Everyone is asking lately “when is the best time to buy” and when will we see the “bottom of the market”? Below is some information provided by O’Dette Mortgage Group regarding the history of interest rates and determining when really is the best time to buy.
Rates & Cost of Ownership: Properly defining the “bottom of the market” should be the best time to buy and is a function of both purchase price and rate. For a 30 yr fixed mortgage w/ 20% down, a 5% decrease in purchase price will wash with a .5% increase in interest rate. So, if rates are more likely to up 1% before home prices drop another 10%, then the cost of ownership is currently on the rise….point being, NOW is the time we’ll look back years from now and realize was the sweet spot time to buy. Note: rates have already gone up 1% in the past 6 months. Current cost of ownership is approx equivalent to purchasing a home in 1989. The arch enemy of mortgage rates is INFLATION. Anyone watching where rates are headed should be focused on inflation. The Fed is actively trying to create some inflation, so what the Fed is currently doing every day, will indirectly push mortgage rates higher.
Condos: Health of HOA’s are more crucial than ever to loan approvals. Attached you will find a Condo Cert Cheat Sheet that outlines the high level basic requirements for condo approvals.
Confumbo: The high cost conforming (aka “confumbo”) loan limits are currently set to expire in September. We hope these will be extended, but expect Congress to wait until the very last minute to address this debate. Current limits are – Nevada County: $562,500 Placer County: $580,000
Credit Score: Credit score requirement for best case scenario rates continue to tighten. 740 credit score is now top tier pricing for 20% down payment scenarios. Point being, it’s beneficial for clients to speak with us ASAP to complete a pre-approval and understand what is affecting their financing options.
Here are 2 images providing further information. Click on images for enlarged versions.