Timing is Right for First Time Homebuyers First Mortgage

If you're a first time homebuyer, you're probably wishing for a crystal ball.  In the slumping home market, it's hard to know if you should make that mortgage loan purchase on a new house.  Mortgage rates are low, and could possibly get lower.  Is this the right time to buy?

How low can mortgage rates go?  That's the big question on the mind of the typical first time homebuyer.  Home values have endured a precipitous drop, and many potential buyers are eager to make that mortgage loan purchase.  But how long should you wait until you make a buy?

Low mortgage rates, good values

It's nearly impossible to pick the bottom of a bursting market bubble.  The only time that you'll know when the housing bubble has struck bottom will be several years from now.  Right at this moment, even the pundits are clueless, especially in light of the recent economic upheaval.

Nevertheless, there are some compelling reasons to consider making a home purchase now.  First, mortgage rates are at historic lows.  Many banks and credit unions are offering mortgage rates just slightly higher than 5 percent for a 30-year fixed-rate loan, and there's talk that the federal government may try to push mortgage loan rates down around the 4 percent mark.

Second, home values have already slid dramatically.  In some areas where values skyrocketed during the housing boom, such as California, Florida, and New York, it's not uncommon to hear stories about home values dropping more than $100,000 below previous prices.  Some pundits believe prices will drop even further.

Making the tough decision

How do you know when the time is right?  Probably the best route to take, and the one that will allow you to sleep best at night, is to set your sights on a reasonable home price, and act when the market reaches that number.  To find that figure, look at current home prices and compare them with previous highs.  Sooner or later, home values should resume their upward climb.  That means that you may lose some value in the short-term, but in the long haul, you could profit handsomely.

Another important question to consider:  Are you financially ready to make a purchase, and take on a mortgage loan?  Do you have a stable income, with decent savings, and minimal credit card debt?  If you're in a profession that can make it through these tough economic times and you have good credit, this could be a perfect time to buy.  Purchasing a house now, then waiting for a return to previous housing price levels would feel like a boom.  It's the perfect case of buying low and selling high.

If you have bad credit and heavy consumer debt, it may not be wise to become a first time homebuyer in the current housing market.  However, if you're in reasonable financial shape, it's the ideal time to take advantage of slumping house prices and low mortgage loan rates.  There may never be a better time to buy.