Is it the right time for you to buy your Pasadena home? I honestly don’t know. It depends on a lot of factors that are specific to you.
Until I sit down with a client for a full blown real estate consutlation, it’s impossible to tell. But, I do know one fact and that is that “you can’t time the market!”
Many people have tried with varied results. There are too many variables involved to play this real estate game successfully and just looking at one factor like prices.
Today, I wanted to focus on just three reasons why buying a Pasadena home today would make sense even though the house that you buy today might be worth less a year from now.
1. Mortgage Rates are Low Today – But may not be next year. According to economists and industry executives, interest rates are expected to rise from the current 6.00% to around 6.50% by December and to around 7.00% in mid 2009.
Here’s an example of what the bottom line can look like if you buy today versus waiting for a 5% drop in value next year:
| Buy Today | vs. | Buy in 1 year | |
| Purchase Price | $600,000 | $570,000 | |
| Loan Amount | $480,000 | $456,000 | |
| Interest Rate | 6.00% | 7.00% | |
| Payment | $2,878 | $3,034 |
You could realize a savings of $156 per month if you buy today vs. waiting for a 5% drop in value.
2. Rates on Jumbo Mortgages – The best rates available for your Pasadena home are for conforming loans. Conforming loans are considered loans at $417,000 or less. Loan amounts higher than this are considered jumbo loans. Jumbo loans are typically 1.00% higher than conforming loans.
Congress has passed legislation to temporarily increase the conforming limit in Pasadena to $729,750. This means that loans at $417,000 to $729,750 currently have a similar rate as those at $417,000 or less.
However, once January 2009 rolls around, those rates are expected climb drastically. As well, the guidelines for these types of loans are expected to tighten up, making loan approval more difficult.
3. Inventory, Inventory, Inventory – Currently, there is a large amount of homes for sale in Pasadena California. This means today, you can pick and choose the home that is right for you. Additionally, sellers are now willing to pay for the buyer’s closing costs including points to buy down interest rates. This alone can add up to many thousands of dollars in savings. Once the market turns, expecte these sellre incentives to go away.
If you are ready to start your Pasadena home search, please call me at 626-627-7107 or email me.
