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You
have probably heard over and over again lately about the phenomenal
buying market out there for property enthusiasts. In fact, even if you
are not a bona fide investor it is still a great time to get into the
business of investing in property. One of the reasons for this ripe
environment to invest and actually make significant amounts of money on
that investment is the low costs of obtaining property that we are
seeing today.
Today’s Low, Low Cost of Financing
Not only are homes priced lower
but also the actual cost to borrow money to purchase the homes is also
lower. Not too many years ago the cost of a mortgage was as high as many
credit cards are today and when you compound that into 30-year fixed
mortgages, the finance charges become astronomical. With today’s
interest rates, however, monthly payments for the same house you might
have purchased at the old interest rates are much lower.
Let’s
look at a $200,000 home. If you financed it back in the 80s when rates
were as high as 16% (or more) the total monthly payment amount would be
about $2,900. Factor in today’s record-setting interest rates and the
monthly payment is more than fifty percent less at around $1,200. This
is for the same house!
Home Prices Remain Very Low
After the infamous market crash of 2007,
housing prices plummeted and they have remained at or near bottom for
quite some time now. For buyers and investors this translates to one of
the best opportunities – especially when combining low home prices with
record low interest rates. Not only is the home affordable, but so is
the cost to borrow money to buy it.
Consider
the example above of the $200,000 home. If your budget is $200,000 and
you were not buying in today’s market – how much home would you be able
to afford within that amount? Of
course, what you would be able to get will depend on location,
neighborhood, style of home and other factors. But in general, the
amount of house you would be able to afford ten years ago does not even
compare to what you can get today for the same amount of money.
Invest for Pennies on the Dollar Now – Enjoy Sizable Returns Later
When billionaire investor Warren Buffett was recently asked about the best investment sectors of today he suggested investing in single-family homes
on a 30-year fixed rate mortgage. This advice came in light of current
market conditions that end up in pennies on the dollar investment
schemes. Buying a home today for under $200,000 will easily yield more
than double the returns by the time the mortgage is paid off. Many savvy
homeowners today are also making extra payments to shorten the term
length of their mortgages.
With
the plethora of investors and buyers that are delving into the property
market to seize the opportunities out there, many have been turning to
any means possible to come up with the down payments. Whether dipping
into savings, obtaining a home equity line of credit on an existing
home, converting the purchased home into a rental property – buyers are
getting creative.
If
you would like to explore your options and find out how you can take
advantage of the amazing investment opportunities right now, contact us
today. We would love to guide you and come with up with some ideas that
work for you.
