VA Loans Blog

Perfect Time for MN Veterans to Buy a Home

July 24th, 2009 1:44 PM by Joan Rusco

       Gazing into crystal balls is dangerous in this business but it’s hard not to be bullish at this time for a couple reasons. 

  1. Interest Rates
  2. Housing Prices
  3. Free Money

      Interest rates remain near their historic lows. Here in Minnesota and nationwide housing prices have dropped considerably in the last few years. The National Association of Realtors reports housing prices were at all- time highs exactly three years ago this month (July).  At that time the average price of an existing home was just over $230,000. The lowest point for housing prices came in January of this year when the average stood at just under $167,000 according to NAR.  That’s a drop of over 27%. Wow! 

        Interest rates remain at historic lows but for how long is uncertain. Mortgage backed bonds are like any other investment, they are price influenced by supply and demand.  Here’s a fact; as the U.S. government continues deficit spending (selling treasuries and long term bonds to raise capital) bond prices will be negatively impacted.  Bond prices are inversely related to rates. As bond prices move down interest rates will move up. So when you hear about that huge government deficit hear this: government deficit spending puts extreme upward pressure on mortgage rates. We at VALoansMN now have mortgage rates in the 5.5% range for a no-down payment loan. History shows that is a fabulous rate.  When I bought my first home in the late 80’s my mortgage rate was 13%. I thought that was great because I remember our parents paying over 18% for a conventional mortgage just a few years earlier.

       Granted we should all be skeptical having watched the value of our retirement accounts plummet, rising unemployment rates and the general state of the economy but I’m still willing to venture into that dangerous zone of crystal ball gazing. I’ll make this prediction: our current near historic low mortgage rates and low housing prices are not going to last.

     Now about the free money. The government will give first time homebuyers $8,000 to take the plunge. If you've not been on a real estate title for 3 years you are considered to be a first time buyer. Eight thousand dollars for a Minnesota Veteran buying her/his first home can more than cover costs of most purchases. That can buy furniture, paint and other improvements.

     So review the facts as they stand today;

  1. Interest rates are still at historic lows
  2. Home prices are way down
  3. The government will give you the money if your a first time buyer

This may be the perfect time to buy a house. This perfect time is not likely to last.

Posted in:General
Posted by Joan Rusco on July 24th, 2009 1:44 PM

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