Home Prices | US Markets | Fixed-Rate Mortgage

That Dream Home May Be in Your Reach
So many families in the US have watched over the past decade as house valued drifted further and further out of reach. While some borrowed astronomical sums at nearly usurious rates, getting into the home ownership game at any price, others were relegated to the sidelines, whether by choice or due to a lack of financial ability. As the real-estate market implodes, this may be the ideal time for those ‘benchwarmers’ to come on the field and play the game.

Home prices have now fallen more than 30% in some US markets, particularly in the so-called ‘exburbs’,
the more remote suburbs whose desirability has been hampered by the rise in the price of gas. Over-construction has also led to a surplus of unsold houses, making contractors desperate to unload homes at almost any price.

Of course, given that wages are stagnating or even dropping, and that banks are much tighter with credit, it is going to be harder for most buyers to find a mortgage for which they can qualify. But there is another factor which works in their favor. We are now seeing a sustained policy of cutting interest rates on the part of the federal banks.

The primary purpose of this move is to make bank depositing unattractive, and business borrowing appealing, thus spurring entrepreneurial activity that can stimulate a dormant economy. But it also works to the advantage of home loan borrowers – rates are so low as to substantially reduce interest payments over the course of the loan.

Borrowers would be wise to select a fixed-rate mortgage, where they are assured that they will only pay the current low rate even when the economy rebounds and interest rates rise. In short, if you have some cash for a down payment and can get a Fixed-Rate Mortgage this may be the ideal time to buy that house you thought you couldn’t afford just a year or two ago.

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