Is this the perfect time to buy a home?

Understanding All the Factors of Mortgage Rates

The answer to that question depends on many factors, many of which are endemic to the person or persons thinking of jumping into the market. However, there are also numerous external factors which should play into the decision making of a potential home buyer. These factors include economic conditions, price trends, available inventory, and if the purchase will be made using a mortgage, prevailing interest rates.

For many, these external factors currently sit at the proper equilibrium to make buying a home a prudent decision. The global recession of the past few years is easing up and home prices are off their 2011 lows, but the housing bubble of the mid-2000s which rapidly drove up prices and made owning a home not affordable for many hasn’t seem to have returned. Prices are still reasonable in most areas when compared to median household income and there is a good balance between the number of buyers and the number of sellers in the market.

Home Loan Interest Rates

Another factor which has been encouraging home buying as of late is interest rates, which are still hovering near all-time lows. It is still possible to get a loan at under 3 percent on a five-year term; an ongoing rate war between banks has been pushing rates down even further.

Even better, credit unions are rolling out rates which are beating the banks by a significant margin. Credit unions enjoy a lot of advantages which enable them to offer more competitive pricing than the big banks. They do not have to adhere to the same federal regulations so they require less money for red tape. Also, because credit unions typically are run locally with decisions made right there in the branch rather than at a massive corporate headquarters many miles away, brokers have much more flexibility on issues such as underwriting and pricing. Many brokers are even willing to eat into their own commissions to guarantee they are offering the most competitive rates.

Borrowing From a Credit Union

Free from the federal regulations which mire the big banks in red tape, credit unions are able to focus solely on delivering the best results to their customers and to their shareholders, without worrying about whether they are toeing the line regarding this or that esoteric rule. Their community-centric nature means bankers build relationships with their customers in their communities; oftentimes, these relationships allow loans to be issued which would never make it through underwriting at one of the big banks.

There are too many determining factors, both broad and individual, to give a definitive answer to the question of whether this is the perfect time to buy a home. However, one thing that can be stated definitively is that prices are good, inventory is diverse, and interest rates are near all-time lows. Thanks to credit unions, many are receiving rates which are even lower than they thought possible.