buying a home before rates go up

Four Reasons to Buy a Home this Fall

Well, here we are again, on the verge of the upcoming holiday season.  Leaves are changing, it’s getting dark earlier, and many people’s thoughts are starting to look ahead to the upcoming holiday get-togethers, visiting with family, and making plans for 2017.  Anyone undecided about the right time to buy a home, sometimes called a “fence-sitter”, should go ahead and come down off the fence, as there isn’t much time left to get in on good home prices before real estate values and increasing mortgage rates make buying a home unaffordable.  My general advice is to buy a home now.  Don’t wait.

Home and Real Estate Prices Expected to Continue Rising

According to a recent Home Price Index, published by CoreLogic, it shows that prices have gone up approximately six percent over the last year.  This very same report has noticeable indicators that suggest home values should continue to increase at a rate of at least five and a half percent in 2017.  Now, I know we’re in an election year, and it’s anybody’s guess what our Government Administration’s objectives are, but not withstanding an unexpected shake-up, most economists agree that prices should continue to rise.  Another recent poll was conducted by The Home Price Expectation Survey, which queries a very prestigious group of investment advisers, financial strategists, economists, and Real Estate professionals.  Their latest report indicated that real estate (particular single family residential housing) may appreciate by at least three and a half percent a year, at least until 2022.  As the saying goes, buy low, sell high… the low has already come and gone.  Real Estate and housing prices should continue appreciating for the next several years, of course, barring some unforeseen economic shakeup or disaster. If you have any desire to buy or sell (or both) real estate, it just doesn’t make financial sense to wait any longer.

Home Loan Interest Rates Expected to Remain at All-Time Lows

A recent Mortgage Market survey by Freddie Mac clearly shows that mortgage interest rates for a thirty-year fixed mortgage have held steady at or under 3.5% for the past four consecutive months.  Uncommonly, and surprisingly, the National Association of Realtors (NAR), Freddie Mac, and The Mortgage Bankers Association are unified in their projections that interest rates will have risen by this same time next year.  This is important because any increase in interest rates will have an impact on your home loan payment.  Within a year, the cost of housing and the amount you spend will increase significantly for anyone who chooses to wait.

You Can’t Escape Your Home Mortgage

Unless you’re wealthy and can buy for cash, or are living rent-free with mom and pop, we all should recognize that almost all of us are paying for a mortgage.  The choice, however, is yours… it can be your mortgage, or your landlord’s mortgage… you choose.  As explained in a paper recently published by the Joint Center For Housing Studies at Harvard University, housing is consumed by people whether they are owners or renters.  This doesn’t even account for the tax benefits and other favorable aspects of owning your own home.  Lenders and Debt Servicing Companies get paid either way as homeowners pay their own mortgage, and renters are paying their Landlord’s mortgage (or, hopefully, most of it), including that extra amount that landlords refer to as “positive cash flow”, all in an effort to reduce the principal debt on the home.  Even more so, this gives us another reason to own our own home, as buying a home often makes financial sense, more than renting does.

It May Just Be Time to Move On

Housing prices are influenced by two important elements:  the home’s actual cost, and the mortgage interest rate.  By all reasonable standards, it definitely appears that both are headed up.  But supposing they weren’t?  Would it still give you reason to wait?  Maybe you need to clean up your credit a bit, or possibly you need to save up some down-payment money.  To know for sure, one really needs to look at the true reasons behind your decision to buy now or to wait even longer.  There could be many reasons for this, such as finding a great home that’s a perfect place for your kids to grow up, or moving to a better or safer neighborhood, or simply whether or not you want to have full control over your home and have the freedom to renovate or upgrade at your pleasure, with all things considered, right now is a prime time to sell your existing home and move up, or to purchase your first “starter-home” and get your feet planted.  As I’ve said many times before, Real Estate Investments are the single best wealth-building tool available to most of us, and taking advantage of market conditions that favor you is always a smart thing to do.  So, if you think it’s the right time to buy a new home, upgrade from your existing home, or to invest in buying rental properties, as the old saying goes, now is the time to buy.  Waiting longer will definitely increase your overall cost of home-ownership, and, subsequently, I am currently advising my clients (and fence-sitters) to buy your next home before Real Estate and Mortgage Loans become unaffordable again.

Consider Saving Your Existing Home as a Rental

If it’s possible to buy your next home without selling your existing one, maybe have a chat with a good property manager to see what rent price you might be able to get for the home.  If the market rent exceeds the existing mortgage by a fair enough amount, it may be a wise decision to consider keeping your old home as an investment property.  In some cases, it’s wise and/or necessary to sell your old home in order to upgrade or move to a new home, but in other cases, keeping the home as an investment can be your first big step towards building future wealth such as a college fund for children, retirement spending, or simply a legacy to pass on to your heirs.  Don’t automatically assume that you have to sell in order to buy.  Talk to the professionals, see what make sense and what you can afford, and make your best informed decision that way.

If you have specific questions about home-ownership, buying a first home, a second home, or an investment rental property, contact your local, trusted Realtor and Property Manager for information and advice.  Also worth considering are “discount real estate brokers” who will do the same job with the same quality as any other Real Estate Brokerage, but just for a lower price.  A discount broker can save you an average of ten thousand dollars or more in real estate commissions, which goes a long way to helping (1) get your home sold faster, (2) putting more profits in your pockets, and (3) creating happy clients.  Some may have strong opinions otherwise, but in today’s Internet and Technology driven world, it’s a lot easier to do the same amount of work in less time, which should save everyone some time and money.  For more information, or to discuss selling or buying real estate, contact your local Real Estate Professional today.

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