Tips for Buying a Home Today

Written by Dianne Molvig Tuesday, July 13 2010

Taking the plunge into home ownership is one of those Big Life Decisions, like getting married or pursuing a new career. You wonder: Is this the right time? Is this the best move for me?

Having cold feet is understandable in today’s environment. We’ve all heard many woeful tales as 2.8 million U.S. property owners faced foreclosure in 2009, according to RealtyTrac, an online foreclosure marketplace.

Still, you may want to warm up to the idea of buying a home in today’s market. Much, of course, depends on your personal circumstances. But two key factors are working in the homebuyer’s favor now: low mortgage interest rates and a high housing inventory.

“I’ve been in real estate for 40 years, and I’ve never seen interest rates this good,” says Dorcas Helfant-Browning, a managing partner with Coldwell Banker Professional, Realtors in Virginia Beach, Va., and a past president of the National Association of Realtors (NAR). In the last week of June 2010, rates for a 30-year, fixed-rate mortgage fell to 4.69 percent, the lowest rate since Freddie Mac began keeping track in 1971.

“In most markets, this is a good time to go looking for a home,” Helfant-Browning adds, “because you’ll have a great selection. There’s a good inventory of houses out there, so the buyer has far more negotiating room.”

The median price for a single-family home as of May 2010 was $179,400, according to the NAR. Prices vary widely across the country. But, in general, “sellers are pricing right,” Helfant-Browning says.

The average home price may dip lower this year. Fiserv Lending Solutions, a research company in Cambridge, Mass., predicts housing prices will fall 6.4 percent in 2010. Housing Predictor, an online real estate forecast source, expects the average home price nationwide to deflate 7.2 percent this year.

Given such forecasts, you might be tempted to delay buying in hopes of snaring an even better deal in a few months. But you might regret it.

“If you wait to see if the prices go down, you might, first of all, miss out on the house you want,” explains Pat Vredevoogd Combs, a real estate agent in Grand Rapids, Mich., and NAR past president. “And second, the minute the interest rates start to tick up, they could go up rapidly. Traditionally that’s the way the market works.”

Once you decide you’re ready to buy, your first impulse may be to start looking at houses. But there’s an important step to take first: Talk to a reputable lender. You’ll gain a lot of information you should have before you house-shop. Is your credit history solid enough to qualify for a mortgage? How much can you borrow? How much will your monthly mortgage payments be? What will you need for a down payment, closing costs, and other upfront expenses?