RECORD LOW MORTGAGE RATES ENTICE HOMEBUYERS: Beazer Homes offers back-to-basics tips on buying the home of your means
TAMPA, Fla., - You don’t have to be an expert in economics to know that as interest rates drop, mortgage applications rise. Add the lowest mortgage rates in recorded history, and lenders are working double time to meet the demand.
Freddie Mac Interim CEO John Koskinen predicts that mortgage rates, which are holding in the mid to upper 4 percent range, are “probably as good as it’s going to get” and “interest rates are probably close to bottoming out.” The government sponsored mortgage investment company is recommending that people buy now.
While much of the current loan activity centers around refinancing, the low rates also are attracting homebuyers into the market. Many of those include first-time buyers who are also enticed by the new $8,000 tax credit.
“Record-low mortgage rates, great pricing and the new tax credit have combined to push consumer buying power through the roof,” said Alan Beulah, general sales manager of the Tampa division for Beazer Homes, one of the country’s top 10 home builders. “How long it lasts is anyone’s guess.”
Simply put, the lower the mortgage interest rate, the more home a buyer can afford to purchase. For example, a monthly payment on a $250,000 mortgage would be roughly $1,200, assuming a 5 percent down payment and a 30-year loan at 4.5 percent.
However, if the interest rate goes up to 6.25 (which it was in November 2008) that same $1,200 mortgage payment would apply to a home valued at just $205,000—a $45,000 reduction in buying power.
In deciding how much home you can afford, experts recommend that first-time homebuyers, and even seasoned homeowners, follow some practical “old school” advice.
Most mortgage counselors or financial advisors suggest using the 28/36 rule. This basically means that your monthly housing expenses like the mortgage, insurance and property taxes should be no more than 28 percent of your gross monthly income. And, all your debt combined should account for no more than 36 percent of your gross income.
Depending on your circumstances, there may be some flexibility in easing the 28/36 rule, like including a co-signer on the mortgage or making a large down payment.
And, according to Beulah, not all loans require a hefty down payment. For example, FHA loans, which are insured by the federal government, only require a 3.5 percent down payment, which is much less than the 20 percent required with some conventional loans.
For example, on a $225,000 home, an FHA down payment would total $7,875, whereas a conventional mortgage would require $45,000 on the same price home.
“Contrary to what you may have heard, qualified buyers should not have any trouble getting a mortgage,” said Beulah. “Beazer has partnered with Bank of America/Countrywide to ensure our buyers receive fast, personalized service and won’t be pushed to the back of the line behind those seeking to refinance.”
Beazer has four new home communities throughout the Tampa area, with prices ranging from low $100s to mid $200s. For more information or to find a new home community in your area of interest, visit Beazer.com.
Contact:
Alan Beulah, General Sales Manager, 813-663-9002, Abeulah@beazer.com
