Not As Bad As Some Think; Not As Good As Some Would Like: The June Housing activity report from NWMLS has been released with the opening paragraph saying that “Not even the lowest interest rates in decades could entice wary house-hunters last month. Home sales around Western and Central Washington remained sluggish with pending sales lagging year-ago levels, but not all the numbers were down.” More.
Time to Refinance? Jumbo Mortgage Rates Plunge: Nearly two years after the credit crunch virtually froze mortgage markets, high-end borrowers are seeing some relief: Rates for “jumbo” mortgages on pricier homes are at their lowest since 2003. More.
Extend and Pretend? To Fix Sour Property Deals, Lenders ‘Extend and Pretend’. Some banks have a special technique for dealing with business borrowers who can’t repay loans coming due: Give them more time, hoping things improve and they can repay later. Banks call it a wise strategy. Skeptics call it “extend and pretend.” More.
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One very important thing potential buyers should keep in mind is that when interest rates are low, that is the worst time to buy — contrary to what most news media and RE agents will tell you.
You see, when interest rates are low, the only way for rates to go is up. When rates begin to go up again (2011?), home prices then fall, since it takes more money to buy a home. Buyers are then forced to buy less home, and sellers are forced to drop their prices.
In addition, potential buyers should never purchase a home with a mortgage, where they cannot immediately rent out the home and be able to cover at least 100% of the mortgage with the rent. It is a good time to buy when the mortgage is less than the rent. Never buy before that time.
So look around to see what similar homes are renting for, and then check what your monthly mortgage payment would be (minus mortgage tax deductions, plus home upkeep costs and property taxes, etc.).
It took me several years to acquire this profound, yet simple, wisdom. Too bad I didn’t know this before I bought my first home. The reason the news media and RE agents do not tell you this is because news media needs RE ad revenue and RE agents need their sales commissions to survive in hard times. If you feel like subsidizing these businesses at the expense of your own retirement, then please do so.
Forgot one thing. Buy a home when interest rates are high because you will have saved up your money by renting when rents are low, and then buying when home prices are low. That way you will have enough saved up to pay off most or all of your mortgage when you buy (that is, buying the home outright), which means the higher interest rates won’t affect you very much. This is the cheapest way to buy a home, and you’ll never read about it in the news. Now ask yourself why that is…
Can I just rent the swimming pool for 3 months?
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