Why First Time Buyers Are Crazy Not to Buy a Home Now
With some of life’s milestones, there may not be a picture-perfect time to take the plunge. But when it comes to buying your first home, the combination of good market conditions and your own financial situation can dictate timing. If you’ve got the credit and down payment, you’d be crazy not to buy now. Want to know why?
Rates are still low
The Federal Reserve was expected to raise rates this summer, but so far they have stayed put. There is still talk that rates could go up before the end of 2015. So what does that mean for buyers? Well, if you’re a millennial, a rise in interest rates could spell bad news.
New low down payment loans
First-time buyers have typically gravitated toward FHA loans for their low credit score requirements and down payments of just three and one-half percent. But new loans from Fannie Mae require as little as three percent. Known as the 97% LTV (Loan To Value) loan or Conventional 97, it can be more affordable for first-time buyers because “the Conventional 97 program does not require an upfront mortgage insurance premium, and because its annual mortgage insurance rates are cheaper, too,” said The Mortgage Reports.
In many market, home prices are up significantly from their lowest levels several years ago, but are still within range of many buyers. Rents, on the other hand, continue to go up, pushing household spending to new, uncomfortable, heights.
When you pay rent, the entirety of your payment goes to the landlord or property owner, and all you get in return is a temporary place to stay. When you own your home, the government essentially pays you money back for your investment. Any points you paid on your loan are also deductible the year you paid them, as are your property taxes.