There are many reasons to buy a home. It is always a great investment, but should not be looked at as a way to make a quick buck. Real estate is a long term investment in your future. Interest rates are great right now. You could wait and end up with a higher rate. If the rate drops enough you can always refiance. Check with a lender in your area to see what type of loan you qualify for and what your rate would be. That is the best place to start.

Dear Donna:

That's a great question. I would not wait to buy a home until interest rates go down. Here are my reasons:

1) Interest rates may not go down any further any time soon. The Fed took quite a bit of heat for its last rate cut and it may be reluctant to do it again--especially if the most recent rate cut leads to the desired economic effect--i.e. a calming of the late summer mortgage panic.
2) As we saw with this latest Fed rate cut, the lowering of the rate by the Fed does not necessarily mean that mortgage lenders will follow with rate cuts of their own. There is a lot of residual shell-shock from the collapse of the subprime mortgage market and the result of that is more conservative lending practices.
3) While rates are higher than they were during the early and mid 2000's, historically speaking, they are still quite low. As people who had mortgages in the late 1970's and early 1980's can attest, 7 or 8 percent on a mortgage is a picnic compared to 18 or 20 percent. In short, money is still quite cheap from an historical perspective.
4) In many markets like mine (San Diego County), now is a fantastic time to buy. The inventory of available properties is way up, demand for properties is down, and as a result, there are many motivated sellers dropping prices and even offering incentives to buyers like payment of closing costs. By getting the in the market now, you can take advantage of great prices. If interest rates do go down in the future and more buyers enter the market, prices will head back in the other direction and this window of opportunity will close.
5) In many cases, the savings to be had from buying a home at today's discounted prices will significantly outweigh any savings you'll get from a lower interest rate on your mortgage--particularly if you don't plan on living in your next house for more than a few years. Crunch the numbers with your accountant and/or tax pro and you'll see that in many instances spending several hundred thousand less on a house (as you can do in this market) saves you much more over time than borrowing money at a lower interest rate in the future yet paying several hundred thousand more for a house.

This is just one real estate professional's opinion but I hope you find it helpful. If you have, or anyone you know has any need to buy or sell in San Diego County, I'd love to help. Email jason.gerlach@gmail.com or call 1-877-804-7373 to reach me anytime.

Good Luck!

Sincerely,

JASON

Interest rates have already been lowered. You need to go get preapproved before you start looking for a house. Talk to the mortgage broker about the current interest rates.
Why wait to buy a home? It is more important to know what the homes are going for in the area you are looking and what you can afford.

Hello Donna. The California Association of Realtors just released its 2008 Housing Forecast today. Below is the link to the article. I would recommend that you find out if there's a similar report for your area as it may help you make a decision. Best of luck.

You bring up a great question. The answer with interest rates is yet to be answered. The Word in the lending business is yes they will take a small dip. Especially when the FEDs meet again here soon. The expectation is that the feds will lower the prime rate by .25%. This is the expectation.

Your other question on should I buy a home now. I would say yes, now is the time to purchase while it is still a buyers market. Sellers are taking some low offers currently. Now is your chance to get a get deal on a home with amazing features for a reduced price. I would move forward with looking at your next purchase. Call me to get help. (608) 575-5185.