Many potential buyers are still on the fence, wondering whether it’s the best time to buy a home. Some fear buying before the market has fully recovered. Others are concerned that they may lose out if they jump in too early before prices and interest rates have hit rock bottom. Here are 7 reasons why I believe now is the best time to buy a home:
A beautiful home for sale with sold sign out front
1) Mortgage Interest Rates are on the Upswing
Nobody has a crystal ball, but all of the economic indicators point to mortgage rates rising this year after several years of historic low rates. Rates have not been this low since the 1950s, when long-term mortgage rates went into effect and Dwight D. Eisenhower was President.
2) Rental Rates Are Climbing
Recently, Zillow reported that rents increased in the U.S. by 4.2% over the last year. When comparing the costs of owning versus renting a home in this economic climate, it’s easy to see the benefits of home ownership. Many people who lost their jobs and even their homes during the economic downturn, are now forced to rent. This has also increased demand for a limited number of rental properties and drives rental prices even higher.
3) Home Prices are on the Rise
Home prices in most markets are stabilized, and even starting to increase in certain areas. This may be dampened slightly with an overly-cautious approach by appraisers and lenders. Despite that, the trend still shows prices on the rise.
4) Mortgage Guidelines Continue to Tighten
With government intervention added to already overzealous underwriting standards, we’re on the verge of seeing it become more difficult for the average buyer to qualify for a home loan.
5) FHA Loans Will Soon Become More Expensive
Starting with FHA Case Numbers pulled on or after June 3rd, 2013, FHA plans to raise the costs of FHA Mortgage Insurance, making these loans much more expensive for the consumer over the life of their loan. Not every home buyer wants or needs an FHA mortgage. However, if you are looking for a mortgage with a low down payment and are not a veteran, FHA will likely be the direction you’ll need to go.
6) There is Less Competition with Other Buyers Most prospective buyers choose to start their house hunt in the spring when the weather improves. It’s much more enjoyable to attend an open house on a balmy, spring day than to trudge through snowdrifts and brave cold temperatures in February in search of a home. More people in the market for a home during spring and summer means greater competition. This can lead to competing with other offers for the same house, which can drive up the purchase price.
7) You Will Qualify for More House So you speak to a lender and together decide that you qualify for and are comfortable paying a monthly principal and interest payment of approximately $449.00. On a 30-year, fixed-rate mortgage at 3.5% interest, you would qualify for a $100,000 loan. If interest rates rise even 1 percentage point to 4.5%, you would only qualify for a $90,000 loan. Your monthly principal and interest payment would actually increase to $456.00.
If you want to take advantage of historically low interest rates, the lowest housing prices in years and less competition from other buyers, now is the best time to buy a home.
Ann Steinemann copyright 2013
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