“Welcome to the jungle” screamed Axl Rose as I thought “before this minute I liked Guns N Roses!” This morning I met the challenge to join a friend at 5 AM for a spin class. With the end of every song I breathed a sigh of relief: “finally we’re done!” Not so fast! Another song, another “hill” to climb, another “How you doin’ Bart?” from a way to energetic instructor (what was she taking?) Will I join another spin class? Not likely!
The only thing that got me through was the knowledge that with each gasp for breath I was closer to the end of the agony. That got me thinking of the state of our economy and how the Economists keep saying we need this bottoming process to occur. “The faster we bottom the faster we can begin the recovery process.” I guess it’s like a surgery where you don’t really want it but sometimes you need the incision, and its accompanying recovery period.
Indeed the recovery process seems to have started already. For instance, we will close more loans in the next 2 weeks than we averaged over 3 months during 2008! At least half of them are for people purchasing a home. Even Federal Reserve Chairman Ben Bernanke said this morning that “The U.S. Economy is stabilizing and will begin to rebound later this year, but the recovery will be slow and cautious”. That’s the best news I’ve heard from him in a long time (maybe since he took over as Chairman in February of 2006)!
If you’re waiting for “the bottom”, we’re there! It’s time to act.
This past week I met with a young couple looking to buy their first home. Their story was very encouraging and I wanted to share it with you. “Rick” and “Susan” have been making a $225/month payment on a motorcycle that was stolen from them a while ago. Yes, Rick should have had insurance, but at least he’s doing the right thing and still making payments! They’ve been renting a condo for a while at $1,000/month. They’re searching for a home now, and if they get the price they seek (which is realistic) they’ll be making a house payment over $200/month less than what they’re paying in rent!
To further sweeten the deal (as if they needed it!), after they close they’ll get the $8,000 first time homebuyer credit from the government and he’s going to pay off the motorcycle. Bye-bye payment! All told, through the purchase of their first home they’ll save over $400/month within their monthly budget! Of course, there is a lot of reward in buying a home (especially your first) aside from the financial considerations. Needless to say, they’re very excited and that’s contagious!
Some of the talking heads have said that in order to reach the bottom we need to see rental prices exceed mortgage payments. Rick and Susan have found that renting is far more expensive than buying. Again I say, we’re at the bottom!
Do you need to make a decision to act while prices and interest rates are still low? Give me a call and we’ll talk about your options.
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