The real estate market is constantly changing. Trying to time it perfectly and buy at the right time is a very difficult thing to do. While we never know when the exact right time is there are some factors that can give us some clues. We are currently in a period of low interest rates, relaxed mortgage guidelines and rising rents. These three factors alone make it a great time to consider buying. We are also on the bottom of a market that is poised to take off in the very near future. If you have been on the fence about buying the time to begin looking is now.
Your loan amount and interest rate are the two most important factors in your monthly payment. Home values have recovered in the past five years but many markets are still on the low side. What hasn’t changed are the historically low interest rates. It wasn’t that long ago that a 30-year fixed rate under 7% was considered excellent. Today that same rate has hovered around 4% for the past few years. This means that you can currently get more home for your dollar than ever before. Interest rates will not stay this low forever. Once they start to go up you can expect them to take off quickly.
Many buyers have complained about the difficulty of the mortgage process. While getting a loan is not nearly as easy as it once was it is not as difficult either. Lenders have reduced guidelines for down payment, debt to income and other underwriting criteria. We will most likely never see stated income loans again but loan approval is much easier than it has been in the past. If you haven’t applied for a loan in years you may be surprised at how the process has changed.
Most of the buyers that stopped looking to buy ended up renting. This created excessive demand that pushed up rental prices. It has reached the point that you may be able to purchase for the same monthly payment, or lower, than a rental. With homeownership come tax benefits and equity building that renting does not. Instead of having money go to a rental that you will be out of in a few years you can apply this to a property that you own. In many cases you will see a reduction in your monthly payment. If you are currently renting you are prime candidates to take advantage of the market and consider buying.
Before the housing market collapsed the main reason people bought houses was for the long term appreciation. Buying low in today’s market means that you are more likely to reap the benefits down the road. Home values appear to have bottomed out meaning that there is only one way for them to go. Ten or twenty years may seem like a long time away but it will be here before you know it. If you buy now you can begin to build equity that you can use to pay for your children’s college, retirement or anything else you like.
If you have been putting off looking at houses the time to start again is now. There are plenty of factors that are working in buyer’s favor that may not be around much longer. Now is certainly a great time to buy.