. 6.25% is still a great rate, historically.

Fri May 9 2008, 18:29

Beth,
Looks like you got some good advice already, but I'll throw in my 2 cents. I "think" that were going to continue to be in a buyers market thru the end of the year and that rates will probably continue to stay low thru the election. That being said, I "know" that it is a great buying opportunity now and that rates are within a point of historical lows.
I think that you have the luxury of starting to look now for the right property, knowing that you should have a decent sized inventory to consider and that time is on your side.
If you were my client, I'd make sure that you have found the right loan package for your situation before going out to look. Luckily, as a 1st Time Buyer, there are a lot of good programs out there for you. I'd then find an agent who is aware that you want to pre-evaluate alot of properties to find the diamond in the rough.
Good luck to you.

Fri May 9 2008, 16:19

Beth, right now is such a great time to buy because the interest rates are great and prices are low. I am seeing the market in McHenry county picking up a but meaning the inventory wont be as big as it was in the winter. I would strongly suggest not waiting too long and taking advantage of the great deals out there now. I always tell my clients that you never know when we've hit the lowest point until the prices start going up. I would say capitalize on the great opportunities for buyers! If you would like to discuss your situation in greater detail please contact me and we can look into the exact area you are looking to buy in and analyze what the market is specifically doing there.

Fri May 9 2008, 12:41

Beth, you need to shop around as current rates with decent credit are around 6.05 on a 30 and 5.50 on a 15 in my area. But now is the time to purchase your first home and especially if you can take advantage of the forclosure market.

Fri May 9 2008, 10:50

Beth,
I highly suggest you buying a home now as interest rates are at a very good low. Interest rates tend to fluctuate easily and you may run out of a good rate.

Fri May 9 2008, 10:44

I don't know the Crystal Lake area at all, so I can't attempt to predict what housing prices and property values will do over the next year or two in your neighborhood. However....

Yes, 6.25% sounds high. Check with a good mortgage broker. There are lower rates out there. However, it's possible that your credit history (accurate or inaccurate) is lowering your scores and, thus, raising the interest rate being quoted to you. And, while no one has a crystal ball, interest rates aren't likely to drop significantly, if at all. If anything--and I'm not an economist--I'd say interest rates are more likely to go up than to go down.

However, interest rates probably won't go up significantly. And, in many areas of the country, there will still be excess inventory and many good bargains next year. So, while now is a very good time to buy, don't be rushed into feeling you have to buy now.

First things first: Go to a good mortgage broker. Find out what rates you really qualify for. Also, find out how much home you really qualify for. You might decide that it's OK to buy now. If there is something wrong with your credit, take the steps necessary to improve it. That'll help not only in buying a home, but in everything from buying a car to buying insurance.

Then, as a first time home buyer, interview a number of Realtors. There are many threads here on Trulia on what to look for in a good buyer's agent. Even at this point, don't feel you have to buy. Be upfront with the Realtors. The good ones will stay in touch and provide useful information as you get closer to your decision to buy.

Follow that series of steps, and you'll do fine.

Hope that helps.

Fri May 9 2008, 09:53

Hi Beth,

I'm a home buyer too. I really appreciate Louis King's objective advice. I don't know your area, so I'm not sure of the inventory. The fed has continually dropped rates at the federal reserve, which intuitively would mean lower rates for mortgages, but that hasn't happened proportionately. ( I had a 5 1/2% fixed on my house, and the Fed rate was higher then it is now)I don't think rates are going to go lower, I think they are just going to go higher. 6.25 seems very high, but I don't know your FICO score. That could influence the lender. Shop around.

Here's a crucial piece of the puzzle to ask your mortgage broker or bank: For each $100,000 I borrow, how much am I paying in monthly payments based on 6.25%? Also, ask houw much you would be paying over the 30 years for a 6% loan and a 5.75% loan. Then ammortize that out for the life of the loan. This is a crucial question to ask your lender--sometimes it can be less expensive in the long run to pay a little more for a house, then to pay even a .25% point on your home.

To sum it up- I think rates are going to stay flat or go up. The only way I see them going down is if the government intervenes and passes an insurance bill that guarantees all loans with fed money. It could happen....is it likely, I don't think so.

Fri May 9 2008, 09:37

Hi Beth;

Go to your buyer agent and get the absorption rate for the kind of house you want in the area that you want.

This will show you how long it takes the average home to sell in your market. To calculate the absorption rate, divide the number of listings in your market by the number of sales during that month. Example: if your market had 300 home listings last month and 100 sales, the absorption rate is three months. When the absorption rate increases, say to six or 10 months, it means that the existing inventory is taking longer to sell.

If homes are taking longer to sell, it's probably safe to wait.

An interest rate of 6.25% seems high. Sit down with an experienced, long time mortgage broker and find out how lending policies have been changing, not just interest rates. If lending policies are are being relaxed, it means that the market has started to turn around or will very soon.

Fri May 9 2008, 08:46

Although there is not a magic crystal ball to see the future, all indications suggest that it IS a great time to purchase real estate. Intrest rates are still very good, there is a larger supply of available homes, fewer bidding wars, patience is tolerated, due diligence is welcome, repair request are welcome and there are fewer investors. Happy Home Hunting!!!

Fri May 9 2008, 08:40