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Make a Move: Purchase a Home Now to Leverage Low Interest Rates

Low interest ratesSeveral key factors motivate buyers to purchase a home. Some want a tangible investment for the future instead of paying rent. Others want to live in a specific location or are looking for a certain type of home, so they buy before that inventory disappears. Many believe real estate to be a value-added, lower-risk component to their portfolios.

Now, thanks to inflation rates and positive economic conditions, there’s another reason to purchase a home – record-low interest rates.

Favorable Rates for Buyers
The duration of a loan (30-year, 15-year, etc.), the buyer’s credit score and the down payment amount all affect the overall interest rate offered by a lender. While these interest rates change from week to week, in Texas the numbers have been favorable for buyers for several months now, creating a busy market where more people (including first-time buyers) can get in the game.

For example, in mid-June 2017, the rate in Texas for a 30-year mortgage loan hovers around 3.875 percent and a 15-year-loan is about 3.25 percent. As this article explains, even a 1 percent change in interest rate can mean savings every month of $100 or more -- and thousands of dollars in savings over the course of the loan. (Check this out for a historical look at interest rates from 1986 to 2016.)

Falling mortgage rates push down monthly payments, but also push up home prices, making such an investment even more wise.

According to John Burns Real Estate Consulting, an independent research and consulting firm, U.S. home prices in recent years outpaced incomes by 29 percent. In 2000, the mortgage rate was around 8 percent and a buyer earning $60,000 per year qualified for a $245,000 mortgage. Nowadays, that same buyer could qualify for a $377,000 mortgage at a 4 percent rate.

Every time the mortgage rate drops, home values go up by about 12 percent, the firm reports.

Houston’s Housing Market
In Houston, the housing market continues its red-hot path. As the Houston Chronicle reports, May was another strong month in terms of record home prices and more sales. Single-family home sales increased by 11.5 percent from the previous month, which drove median sales prices to unprecedented levels. Experts predict that sales and prices will continue to trend upward in the coming months.

Should You Buy Now?
If you’re considering a home purchase, the time to buy is now. Across all property types—single-family homes, condominiums, and townhomes—values are increasing while mortgage rates are historically low. Houston has long been a hot spot for home buyers, and with new inventory hitting the market from innovative developers like Surge Homes®, the competition for new homes will continue to heat up. Take advantage of mortgage rates that favor the buyer, and find the home you want today.