Real Estate News You Can Use
April 2008
Risé Johns ASR®, CRS®, GRI
Ignore The Headlines!!
This is no easy thing. How do you tune out all the chatter on recession, housing, subprime woes, the credit crunch, $100 oil and nukes in Iran? It’s enough to make you sit on your thumbs and wait before making any big moves.
Famed money manager Peter Lynch states, “if you don’t already own a home, that should be your first investment, since an owner-occupied home is nearly always profitable.” Lynch stated this as the top reason to not buy stocks and to buy property.
Let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious—before an inevitable rise in interest rates wipes out your advantage. Anything you gain by a further drop in prices might be offset by rising interest rates.
Consider a typical home that sells for $200,000. With 20% down, a 30-year fixed rate mortgage at today’s rate of 5.5%, your monthly principal and interest come to $908.46. Lets’ say, one year from now, the same house is selling for 10% less, or $180,000. The “recession” is history and the Fed has increased interest rates. If mortgage costs rise just half a point, to 6%, your monthly payment would be $1,079.19 and you have saved nothing!
Risks always seem most acute when the headlines give you ulcers. But that’s exactly when you should think long term and get off your thumbs.
Risé Johns has been involved in real estate for over 27 years. Her knowledge, experience and customer service will make your next real estate transaction a smooth one. Call Risé at (512) 267-LAGO for “World Class Service.”
