September 17, 2010
HOW ABOUT TO BIND YOURSELF TO A COMMUNITY?:
10 Reasons To Buy a Home: Enough with the doom and gloom about homeownership. (Brett Arends, 9/17/10, WSJ)
6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.
8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.
Low rates make 15-year mortgages feasible for many refinancers: Monthly payments are higher but those who can afford it welcome the peace of mind of knowing that their home will be paid off in half the time of a standard, 30-year loan. (E. Scott Reckard, 9/17/10, Los Angeles Times)
As homeowners rush to refinance their mortgages, an increasing number are opting for a 15-year term. They're not only moving up the date on which they'll own their property free and clear, but also benefiting from a lower rate than those available on 30-year loans.This week the rates offered by lenders on 15-year fixed-rate loans averaged 3.82%, Freddie Mac reported Thursday. That was down slightly from 3.83% last week and the lowest in the 19 years that the mortgage finance giant has tracked such loans.
The average rate on 30-year fixed-rate loans was 4.37%, up a bit from its record low of 4.32% two weeks ago, according to Freddie Mac's weekly survey.
