While Minneapolis-St. Paul homebuyers take a lot of factors into consideration when investing in real estate, one little number can bring the whole thing to a halt: interest rates. Compared to rates offered at the beginning of the decade, many people think that interest rates are high, placing that dream home out of reach.
Looking at historic data, the numbers tell a different story: they’re still comparably low. According to the National Association of Realtors, today’s interest rates rank among the industry’s 40-year lows. A check of the Star Tribune’s 9/13/07 edition shows 30-year fixed loans are available for as low as 5.94%. For up-to-date mortgage rate information, check out Bankrate.com.
Investing in real estate is more affordable than you think
Mortgage companies, competing for your business, are making every effort to keep mortgage rates as low as economically feasible. For the average Minneapolis-St. Paul homebuyer, with good credit and earning a steady income, investing in real estate is very possible…and more affordable than you think.
While a number of conversations center on a mortgage crisis, mortgage companies have set tighter credit rules to help homebuyers pinpoint how much house they can really afford, so they don’t overextend themselves financially. And mortgage programs are available for qualified first-time homebuyers, designed to make investing in real estate even easier.
Now is the time to act
Wait around for the market conditions to become more favorable, and the Minneapolis-St. Paul home you want may wind up costing more than you planned.
A half-point change in mortgage interest rates can make a significant difference. For example, a 30-year $200,000 mortgage at 6.5% would cost almost $24,000 more over the life of the loan if the interest rate increased to 7%.
Some Minneapolis-St. Paul buyers may be content to wait for their home to come down to the right price to make a higher-rate mortgage affordable…but that price would have to go down more than 10% to compensate for a half-point increase. And chances are that another buyer, willing to pay, will get the home first.
In other words, basing your buying decision on what you think might happen with mortgage interest rates just doesn’t make sense. (It probably won’t make any dollars for you, either.)
When you’re investing in real estate, it’s better to make your move in the market you know – which is today’s market – and start building your equity and tax benefits right away.