When mortgage interest rates drop to historic or near-historic lows, a surge in mortgage refinancing usually follows. Existing homeowners scramble to save money on what is likely their biggest monthly expense.
Interest Rates Are Low, but Are You Ready to Buy a Home in Hudson Valley? – by Kei Kullberg, New York Mortgage Expert, Superior Mortgage Branch Manager / Loan Originator – NMLS # 1740248
Home purchasing activity doesn’t always go hand-in-hand with rock-bottom rates, however. First-time homebuyers traditionally make up about one-third of all buyers, and low interest rates don’t usually boost that percentage. Low rates can make a house payment more affordable, but that hasn’t meant that everyone runs out and buys their first home.
People become first-time homeowners for a multitude of reasons, and low interest rates are usually not at the top of the list. Homeownership is a big commitment, and if you’re thinking about buying a home while rates are low, you might want to first answer an important question: Are you ready to buy a home?
Get the whole financial picture
If you’re renting a place now, it’s likely that your monthly rent is your biggest recurring expense. You might think that if you can land a house with a mortgage payment that’s similar, it means you can afford to buy the home.
But there are other costs to consider. Owning a home requires maintenance and occasional repairs. There are insurance and property tax costs to be paid. If you come up with a big down payment to get the lowest interest rate possible, do you have any money left over for unexpected expenses after you move in?
Remember, too, that what a lender says you can afford and what you actually can afford aren’t always the same. A hefty monthly payment that you qualify for on paper doesn’t necessarily mean you can comfortably swing it every month. Only you have the truest view of your financial picture, and it’s important that you see the whole thing.
What are your family plans?
Some first-time homebuyers take up the quest for a home of their own because their family is growing. You and your partner might have decided to move in together, or you need a bigger place because you’re expecting a child. When you’re taking the step of homeownership, it’s a good idea to think about how those things might change in the coming years.
If you plan on having a large family, it might not be wise to buy that two-bedroom condo – even if you don’t plan on a family right away. If you’re going to have children, it’s also wise to research the school districts where you’re doing your home buying search.
A home is a big enough commitment that it makes sense to not just assess what your situation is right now, but to also envision it a few years down the road.
Can you give up mobility?
Buying a home can often feel as though you’re buying into a community. You want to put your roots down and be part of a neighborhood. Some will say buying a home means they’re finally “settling down.”
Unlike renting, however, you can’t necessarily pack up and leave if you end up not liking the place or your longer commute to work is less palatable than you expected. Homeownership means less mobility compared to renting. It’s harder to get out of a mortgage than a lease, and if you like moving around a lot, renting might be the better option.
Because of the way mortgages are amortized, you pay a lot of interest upfront. Unless you’re in the hottest of markets and prices are shooting through the roof, it’s easy to lose money on a home if you sell it in less than four or five years.
The bottom line
Low interest rates can make more homes more affordable to more people, but that doesn’t mean you should automatically become a first-time homebuyer. Low rates won’t help you if you’re not ready to be a homeowner, so carefully consider whether you are before you take the leap.
Get to Know Kei The Mortgage Guy
Starting out at Superior Mortgage as a Production Associate, I have integrated my passions and knowledge of the mortgage industry into my work. I then moved on to be an efficient and detail orientated Loan Processor. Loan processing taught me how to analyze loans in a way that would enhance my skills and understanding of the mortgage industry.
Since November of 2018 I have become a licensed Loan Originator and Branch Manager of the Superior Mortgage Fishkill Branch. Customer Service and meeting client’s needs is an expertise of mine and striving to get clients in their new homes is especially what motivates me day in and day out.
I grew up in Cornwall, NY, which then lead me to attend the National Sports Academy in Lake Placid, NY. From there I attended the University of Alaska at Anchorage and furthered my education experience at St. Lawrence University in Canton, NY, where I graduated with a Bachelor of Arts Degree in Business and Economics. At St. Lawrence I was the MVP of the Division 1 Alpine Ski Team who also took part in numerous community service events throughout each semester.
My experience of working with real estate investors small and large has taught me the importance of using real estate as a tool for investing and gaining long term wealth. I will continue my real estate investment journey with the help and influence of my clients and talented co-workers. I am also passionate about skiing, photography, and any sport that takes place on the water.