Sunday, October 13, 2013

Is now a good time to buy a home in light of the Government Shut down ??

I have been asked a lot recently about whether now is a good time to buy a home, especially in light of the Government Shut down.  Will rates go up?  Will my loan close??

Regarding rates, they have actually dropped.  A continuation of a shut down would cause a significant panic in the market and likely cause investors to run to ‘security’.  Mortgage Backed Securities (MBS's) have traditionally been a great source for security as they’re private bonds.  If Uncle Sam is out of commission, MBS’s could be an even better safe haven for investors.  The current, historically low rates are a function of the uncertainty and fear in the market place.  More fear is likely to produce lower rates, not higher. 

It isn’t possible to provide a guarantee of a rate until you are under contract.  HOWEVER, there is still much good news to consider along these lines.  Rates have been historically low; one of the lowest in 70 years.   Rates are still very low (mid to low 4’s right now) so the difference in payment on the same loan.  

This is a good reason to consider moving sooner rather than later..  Economists are projecting rates in the mid to high 5’s within 12 months. While that will mean strong recovery and better than average appreciation in home value, it will also make homes a bit less affordable.