With a new year beginning, many people are gearing up on resolutions like losing weight or lifestyle changes, but often forgetting to plan for their finances. Stuff that happened in 2010 may seem like old news, but the truth is a lot of the mortgage news still affect you going in to 2011.
Last year was a big year for the mortgage industry if you think about it. Mortgage rates dropped to the lowest it’s been in decades, the first-time homebuyer tax credit of up to $8,000 ended and home prices continued to drop in many areas.
While some of these events (such as the drop in home prices) may sound like bad news, the truth is 2010 was a year of opportunities for many people, and lucky for you – a lot of these opportunities still exist in 2011.
Low Mortgage Rates in 2010
2010 Can best be summarized as one of the best years for buying a home. Mortgage rates hit an all time low as housing prices plunged. If you’re already a homeowner – don’t panic too much about the drop in prices. As with most things, the value of your house fluctuates, so while 2010 wasn’t a good time to sell a home, 2010 (and 2011) is a great time to buy one.
So just how low were these mortgage rates?
For 2010, mortgage rates for a 30-year fixed loan averaged just below 4.7 percent, which is the lowest annual average since 1955! That made it the best time to refinance out of a high rate, and if you haven’t already done so – be sure to check out our current mortgage rates to make sure you have the lowest rate possible.
Fun fact: Did you know that the average price of homes back in 1955 was only $22,000? Compare that with our current average price of $268,700 per home, and you can really see how prices have changed over time, which brings us to our second mortgage industry event: extremely low home prices.
Home Prices in 2010
Most homes were half the price of what they were ten years ago in 2010. While I have seen some slight price increases in metro Detroit recently where I live, the fact is that housing prices are still low all across the nation compared to just five to ten years ago.
But the housing prices hit an all time low last year. In fact, investment bankers were even buying up properties in New York City – a place that previously didn’t even have real estate available no matter how much money you had.
Regardless of where you live, be sure to check out our free downloadable resources for helping you buy your first home.
- First-Time Home Buyer: Checklist When Buying A Home (PDF)
- Short Sales, Foreclosures and Homeowner Sales: A Guide to How They’re Different (PDF)
The low prices combined with the first-time homebuyer tax credit that ended last year, people were able to afford homes that previous generations needed decades to save for.
Even if you didn’t buy your first home last year, you still have time. Buying a home not only saves you from watching your dollars go down the drain with rent every month, it also provides some great tax deductions from property taxes and certain home improvements. Beyond the potentially huge cost savings, don’t forget the original benefit of just being able to change anything you want about your home when you buy instead of rent, so don’t procrastinate, and start browsing listings today.
How to Prevent Foreclosures
Last year was also a time of foreclosures. With unemployment at nearly ten percent, many people were losing their homes. If this is happening to you, be sure to contact your bank and check out the Making Home Affordable Programto get help on your loan. Also, if you’re tight on money, don’t forget to check out 45 Ways to Save Money and Live Well.
If you want to sell your home but you’re underwater (as in you owe more than your home is worth), talk to your lender about your options, and consider a short sale if that’s a possibility in your situation. A short sale is a compromise between the lender and borrower, so that the lender agrees to absorb part of the loss from a lower sale price due to the economy. Each situation is different, so be sure to check with your lender as to whether this fits your situation.
Financial planning is crucial for every household, regardless of where you stand in your finances. Of course the first step is to have a hefty emergency fund set aside in case of job loss or financial crises. With the economy continuing to improve in 2011, and the housing market changing, what are some of your plans for the New Year?