Do you remember those old jokes that began, “I’ve got some good news, and I’ve got some bad news”?

Well, lately we at Maine Source Homes & Realty feel like saying that quite often. The bad news is, interest rates are rising significantly for the first time in years—making it more difficult for folks to buy a home. The good news is, there are still wonderful homes to be built and bought in the Lewiston-Auburn area. And NOW is the time to get a good deal on them—BEFORE interest rates go any higher!

Interest Rates and YOU

The classic definition of “interest rate” is “the cost of money.” For most of the past decade, interest rates either didn’t move or rose “like molasses going uphill.” Why? Because the U.S. Federal Reserve was doing everything it could to free us from the nightmare of The Great Recession. But as the economy has slowly improved, the Fed has inched up interest rates. Over time, this has a bullseye impact on home mortgage loans—and your ability to get an affordable one.

For example, at current interest rates, you’ll pay TENS OF THOUSANDS of dollars more over the life of your loan than you would have when rates were at 3.95 percent, assuming (for example) a $250,000 home price and 20 percent down-payment.

One more thing: As interest rates trend higher, your house-hunting in the future might become more and more disappointing, keeping you from what you REALLY want in a home. As Len Kiefer, deputy chief economist at Freddie Mac recently noted, “Folks are seeing prices move higher [now that] interest rates are up, which could mean you can now afford less.”

How Interest Rates Have
Recently Impacted Buying a Home

According to the National Association of Realtors, home prices nationwide have skyrocketed 48 percent since 2011, while personal incomes have risen only 15 percent. This is obviously creating a genuine “affordability squeeze”—one virtually EVERYONE predicts will only get worse in the coming years.

Also … If you’re a news junkie, you know the U.S. Congress recently passed large-deficit budgets that will put additional pressure on interest rates to rise.  To some, that might just seem like a headline in the Lewiston Sun Journal. But its real-life impact will be to make home-buying less affordable the longer you delay purchasing.

Good News/Bad News Revisited

And that brings us back to our “good news / bad news” scenario. Because there’s actually still some good news, for those who buy a home in 2018. That good news is:

While mortgage rates ARE rising fast, they’re still historically low. And they haven’t been above 5 percent since 2011. So that creates a window of opportunity for you—one you likely will want to take advantage of by Christmas, when rates could very well be at 5 percent or higher again.

A Final Thought on Interest Rates
and Buying a Home . . .

When you take all these trends and statistics and put them all together, you arrive at one undeniable truth:

For those who wish to buy a home in Maine or specifically in the Lewiston-Auburn area, the time to act is sooner rather than later.  If you’d like to do that in 2018, we’re right here to help!

MAINE SOURCE HOMES & REALTY is dedicated to helping you find your perfect home-ownership solution. Whether you wish to buy, sell, or build a home, Maine Source Homes & Realty invites you to benefit from our 46 years of trustworthy experience and expertise.

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