Current Housing Market Good for Buyers

There are many reasons why people choose to buy homes including: pride of ownership, the ability to decorate, the ability to own pets, interest deductibility on your taxes and investment. If you are renting, you are simply helping your landlord make his mortgage payments and building his equity and investment.Certainly if you are likely to move within one to three years a home purchase may not make sense. But if Fort Collins will be your home for the indefinite and you have a stable job you should consider buying a home. Unlike other purchases, a home purchase not only is shelter for your family but also will go up in value over time. Last year a national investment analysis predicted that the Fort Collins Real Estate was one of the top 10 areas that is likely to have home sales appreciate by 25 percent in the next five years. The current housing market is presenting a tremendous opportunity to the buyer. In Fort Collins today there is a very good selection of both resale and new homes in all price ranges. Since spring is officially here we will continue to see more homes coming on the market over the next 90 days. In order to compete, many sellers in the resale homes have replaced carpet, painted, as well as remodeled baths and kitchens. Homes that are in top condition and well priced generally move quickly in our market. Resale homes often offer perks that you would not see in the new homes. They may have mature landscaping, sprinkler systems, fences, decks, enclosed porches, storage buildings, finished basements, plus a more central location closer to bike trails and city parks. Sellers that have cared well for their homes and have updated them are generally rewarded with a quick sale a top market value. Interest rates today are hovering about 6 percent for a 30-year fixed rate loan. This low interest rate gives the buyer excellent buying power. A purchaser buying a $250,000 home with a 10 percent down payment would end up with a loan of $225,000 and an estimate principal, interest, taxes, insurance and mortgage insurance payment (PITIM) of $1,573.00 per month. Closing costs generally run about 2-2.5 percent of the loan amount provided you are not paying points to buy the interest rate down. On a $225,000 loan this would generally run $4,500-$5,700 depending on the time of the month that you close. The total of your 10 percent down payment and closing cost in this example would be $29,500 to $30,700. For loans closing in 2007 the federal government is allowing mortgage insurance to be tax deductible for borrowers with a yearly income of less than $100,000. This tax benefit must be approved each year. There are numerous loan programs that allow you to get up to 100 percent financing it you qualify. If the seller is willing they can pay all or some of your closing cost to make it even easier to buy. Buyers sometimes postpone making a home purchase in order to save up a larger down payment. If interest rates rise half of one percent it will reduce your buying power and increase your monthly payment. In the example above the extra half of a percent would increase your payment by $73.98 per month. If the homes in the area are appreciating the typical buyer can not save fast enough. Assuming an annual appreciation rate of 3 percent on a $250,000 purchase, at the end of five years the value of the home would be $289,800. At the end of 10 years the value would be $335,900. If you had rented all this time at $1,200 per month assuming no increases in rent, in five years you would have paid $72,000 and in 10 years you would have paid $144,000. Chances are you would probably have seen several rent increases. In any case you certainly would not have any equity to show for it. Often we see buyer apathy in making a home purchase until the interest rates are rising or there are fewer homes on the market. If you are ready for a new home take advantage of the current market to make your move. There is an excellent supply of homes on the market in all prices ranges and categories, interest rates are still very good and there are financing programs for all situations.