Everyone dreams of owning their own home in the perfect neighborhood, but so few of us have any idea where to start.
Buying a house can be a scary and daunting endeavor, but it doesn’t need to be. When it comes to buying a home, much like anything else, knowledge is power. Knowing everything you can about the status of interest rates, housing prices, and money lenders will give you the tools you need to make a smart purchase. With 2017 coming to a close, it’s a great time to purchase a house. Here are three reasons why you should pull the trigger on buying a home now, even if you are on the fence.
Reason One: Housing Prices
Since the 2008 housing market crash, the real estate community has been putting itself back together slowly but surely. Now, soon to be a decade after the financial crisis, the market has all but completely restored itself. The cost of houses, especially in California, has only steadily increased. The cost of buying a home is only going to increase at a faster rate as time passes and the market grows stronger and stronger. The more stable the market, the higher the cost of purchasing a home. Not only is stabilization causing an increase in price, but it’s decreasing the availability of homes for sale. There is a shortage of houses for sale in California and many other states in the country, as well. With increasing demand comes steeper prices. If you wait too long you might find yourself settling for a less-than-ideal home well above your price range. The building market is slowed and stifled by increasing costs labor and building materials, making it harder to build new homes for purchase at any kind of rate that could keep up with the demands of the market. The last thing you want to be faced with is buying property and then contracting a builder. This is almost always more trouble than it’s worth, especially if you already have a career to manage.
Reason Two: Interest Rates
At the start of 2017 interest rates on a 30 year mortgage hovered around 3.55%. With the Federal Reserve finally increasing its key interest rates, we can expect interest rates on 30 year mortgages to increase between 5% and 6% by the end of 2020. After the passing of the Dodd Frank Act during the 2008 mortgage crisis, qualifying for loans has become much more difficult. If qualifying for a loan is going to be an issue, there is always the option of hard money loans. Even if qualifying isn’t an issue, the interest rates on traditional home loans are likely to steadily increase. A hard money loan tied to assets with a fixed interest rate can be a lucrative alternative to traditional real estate loans. For example: hard money lenders in Richmond, California are offering fixed rate loans for as low as 7.99%. Given the trend of the market and interest rates, this could be an extremely viable option – especially right now.
Reason Three: Tax Breaks, Equity, and Stability
Most people who don’t own homes, don’t know that interest paid on mortgages and home loans are tax deductible. One of the great advantages of ditching the apartment and purchasing a home is the investment in your future and finances. Taxpayers can deduct up to $100,000.00 on their first and second mortgages. You can almost always count on the value of your property to continue to increase, especially if you live on a coastal state like California. When you consider your tax break and your home’s increasing value, owning a home is an investment in your financial future – and it’s a safe one. The cliché American dream has always been to buy and own a home in a nice neighborhood with a good school district, but it’s not so far-fetched or overrated. The sooner you buy a home and plant your roots, the sooner you can start to build equity. You can’t put a price on the mental and financial stability that comes with owning your own home. The sooner you buy a home, the quicker and easier it is to build the life and the family that you have always dreamed of.
This blog post was written by Adam Pepka. Adam is a real estate doyen and finance guru currently residing in Tucson, Arizona. His real estate investments in several states keep him constantly on the go, and his passion for writing has found him penning pieces with unique insights on everything from landlording issues to investment advice.