Listing Courtesy of KELLER WILLIAMS REALTY
A few weeks ago, an eye-catching article surfaced on the Investopedia web site—one with the arresting title of “When is the Right Time to Buy a Home?” I have always assumed that for prospective area home buyer, the answer to that question varies by the individual circumstances. But if there is a more cut-and-dried universal answer, it would certainly be good to know it. Definitely worth reading.
Despite its name, Investopedia is not an encyclopedic history of investing. Its own history is interesting, though—it started in Canada, was acquired by Forbes, then sold a short while later to ValueClick for $42,000,000 (talk about good investments)!
The article that was to supply the answer to “When is the Right Time to Buy a Home?” did turn out to have the right answer, though it’s a little less definitive that you would hope—prospective Bethany Beach home buyers don’t get the simple “NOW” or “LATER,” which would be most useful. However, before the final answer is presented, scattered between the many ads and other clickbait that apparently pay for Investopedia are some interesting current facts and observations, and several cop-outs.
When it comes to the big question, “When is the Right Time to Buy a Home?” by halfway through the article, it’s looking a bit more like “now” than “later.” It cites The National Association of Home Builders’ Housing Opportunity Index, which now finds that nationally, the majority of homes are affordable for families earning a median income of $63,900. True, most Bethany Beach families don’t earn exactly $63,900, but still, it’s good to know. Reading on, we learn that this level of affordability has been better in the past, and might be better later “unless mortgage rates move higher in the future.” Since elsewhere on the site we find that “the consensus is that interest rates will rise,” it doesn’t take Sherlock Holmes to deduce where “When is the Right Time to Buy a Home?” is leading.
Or so you might assume, before the article quotes a saying on Wall Street: Don’t try to time the market, which Investopedia advises also applies to real estate. Oddly enough, it also says, “If you’re looking for an edge, interest rates are near historic lows so now appears to be a better time than most for purchasing a home.”
That’s a pretty strong hint, but the answer isn’t spelled out. Yet. There follow some bits of good advice (hire an inspector prior to purchasing a home; don’t buy a car while your credit is being checked; inquire about taxes) before we get to the ultimate heading, “THE BOTTOM LINE.” It took a while, but here is the advice Bethany Beach readers would have been looking for all along, bottom-linewise.
Investopedia’s answer for “When is the Right Time to Buy a Home?” is a lot more sensible than most: “When you can afford it.”
I couldn’t agree more. Even if all the other factors weren’t as positive as they are today, being able to make a good fit financially is at the top of the list. If now is that time for you—or if it’s time for you to put your own Bethany Beach home on the market—it’s also a good time to give me a call!
They’re called “swings” or “bridges”—but they don’t belong on a kindergarten playground. They’re the specialized loans that can help Bethany Beach home buyers get past the kind of cash crunch that can snag an otherwise perfectly achievable purchase.
This is a timing situation that happens quite frequently; it’s in the nature of residential real estate transactions. Suppose you are selling your Bethany Beach home to an out-of-state buyer. The deal is well on its way to being finalized on the agreed schedule. Meanwhile, you have found a new, bigger place that’s perfect for your family (it’s in Bethany Beach, too—also in a great neighborhood). The problem is that you need to close on the new home before the sale of your current one is finalized. That’s the cash crunch.
The solution can be a bridge loan (AKA, a swing loan). It’s a loan for the short period of time that will allow a home buyer to close on the new home purchase as the other sale closes. Of course, the problem is (this is what the lender has to be thinking) what if the sale of the old house falls through? The answer is to be able to produce a binding contract for that sale—without it, there is little chance the loan will be granted.
Bridge loans aren’t terrifically popular with lenders, since they involve a certain amount of paperwork for a transaction with such a short duration. I find that lender reluctance is minimal when we deal with one which is already involved—either holding the earnest money deposit or otherwise engaged with the parties. Even so, the terms of a bridge loan will be more expensive than other kinds—but since the term is brief, the higher interest cost does not amount to much of a deterrent.
Bridges and swings aren’t the only possible way to solve the buying-before-closing dilemma. Sometimes a line of credit (HELOC) on the old house will fill the void, particularly if it has not yet been entered in the Bethany Beach MLS. If it is already listed, the line may come with some extra charges, including cancellation or closing charges to compensate for the likelihood of its short duration. It is sometimes also the case that the lender financing the purchase of the new home is willing to provide a bridge loan by using the old property as security. Although that is a secured loan, it’s likely to be an expensive one.
When my clients buy or sell, or, as in some of these situations, buy and sell, some of what I do is to help put together creative solutions. Seeing you successfully sell—or move into—your Bethany Beach home is what my service is all about. It starts when you give me a call! Call/Text me Russell Stucki at (302) 228-7871, email me at firstname.lastname@example.org, visit more listings at www.beachrealestatemarket.com.