It’s no secret that when interest rates begin to dip lower, there will be another wave of homebuying, which will drive the price of homes up even higher. It’s historically proven.
That’s why if you qualify for a home it is wise to buy now and build equity as rates are likely to come down and home prices are likely to increase. You can fix your price for a 2025 move-in and close escrow when rates drop. Take advantage of locking your interest rate today for extra insurance and if rates improve, your rate will be able to float down prior to closing.
No matter which way the real estate market is leaning, buying now means you can start building equity immediately and gain tax advantages for owning verses renting. “Remember, you marry the house and date the rate,” states Melissa Cohn, Regional Vice President of William Raveis Mortgage, “you can always refinance later.”
In general, if you can answer yes to these three questions, NOW is the time to buy.
- Have you saved enough for a down payment? If you’ve been paying bills and saving, you may have a chunk of change for a down payment. Remember, even family members can help with some of the down payment and the more you put down, the less you’ll have to borrow (and so the less interest you’ll have to pay). Lenders approve loans if you have at least two months’ additional cash reserves; this provides a cushion if something unexpected happens.
- Are you planning to keep the home for a while? Owning your home for a few years helps amortize the closing costs that are normal fees incurred at purchase. To justify those one-time transaction costs, it’s better financially not to sell too soon after buying. Capital gains taxes consume a larger portion of sales revenue when a sale is made within the first two years after the purchase.
- Do you have good credit? Start by getting a credit check and pre-approval from a qualified lender early in the process because then you will know what price range you can qualify for. Many times, the best rates on mortgages are available to those that have demonstrated a history of on-time payments.
(Information provided by Bankrate, Oct 15, 2023
