With unemployment rates just under 8%, banks paying less than 1% interest on CDs and account balances and inflation looming many renters today wonder if buying a home in 2013 is a good idea. The key to buying a new home is asking yourself the tough questions and honestly answering them. There are situations where buying a home is a “no-brainer,” but half the battle is recognizing the signs. Here are the signs when buying a home makes sense.
Historically Low Interest Rates
Many adults today can remember the 1980s when mortgage rates were in the high teens. Buying a home was close to impossible for a lot of families back then but today we’re experiencing rates in the 2’s and lower depending on the borrower’s credit history. These historic low interest rates mean a mortgage is much more affordable today than it was 30 years ago. It also means you can afford a home you may not have been able to afford just a few years ago.
Building Equity – a Forced Savings?
While some economists argue that payments made toward your mortgage principal can be viewed as a forced savings, other economists argue that people can do better renting a home or apartment and investing the difference. But the problem with the “investing the difference” argument is assuming that people will actually do it. Not all of us have the discipline to save the money, nor can we avoid raiding the savings/investments along the and it’s rare for someone to have the luxury of an after-tax return renting that’s financially better than owning a home. Life happens and so do extra expenses we hadn’t anticipated along the way. By owning a home you not only benefit from this forced savings, but you’re also in a better position to borrow more money with home equity lines of credit and home equity loans to cover some of those unanticipated expenses like medical bills, home improvements and college costs.
Tired of your Landlord?
Wouldn’t it be nice to have the freedom to paint the walls in your bedroom with the punch of color you prefer rather than tolerating the boring white or neutral tones on the walls throughout your apartment? Are you tired of having to wear extra sweaters in the winter because your landlord is too stingy with the heat? Tired of your neighbors loud parties every weekend? Home ownership is a big responsibility that requires a certain level of financial and social maturity. You may be more ready to buy a home in 2013 than you think.
Great Neighborhoods with more Affordable Housing
What makes a neighborhood so great? While some might say it’s because of economic development like plenty of restaurants, shopping malls and home improvement stores, the truth of the matter is it’s the school district. And the better the school district, the better the property values. With the housing crash a few years ago and historically low interest rates, many families are able to buy a home in a good school district that would have been out of their budget without the housing crash. By purchasing a home now and locking in a 30-year low interest rate loan, you’ve invested in something you can’t put a price tag on – keeping your family safe and your peace of mind. Housing prices may not increase as quickly as they did a few years ago, but homeownership should be for the long-term. Interest rates can’t go much lower and will eventually go up. When they do, you’ll have a low interest rate and will have built equity in your home.
With more families rebuilding their credit, low interest rates, the opportunity to build equity in a home and more affordable housing 2013 stands to be one of the best times to buy a home.