Thursday, October 1, 2015

WHY YOU SHOULD BUY A HOME RIGHT NOW

Even though the market has recovered from near-historic low mortgage interest rates, it’s still a great time to become a homeowner. Whether you’re considering buying a property to live in or one to rent out, the time is now.

Great Rates for Home Buying
According to Bankrate.com, current interest rates for a 15-year fixed mortgage hover around 3.2%. Barely surpassing inflation, this rate also allows current homeowners to refinance their loans or to put extra money toward their retirement accounts instead of paying off their mortgage early.

If you’re looking to get a mortgage right now, make sure your credit report is in top shape. Review it to see if there are inaccuracies — you want to be prepared to get the best interest rate possible. Check out a few different lenders; you never know which one will be able to get you the best rate.

If you’re considering buying a house to act as rental income, doing so when rates are low is one of the most important factors to the success of your investment. We don’t know where interest rates will go in the future. They could fall even lower or rebound to pre-recession figures, but right now is a good time to bet on the housing market.

Will Lipovsky, a blogger at First Quarter Finance, said since interest rates for mortgages are still low while the stock market is doing well, now could be a perfect time to get into real estate.

“The stock market has been doing really well for the past few years, minus a recent dip,” he said. “Why not take those gains and parlay them into real estate? Real estate has been pretty level in most areas. You may be positioning yourself nicely for another market spike.”

For some people, putting money they’ve earned into real estate could be a nice way to diversify their investments. Instead of buying more stocks or mutual funds, buying real estate can be a good way to round out a portfolio, even for a seasoned investor. Plus, there are special deductions you can take as a landlord that you don’t qualify for if you live in the home.

But is Buying the Right Thing for You?
If you’re considering buying a home, the time is now given outside factors. But is it a good time for you? Do you have the savings for a down payment? Do you have an emergency fund that can cover any unexpected repairs? Do you anticipate living in the same area for at least the next five years?

“Interest rates are still near historic lows,” said Paula Pant, a blogger at Afford Anything. “That said, you shouldn't buy a home because rates are low — that's letting the tail wag the dog — but if you're contemplating buying this year vs. next year, you may want to purchase before a potential rate hike.”

No matter if you’re looking to become a landlord or if you want to upgrade, real estate is not one-size-fits-all. Some cities are particularly good for investors while others have few areas that are good for development.

“Particular neighborhoods hold great investment opportunities, while other neighborhoods don't,” Pant said. “The short answer is yes, there are many good deals for homeowners and investors alike; the long answer is that everyone needs to do their homework, particularly with regard to location.”

The Bottom Line
With interest rates hovering near historic lows, now is a great time to buy into the real estate market. But don't just buy just to buy — make sure you can really afford the down payment and other costs associated with purchasing a house without sacrificing everything from your savings pool.

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