We’re planning to purchase a home this year which is incredibly exciting! Today’s post from Holly shares a few reasons why this year is the right time to buy a house!
Why this is the Year to Purchase a Home
You may want to seriously consider buying a home in the upcoming year, especially if you have been waiting for your chance to jump into property investing. With mortgage insurance premium rates, rental competition, interest rates, and housing bubbles combining, the stars have aligned for those of us hungry to purchase, whether you’re a first-time buyer or are looking to expand your property portfolio.
Interest Rates are Low
Interest rates won’t be dipping anytime in the near future, so pouncing on a good deal when you see one is key. Taking advantage of the low rates available this year could mean saving hundreds or thousands of dollars down the road. Most 30-year fixed-rate home loans are currently hovering around the 4 percent mark, but keep in mind that this data varies by city and state. Many housing experts claim it’s likely that we’ll never experience interest rates this low again, making now the time to purchase.
The Time for Low Premiums is Now
As the 2016 elections draw nearer, a switch in presidency is upon us. Why does this matter in terms of house purchasing power? In January of last year, President Obama passed an executive action that required the FHA to reduce their annual mortgage insurance premiums by a whopping amount: from 1.35 to 0.85 percent in exact terms. With an adjustment in the White House on its way, these regulations may not remain in upcoming years. This executive action means good news for new homeowners, with the White House claiming that it could save a first-time house buyer close to $1,000 every year in regards to their mortgage payment. Grab this deal while it lasts.
Home Prices Won’t Decrease
In cities across the United States, the prices of homes have consistently risen over the last year, with some metropolis areas showing gains of 4 to 5 percent in overall cost. While these interest rates rise, they’re still nowhere near the astronomical rates increases experienced in the time spanning from early 2013 to 2014—with rates ranging from 10 to 20 percent. Don’t wait for this to happen again; if you buy now, you’ll still be assured better rates than you would have had two or three years ago.
Renting Vs. Purchasing
Rent is becoming less affordable as time goes on. One Zillow study purports that the average median rent price is much higher than the mortgage payments on a median-priced home; with the former costing $1,575 and the latter coming in at a mere $850. Rent can also experience yearly increases, while housing payments are locked in at a fixed cost in most cases. It really comes down to these fixed costs; you can’t stop the clock on your rental costs, but in terms of purchasing a home, you truly can for at least an extended period of time. In 2015, rent rates outpaced home costs in 20 of the 35 largest housing markets, and predictions claim rent rates will skyrocket even further in 2016—by a staggering eight percent.
The Future of Home Sales
All signs point to the cost of home sales decreasing for the foreseeable future, and with the median price coming down, an influx of young first-time buyers and those looking to expand their property portfolio have all the reasons in the world to make a purchase this year. Early studies expect home sales to be the best experienced since a decade ago in 2006. Some experts expect at least six million homes to be sold this year, with existing home sales expanding by three percent and new home purchases expected to blossom by a whopping 16 percent. With stabilizing housing prices, buyers have more room to haggle with sellers, and a large stock of inventory to select from.
Finding the Capital
If you’ve decided to purchase a home, there are several ways to get the capital. You can get the aforementioned low down payment mortgages through the Federal Housing Administration, borrow from private hard money lenders, withdraw up to $10,000 from your IRA, or even approach your employer for help in securing a low-interest loan from select lenders (usually only applicable through big companies).
If you’ve been waffling between buying a home and waiting for conditions to get better, you won’t find a better time than now. Depending on your individual financial circumstances, the mixture of low interest rates, fair mortgage premiums, and a competitive market could place you in the best position of your life for a property purchase. Consider your property aims, take a look at all of these convincing housing factors, and you could make the buy of a lifetime.
Our House Purchase
We did end purchasing a house in 2016! Check out all the details of our first home purchase here, including what we paid, how we financed, and our monthly payment!