A recent article in Money magazine lists 5 new rules for today’s homebuyers. After reading the article I found that I agree with all 5 of them.
New rule 1: DO NOT try to time the bottom of this market. We may be there or close already or not. In any instance it’s very unlikely you’ll hit it at the exact bottom. Case in point; several years ago my wife and I decided to refinance our former home in west Knoxville because mortgage rates were falling. I had 5 different mortgage bankers and myself watching the market trying to figure out where the bottom was.
When I thought we had arrived we pulled the trigger and refinanced……………only to watch the rates go down another half a percentage point before they started back up again. Oops…my bad…….or was it? We refinanced our 30 year mortgage with a new 15 year note and still lowered our payment about 10 bucks a month IN ADDITION TO knocking 15 years of payments out of our budget. Personally I would not call that a bad thing even if we didn’t hit the exact bottom. 
New rule 2: Mortgage rates are very attractive right now. Here’s what the mortgage experts say; “The 30-year, now at 6.1%, will likely reach mid-6% by December and 7% in 2009, says Celia Chen of Moody’s Economy.com.” If you’re in the market for a new home in Knoxville or Farragut Tennessee soon, now is the time to get looking a buy. On a $200,000 house a 1% difference in the mortgage rate you can get today versus what you could be paying next year is at least $130.00. A $130 a month savings over the life of a 30 year mortgage is close to $50,000!
New rule 3: Rates on jumbo mortgages. Jumbo loans, those over $417,000 now average 7.2% and the experts say they’re unlikely to drop much this year. However, a new law lets Freddie Mac & Fannie Mae buy loans as large as $729,750 in 71 high priced area. Unless Congress extends this law it expires at the end of this year.
New rule 4: Don’t buy cheap, buy quality. Quality neighborhoods, quality school districts, and quality homes. You’re not just buying a house, you’re buying a home where you and your family will be living 24 hours a day, 7 days a week. A lot of new neighborhoods that have popped up recently are likely to have lots of owners with risky loans and little equity; a dangerous combination. Buy in a quality Knoxville or Farragut neighborhood with quality schools even if you don’t have school aged children. Like any other investments, quality tends to hold or increase it’s value when other investments fall. In addition to the investment factor you also get to live in your home and everyone needs a place to live. Knoxville and Farragut have lots of quality neighborhoods with quality homes for sale.
New rule 5: Make sure your Realtor has your best interests at heart. The real estate game often has a built in conflict of interest since the seller typically pays a commission to his listing agent which is shared by the buyer’s agent. These days sellers are offering cash bonuses and other incentives to buyer’s agent to entice them to steer buyers their way. Make sure your agent isn’t steering you to a house that is better for him than you. Agree up front on what he will be paid, typically 3% of the selling price, and that any extra credits or incentives go to you as a credit towards your closing costs or an additional discount off the price. In Tennessee a buyer agency agreement between you and your Realtor will spell out the terms and conditions of your purchase.
Visit www.KnoxvilleHomeCenter.com to see the many great homes for sale in the Knoxville & Farragut areas. When you get ready to go looking at some please call or email me to help you buy one at the best price and terms.
Jim Lee, Accredited Buyers Representative (ABR)
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