Many Colorado Springs house hunters have lost confidence in the housing market due to some news released in the media. Here are some of the misconceptions out there which after this, hopefully will be dismissed.
Misconception number 1: Home loans are impossible to get right now
Traditional loans are available from as low as 5% and less. Another option is an FHA loan and they only require a 3.5% deposit. If you have not owned a home for 3 years, you even qualify for a first time home buyer loan. El Paso County has a 14 million dollar bond for you that you can get with a 3.9% fixed rate and down payment aid that you won’t have to repay. Colorado Housing and Finance Authority (CHAFA) also has funds that carry a small interest rate and down payment. There are other ways to receive assistance to purchase a house both on the local and national level.
The misunderstanding comes from the fact that the way in which persons qualify for loans has changed. For example, currently, you have to be able to prove appropriate income and a good credit score to get a mortgage loan. All that means is that the days with little or no documentation for loan approval are over. This is a good thing as this is one factor that led to the amount of foreclosures now being experienced. In addition, if you have a real estate broker that’s a good negotiator, you may be able to include your closing costs in the final agreement further reducing your home-buying expenses.
Misconception number 2: Rates aren’t increasing now so there’s no rush
Let’s look at an example. The typical 30 year fixed mortgage rate for the year 2003-2007 was 5.75%. Therefore, if you had a $200,000 mortgage, the monthly payments would work out to $1,167. Today, the same 30 year mortgage is between 4% to 4.25%. That same $200,000 mortgage at 4.25% would work out to $983. Imagine if you sold the $222,000 house and purchased a $300,000 house. The payments would move from the 5.75% rate to the recent 4.25% rate so that equates to a difference of $144 per month in payments for $80,000 more of house.
Misconception number 3: You’re better off waiting until there’s an improvement in the market
History always repeats itself. It’s not the first time that prices have fell. Markets are cyclical and knowing this we know that once again, prices will go up. If you do not currently own a Colorado Springs house, or are considering an upgrade to what you currently have, then this is the perfect opportunity for you to buy. If you are even only thinking about investing, it makes sense to buy when prices are low as well as interest rates and there is a lot of inventory.
Prices are beginning to stabilize and the economy is in the process of improvement. As a result, prices may increase soon in order to keep inflation steady so it is the best time to buy. Not to mention that banks want to get rid of their foreclosures and are reducing prices.