As 2015 turns the page to 2016, many of you will be celebrating something. New job, new baby, why not a new home? A new job or new baby may spark the need for a new home as it is. So here's 6 Great Reasons to Buy a Home in 2016, according to several links (credited at bottom) and my own advice and experience.
1: Interest rates are still at record lows, but for how long?
There's always the chance they could go up with economic factors, it’s nonetheless a fact that interest rates on home loans are at historic lows compared to where they were a generation ago, with a 30-year fixed-rate home loan still hovering around 4%.
Historically low interest rates can’t last forever. The Federal Reserve is expected to start bumping up interest rates soon, so the earlier you lock in a low rate, the better. “You are likely to get the best rate you will possibly see, perhaps in your lifetimes through the majority of next year, but certainly, the earlier the better,” Realtor.com chief economist Jonathan Smoke told CNN Money.
My local mortgage lenders do their best to find you the program which works for you!
2: Rents have skyrocketed, and will continue to go up
Another reason home buyers are lucky is that rents are going up again! I blogged about this very topic in December of 2014. In fact, rents outpaced home values in 20 of the 35 biggest housing markets in 2015. The price to rent is expected to rise next year, so buying is becoming a cheaper option than renting in many cities, CNN Money reports. Property managers expect rental rates to rise by 8 percent on average for 2016, according to Rent.com. If you're paying $1500/month in rent in 2015, it could be $1620/mo in 2016 with an 8% increase. Wouldn't that be put to better use by buying?
Forbes lists the 7 Financial Benefits of Owning a Home. Pay special attention to #7!
Anyone renting in Dallas-Fort Worth can attest to the rise in rents! Why pay someone else mortgage when you can pay your own?
3: More home listings are a possibility
Prices have gone up in many markets. That's no secret. While every market is different, more information is out there about the rising values of homes. It was a major buyers market in 2012 in DFW, and those who bought then may cash in and upgrade in 2016. Their sale may be your gain. I've sold 4 homes for people who bought in 2012 just this year, and they all were able to profit significantly and move on to their new home.
DFW is still going up some, but a lot of it is due to incoming economical factors. Don't wait to buy, only to have to pay more!
4: You don't need as much of a down payment as you might believe
What is viewed as the biggest obstacle that prevents renters from becoming homeowners is pulling together a down payment. But today, that chunk of change can be smaller, thanks to a variety of programs to help home buyers. For instance, the new Fannie Mae and Freddie Mac Home Possible Advantage Program allows for a 3% down payment for credit scores as low as 620. Depending on whether you use a VA, FHA, USDA, CRA, or conventional loan, the down payment options vary. Some lenders have specialized programs offering different things for buyers of different capacities. I'd be happy to guide you in the right direction.
There's down payments of 0%, 3.5%, and 5% minimums. My lenders will show you the difference and find you the right option.
5: Mortgage insurance premiums have just been reduced.
If you do decide to put less than 20% down on a home, you are then required to have mortgage insurance (basically in case you default). A workaround to handle this, however, is to take out a loan from the Federal Housing Administration—a government mortgage insurer that backs loans with down payments as low as 3.5% and credit scores as low as 580. The fees are way down from 1.35% to 0.85% of the mortgage balance, meaning your monthly mortgage total will be significantly lower if you fund it this way. In fact, the FHA predicts this 37% annual premium cut will bring 250,000 first-time buyers into the market. Why not be one of them? It may not seem like a lot at first, but once you see the difference on paper, you'll see what the fuss is about. Mortgage interest varies by credit score.
It has helped some borrowers quite a bit. Any lowering of a payment is wonderful!
6: You can take advantage of some major tax breaks
Tax laws continue to be in favor homeowners, so you’re not just buying a place to live—you’re getting a tax break! The biggest one is that unless your home loan is more than $1 million, you can deduct all the monthly interest you are paying on that loan. Homeowners may also deduct certain home-related expenses and home property taxes. Here's some tax breaks you may be able to take advantage of, according to TurboTax!
I saw my own taxes go down after buying my home!
According to the Home Buying Institute, the bottom line for buying a home in 2016 is this: “If you plan to stay put for a while, and you feel pretty good about your employment and income situation, 2016 might be a great time to buy a home.”
Contact me today to get started finding that new home, or to get the mortgage process started!