5 Reasons to Buy a Home Now
For many people, there comes a time when they feel they are ready to buy a home of their own. However, that time may not be the same for everyone.
There are many factors to consider when buying a home such as the current state of the housing market, the area where you are looking to buy, current inventory, home prices and mortgage rates.
If you feel you are ready to buy a house now, you may want to consider these factors when making your decision:
- Interest rates are near historic lows. In March 2020, the prevailing market interest rate for a 30-year fixed-rate mortgage dropped to a record low. Since then, interest rates have remained very low, which means that the interest rate you may be able to get now for a mortgage might be lower than you could have ever gotten before.
It’s important to note that not everyone receives the same interest rate. There are several factors that impact the interest rate that each person is offered, meaning you could receive a rate above the prevailing market rate. However, interest rates now are still historically very low. And a lower interest rate could translate to lower mortgage payments.
- Interest rates are expected to remain low for the rest of 2021. Beyond the fact that interest rates are still low, they are also expected to remain low for the rest of this year. And maybe into next year.
Each of the latest forecasts from the Mortgage Bankers Association, Freddie Mac, and Fannie Mae project that the prevailing market interest rate for a 30-year fixed-rate mortgage will remain low for the remainder of 2021. Both the MBA and Freddie Mac project interest rates to rise throughout 2022, while Fannie Mae expects rates to stay around where they are now for all of next year.
- House prices are still rising quickly but there may be a light at the end of the tunnel. If you’re waiting for home prices to start coming down before you buy, it might be a long wait. In fact, according to the latest data from the Federal Housing Finance Agency, home prices have risen in every quarter for 10 years straight.
However, the latest forecasts show that home price increases may begin to moderate somewhat over the next year. While house prices are still projected to rise, they may not accelerate quite as quickly as they have been. That should help with affordability and with building equity, which we’ll discuss more below.
- Increases in inventory. There has been a shortage of homes in the U.S. since 2015, forcing some buyers to settle and others to be prohibited from buying at all. There are indications that conditions may be improving though, as the latest data from the National Association of Realtors shows that the nationwide total of housing inventory has been increasing over the summer.
While most of the improvement has been in the middle- and upper-tier price points, there are signs that there may be some increases in smaller home inventory, which should help first-time homebuyers.
- Begin building equity now. Since prices are still on the rise, it may be advantageous to get in now if it makes sense for you and your family. Then, as the value of your home increases, you may have the opportunity to build equity. Equity is the difference between the amount of money you owe on your home and what your home is worth. Building equity helps you build wealth. Equity may also be used to make home improvements or as a down payment for a new home.
If you are interested in learning more about buying a home, contact our knowledgeable mortgage team. They’re standing by and ready to help you.