5 Reasons to Buy a Home in 2010

The last 18 months have been some of the most tumultuous in the history of our great nation. To many, these months have meant misery, stress and financial ruin. To others, they have meant an incredible opportunity to prosper through the purchases of heavily discounted stocks and real estate. Then there are those in the middle, those afraid to get their toes wet or otherwise take a leap and get into the home of their dreams at a price they might never see again.

For those in the middle, torn on what will likely be the largest financial decision of their life here are a few basic points to help you decide:

1. Interest Rates at Historical Lows - With interest rates consistently hovering around 5%, the interest costs associated with purchasing a home are greatly mitigated. Over the life of a loan the ability to lock in at 5% for 30 years can save tens of thousands of dollars on a standard loan and hundreds of thousand on a jumbo.

2. Rates Adjusting - In the early 2000s, many consumers purchased homes that were well beyond their means via interest only loans or loans with very low variable rates for a short duration. With many of these loans ending their variable term and moving into fixed rates, many homeowners will see their mortgages increase by up to 50%. The net result will be a buyer's market depicted by more sales, more inventory and more foreclosures.

3. Starved Home Builders - With new construction starts just below 500,000 homes nationally in 2009, builders are trimming their margins in an effort to stay afloat. While many construction costs are variable and decline as construction slows many fixed costs such as land remain until units are sold off.

4. Speeding of Short Sales - Previously "short sales" had been anything but short with many offers taking months to get a response from the bank. The net result was vacant properties, lost revenue and TARP bailout of banks. In an effort to eliminate this waste in banks, the government is prodding the banks to improve the timing on short sales and make them a smoother process. For those buyers willing to get involved who can still wait a little while on a bank response, there exists a tremendous opportunity to acquire real estate at prices considerably lower than current foreclosure prices.

5. Banks aren't Lending - For those in the supreme position of being able to purchase without a mortgage, the time has never been better. Banks unwillingness to lend money the last 6 months has not only helped drive prices down, but also made cash deals that much sweeter. For sellers in a tough position many would rather take the promise of cash today at a lower price point than waiting what could be months for a bank loan to fund the transaction.

Ultimately, the decision to buy will be your own, but remember real estate is rarely a losing bet over time and while nobody can predict the bottom buying in 2010 will guarantee you are buying off-peak.

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