Great Market for Home Buyers Northridge CA

Think you missed out on the best time to buy a home? Think again!

Today’s lower house prices and cheaper mortgage rates make now one of the most favorable times to buy a home in several years.

Sure buying a home is a big investment. Even though housing prices have cooled in much of the country over the past 12 months, they certainly haven’t crashed. Most sellers are still seeing a healthy return on their investment.

So why is it a great market for home buyers?

First of all, let’s start with mortgage rates. They’re at near historic lows. If you’d taken out a $200,000 mortgage to purchase a home back in January 2000, when the national average 30-year fixed-rate mortgage was 8.32 percent, your monthly payment would have been $1,512 a month. That same loan at the current (January 2007) rate of around 6.32 percent, would cost you only $1,272.84 a month.

This means you can buy the same price home today for less money. But what about the fact that houses today cost more? Well, because it costs less to borrow money, you can afford to buy a more expensive home. At 6.32 percent, a $250,000 mortgage costs $1,550.69 a month -- almost exactly the same as a $200,000 mortgage seven years ago.

You can also benefit from the fact that the gap today between adjustable rate mortgages and fixed-rate loans has narrowed. In the past, it typically cost a couple of percentage points more to lock in the security of a long-term fixed-rate mortgage. Not any more. In recent weeks, average one-year ARMs have been around 5.51 percent and five-year ARMs at 6.04 percent -- not much less than 6.32 percent 30-year fixed-rate loans.

Add to this that sellers may be more motivated to negotiate a deal during the slower winter months. And what do you get? A definite buyer’s market – and a great time to be buying a home.