Curve

With mortgage rates this low, is late-2019 a good time to buy a house?

Erik J. Martin
The Mortgage Reports contributor

Mortgage rates are making it a better time to buy

Mortgage interest rates have been dropping lately. So have home prices. There are real estate deals waiting to be claimed. So that begs the question: Is the rest of 2019 a good time to buy a house?

It may not be a good idea to rush into a purchase in order to capitalize on low rates and be moved in before the end of the year. Then again, waiting too long can have its risks, too: Home prices and rates could go up next year. Plus, the housing supply could decrease.

Is 2019 a good time to buy a house? If you’re in a good financial position, the answer could be yes. But prepare to do your research first. Shop around, and weigh the pros and cons.

Check your home buying eligibility. Start here. (Sep 16th, 2019)

Is late-2019 a good time to buy a house? Exploring the pros

The economy is healthier than at any time in decades, especially based on unemployment numbers. Incomes are up. Inflation is down. Interest rates are low.

According to Freddie Mac, the average nationwide 30-year fixed rate just hit 3.6%, about 2 percentage points lower than expected by now.

To put that into perspective, you would save over $300 per month on a 10% down, $350,000 loan with that 2% rate drop.

These factors make conditions ideal for purchasing, says David Reischer, attorney and CEO of LegalAdvice.com.

To put that into perspective, you would save over $300 per month on a 10% down, $350,000 loan with that 2% rate drop.

“It’s an excellent time to buy a home right now when it comes to mortgage origination. If you want to buy, you can acquire a mortgage loan with extremely favorable terms. There is a strong correlation between mortgage interest rates and Treasury yields. And right now, treasury rates are historically low,” he says.

Also, mortgage lenders are very competitive right now.

“That means you can often negotiate to have junk fees removed,” says Reischer. “These can include application and processing fees and origination points.”

Michael Mesa, a Certified Mortgage Planning Specialist with Fairway Independent Mortgage Corporation, agrees.

“Inflation has slowed. It’s easier to pay down debt and create more disposable income. The real estate markets in some areas have cooled a bit. As a result, we’re seeing less bidding wars,” says Mesa.

Lawrence Yun is chief economist for the National Association of Realtors.  He cautions that buying a home is a long-term decision. He also warns that trying to time the market can lead to regret. Still, he believes it can be a smart decision to purchase between now and 2019.

“You should feel comfortable financially and enjoy good job security. You may be anticipating a higher salary or fresh bonus. If so, it could make sense to apply for a mortgage soon,” says Yun.

“There are fewer buyers once the school year begins. Buyer competition is less” –Lawrence Yun, NAR Chief Economist

A sweet spot window in which to buy could be later this year.

“There are fewer buyers once the school year begins. Buyer competition is less,” Yun notes. “But there are also far fewer new listings that come on the market from September onward.”

Take advantage of today's favorable conditions. Start the home buying process here. (Sep 16th, 2019)

Examining the cons of buying a home in late-2019

On the other hand, it may be better to wait until after 2019 to buy. Ponder that the economy has been riding high for many years now with no major corrections. What if the stock market takes a plunge this year or the housing market cools off? What if a recession arrives in 2020?

Ryan Merritt with Quontic Bank says there’s always the risk that the economy may begin to slow in 2019.

“That would make homebuyers feel less secure and more inclined to wait for the economy to pick back up in the future,” he says.

“The risk is you could overpay now for a home’s true value. You may be able to purchase the same home in 2020 at a cheaper price.” –Ryan Merritt, VP Retail Sales at Quontic Bank

There’s also the potential that home prices or interest rates could fall further next year. That could lead to regret about pushing to purchase too quickly in 2019.

“The risk is you could overpay now for a home’s true value. You may be able to purchase the same home in 2020 at a cheaper price,” Merritt notes.

Yun says it’s possible that the real estate market may also be affected before long by geopolitical factors. These events could affect your ability to afford a home.

“A vigorous trade war with higher tariffs, for instance, could push the economy into a job-cutting recession,” says Yun.

Late-2019 a good time to buy? That depends on you

Ultimately, the answer to whether late-2019 is a good time to buy a house hinges on your personal situation.

“As with any large purchase, you must think it through thoroughly or risk not only buyer’s remorse but possible financial ruin. Are you struggling under debt that needs to be paid off or consolidated? If so, those issues need to be taken care of first,” suggests Mesa. “Pay down as much debt as you can before taking on a mortgage.”

But if you’re in good financial health with a dependable source of income, now may be the perfect time to purchase.

“Interest rates aren’t going to bottom out this low again any time soon, I believe,” Mesa adds.

If the time is right, buy for the right reasons: Because you need a place to live and want to build equity instead of throwing money away on rent.

“Buy a home to build wealth,” Yun advises. “Given the housing shortage, home prices are much more likely to rise rather than decline. Mid-priced and affordable homes are in a safer place than the upper-end market, with solid home price growth expected.”

But remember to “do your homework before jumping in,” recommends Meritt. “Talk to a loan officer prior to stepping out in the market. This person can help you decide what type of home and monthly budget you can afford.”

If you’ve decided now is the time

You may decide that now is the time to strike. Your income is solid, mortgage rates are low, and there are affordable homes in your area.

In that case, get started at the link below. You may be happy about your pro-active decision before the environment changes in 2020.

Verify your new rate (Sep 16th, 2019)