Whether you’re looking for a new home to start a family or just want that dream house but don’t have enough money to pay for it in cash, then you should consider getting a mortgage. This might be the best time in purchasing that house you’ve always wanted. Mortgage rates are at all-time lows and with the increasing number of foreclosures and the over-construction of new homes, it’s almost a steal with bargains to be found everywhere.
A mortgage is generally defined as loans secured for the purchase of a residential property through financing grants by banks or financial institutions with an interest rate proportional to the amount to be financed and the term or years it is to be taken.
With the economy at its weakest in decades, the prices of residential properties have gone down. Bargain house prices abound, as banks and investment companies try to sell off their bad investments in the housing sector. The construction boom during the late 80’s going through the 90’s has seen numerous properties built-up, with many investment companies putting their money in the construction of new houses. The recent downturn in the economy has placed pressure on these companies to lower their mortgage rates. Houses being sold for $250,000 are now up for grabs at the $150,000 range, a sharp downturn in prices.
The number of foreclosures in 2009 jumped 21% to hit a record 2.82 million. Recent numbers from the first quarter of 2010 show a 16% increase from last year, as bank seizures rise across the nation. Stagnant national unemployment rates in the double digits and increasing numbers of foreclosures have forced lower demands for new housing and a move by companies to lower mortgage rates to all time lows. Economic stimulus provided by the Obama administration which aimed to lower down market range had targeted impact for a limited number of homeowners to date. The Administration’s Making Home Affordable Program aims to bolster the government’s efforts to help troubled homeowners avoid foreclosure.
Outlook for the future
As market prices fall, steady demands should pick up and reduce excess inventory on the market. It is simple economics at work, the rule on supply and demand. As there is an oversupply of houses caused by the construction boom in previous years and a sharp decline for purchase because of the downturn in the economy, residential home and property prices are inevitably pushed down. The number of homes in the market either foreclosed or brought about by over construction and the economic policies instituted to combat this downturn has forced banks and financial institutions to lower their rates. Despite some fluctuation, mortgage rates should remain low for the foreseeable future among prevailing reports that the economy is not yet out of recession.
People who want to purchase their homes with cash will find good bargains and those planning on taking loans to purchase their home will find it the perfect time. The sharp drop in housing prices coupled with low interest rates has made it the best time to get that dream house you’ve been looking for all these years.