Tuesday, December 16, 2014

Five Reasons to Buy a House Right Now



You might go back and forth on whether to buy a house. However, if you’ve been on the fence for years, now might be the right time to purchase.

Buying a home is a huge investment that can pay off in the long run. You can build equity and add to your personal net worth, plus you can enjoy predictable monthly payments and the possibility of living house-payment free in the future.

Since buying a home has become much harder in recent years, some people don’t apply for financing for fear a lender will reject their application. However, given present conditions with the housing and mortgage market, there are five good reasons to buy a house right now.

1. Mortgage Rates are on the Move

About three years ago, mortgage rates hit a new all-time low. They have increased over the past two years, yet still remain relatively low. And since the interest rate plays a role in how much you pay monthly, getting a low-rate mortgage results in a cheaper house payment and increases purchasing power. However, rates won’t remain low forever.

Some money experts predict mortgage rates will continue to increase throughout 2015. There’s no way to know exactly how much they will increase, but some experts believe rates will rise to 5.5 percent by the end of 2016.

2. Greater Inventory of Houses for Sale

The demand for housing has calmed down in several housing markets, causing prices to stabilize. And since there’s a greater pool of houses to choose from, it’ll be easier to get what you’re looking for at an affordable price.

“Inventories are at their highest level in over a year,” said Lawrence Yun, Chief Economist at the National Association of Realtors.

Additionally, some markets maintain a steady supply of foreclosures and short sales. These properties often sell below market value, so it’s an opportunity to purchase more house for your money. Just know that it takes longer to close on a foreclosed or short sale property. And in most cases, you’re buying these houses as-is, so be prepared to spend money on improvements or repairs.

3. Home Prices are Starting to Increase

Home price gains have been steady over the past couple of years, but prices are beginning to inch upwards in some areas as the housing market improves. If you’re looking to get in a property while prices are stable and affordable, now’s the time to submit your application. The longer you postpone ownership, the greater the chance homes will appreciate in value, driving up sale prices.

4. Renting Isn’t Getting Any Cheaper

Renting offers flexibility and you’re not responsible for major repairs. However, rent prices aren’t stable. In some areas, renting is more expensive than buying. Take San Francisco for example. According to Realtor.com, the average renter spends approximately 42 percent of their monthly income on rent. And nationwide, rents are rising at about four percent a year.

At this rate, an affordable apartment today might not be so affordable in just a few years. Buying, on the other hand, is the chance to lock in a fixed rate and enjoy predictable payments for the life of the mortgage.

5. Lenders are Softening their Requirements

After 2008, lenders imposed stricter credit requirements for mortgages. Some banks only approved applicants with minimum credit scores of 680 or 700. And unfortunately, this excluded many would-be homebuyers. More recently, some lenders have started relaxing their credit requirements, providing a borrower has sufficient income, a down payment and a cash reserve.

Additionally, a survey conducted by the Federal Reserve in the third quarter of 2014 says, “14 percent of banks reported an easing of mortgage loan standards.” According to the report, “banks are reducing FICO requirements, lowering qualification hurdles and helping more loans get to closing.”

Bottom Line

If buying a home is your goal, don’t give up. It’s not as easy to get your foot in the door nowadays, but it’s possible. The key is education and knowing what to expect from the lending process.

source: totalmortgage.com