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It’s Time to Buy a House (or a Car), If You Can

There is a bright side to all of this economic doom and gloom going around. If you’re poised to buy a home—or even a car—in the next few months, you’re going to get quite a deal.

Save a bundle on a house

The rate on a 30-year fixed rate mortgage fell to 5.47% last week—a new four year low (sub. required), and lobbyists are pushing Congress to subsidize a 4.5% 30-year fixed rate for new homebuyers.

Not only are mortgage rates low; so are home prices, which fell 9% nationally in the third quarter of 2008 compared to a year ago.

Despite low rates, great prices, and glut of homes for sale, buyers will still need to qualify for a mortgage, which could be the kicker. You’ll need excellent credit and perhaps as much as 20% down.

If you’ve got the credit (and cash) it’ll take to buy a home, then start shopping! To see if you’ll qualify for a mortgage—and what kind of rates you can get—learn how to get mortgage quotes online.

Buy a car, save a truckload

It’s not just the housing market that is ripe for buyers; car dealers are desperate to make deals. As you can see from the recent news, American automakers are hurting the most, but the entire industry is struggling. Read up on my tips for negotiating with car salesmen, take steps to secure financing if you need it, and then head to the dealerships!

(A final note on credit and auto lending. Yes, stricter lending has impacted auto loans. Even buyers with shaky credit should still be able to find approval, however; it just may not be at the dealership. If your credit is average or poor, try applying for an auto loan online as well as with your local bank or credit union before going to the dealership. But always, always get quotes from two or three lenders!

Get Pre-approved Now

About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. Do you think rates will end up dropping to 4.5?

  2. I think now is a decent time to buy. Will rates and prices go lower? Maybe, but eventually they will get better. If they don’t we will have nuch bigger problems to deal with.

    -Dan Malone-

  3. I really don’t know if the push for 4.5% rates will work or not. The reasoning seems sound (that the recession started with housing, so perhaps reversing housing will reverse the broader economy). Then again, 4.5% rates would be a result of government subsidies which is just MORE taxpayer money coming out of our pockets.

  4. If you have the money you can get steals in homes and cars. Some auto dealers are offering buy one car get the second for a dollar. The problem is that money is just so tight right now that few can take advantage of these deals.

  5. In my opinion, I don’t think it is the best time for most people under the age of 30 to buy a home. Below are a few reasons why I think it may be prudent to sit on the sidelines for a little while and see how the current economic storm shakes out.

    1. The incoming Obama Administration will try something to stabilize the housing industry, therefore I think there is a real possibility that mortgage rates may drop to 4.5% in the near future.

    2. I don’t think homes are a steal at all right now. Prices continue to drop in most major metropolitan areas around the country. In places like South Florida and Southern California many real estate experts are predicting another 25% drop in home values in 2009.

    That means if you buy a $200,000 house or condo tomorrow, it will only be worth $150,000 a year from now. That is a loss of $50,000 in just a year.

    New homeowners will most likely have to stay in their home for a substantial amount of time to see any kind of positive return. And how many people under the age of 30 just getting out of college know where they will be living or working 5-10 years down the road.

    3. The economy continues to worsen. Unfortunately, it looks like even more people will be losing their jobs in the next year. A job loss coupled with a new 30 year mortgage, on a depreciating asset, well that could be devastating.