Home Buying: Get Off The Fence

Don’t despair quite yet prospective home buyers. Things aren’t as bad as you think.

If you’ve been keeping an eye out, rates have been volatile. We just saw the largest one-week rise in mortgage rates since the big financial crisis in 2008. This caught a lot of home buyers and candidates for refinance by surprise. Nobody is super happy about it. But let’s look at it another way: If you’re in the market, quick action is the way to go here.

First things first though: lets look at the why of the increase. The Fed has been purchasing bonds in order to keep rates down to the tune of about $85 billion per month. Essentially, they’ve been doing this to encourage optimism in the housing market to help grow the economy. They see signs that the economy is doing better, so they feel that soon they can take off the training wheels and let the market do its weird thing. So they announce plans to start curtailing this bond-purchasing, and will end it sometime in mid-2014. They figure that with the economy doing better, and confidence restored in the housing market, prospective buyers will not be scared off by slightly higher rates.

So, determined to test this hypothesis, the market shoots rates up a full percentage point.

Why should you still act now?

Well, mortgage rates will continue to climb. We are in the midst of the most rapid rate hike in history, but rates are still historically pretty low. Rates in 2000 were just about double what they are today. So take a dose of perspective when making your decision. Things may may level off (no promises), but if you’re expecting rates to go back down again; they may, but not by much. Unless you’re a wizard or a time traveler, you’re likely not going to see rates go down to what they were 6 months ago.

Furthermore, home prices are only going to keep increasing. Even though the problems with housing inventory seem to be cooling off, they are merely slowing the increase of home prices. Like the Fed says: optimism is back. Get your optimism pants on, put on your rose colored glasses, and act now and take advantage of these affordability conditions. Or wait, and borrow more at a higher interest rate for the same home. The glass will be half empty later, rest assured.

Here are some exercises to help you be more optimistic:

See that glass? That glass is half full.

True, this glass is mostly empty, but it’s at least a quarter full of whiskey. That is better than a half glass of water any day.

This money isn’t even in a glass, but you’d still feel good about having it right.

Good focus on that. That’s the money you’ll save if you act now. Call one of your favorite Blue Water Mortgage Loan Officers today for more info!