7 reasons to buy a house before 2014
Thinking about taking the plunge and buying a home? The next few months might just be the time to do it.
By Sabah Karimi
If you've been thinking about taking the plunge and buying a home, the last quarter of 2013 might just be the time to do it.
Rates on fixed-rate loans are still appealing, and experts say it's still cheaper to buy than rent. Some financial institutions are also a little more lax with their loan qualification requirements this year.
Here are seven reasons to buy a home by the end of the year:
1. Mortgage rates are still dropping. The average rate for a 30-year fixed rate loan is 4.50 percent at the time of publication. While this is a 1.15 percent increase from the historic low of 3.35 percent at the end of 2012, it's still an attractive rate for prospective homebuyers. The housing sector is getting stronger and inflation rates are low, which promotes low mortgage rates.
2. It's still cheaper to buy than rent. If you live in a metropolitan area, it may make more financial sense to buy a home than rent a house, condo or apartment. According to a 2012 Trulia Trends study, buying a home is 44 percent cheaper than renting in the 100 largest metro areas in the United States. While this data was calculated based on last year's lower mortgage rates, there is still a significant price difference in total monthly costs with today's rates.
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3. Home prices are relatively low. Housing price trends vary significantly by location and even by neighborhood, but the average housing price trends across the country look promising for prospective homebuyers. The S&P/Case-Shiller composite index of 20 metropolitan areas increased only 1 percent this past season, so 2013 could still be a great time to buy.
4. It may be easier to get a mortgage. Credit unions and banks may be making it easier for some prospective buyers to qualify for a mortgage. Less stringent requirements and qualifying criteria may help some people finally get that home loan. If you have good credit and some savings available for a down payment, you might just be able to get a loan for your dream home this year.
5. Less competition from home flippers. Investors looking to buy and flip houses can't move as quickly as they did in recent years. Housing prices in some markets are increasing, making house flipping less attractive. This gives prospective homebuyers more inventory to choose from and the benefit of having less pressure to close a deal because of another pending offer. This could be the time to enjoy the freedom of shopping around for that perfect home and making an offer.
6. Avoid the cost of rising rent. A buyer's market means it might be time to say goodbye to renting for good. If you're tired of rent increases at your current location or want to move but will experience a spike in rent, consider the benefits of buying a home instead. You may be able to secure a great rate with your credit history and end up paying the equivalent or less in monthly payments as you build equity in a home. Renting can be a more affordable option for the short term, but renters still have to face rising rental costs year after year.
7. Invest in your future. Buying a home gives you a chance to start building equity, and you are investing in your future. Even if you end up selling your home in five or 10 years, you could profit from the sale and invest that money elsewhere. If you've been dealing with rising rent or the hassles of costly moves for the past few years, settling in to a home can stabilize your housing expenses – especially if you get a fixed-rate loan at a great rate. You won't have to worry about your monthly housing expenses changing significantly for a few years, and you will pay for something that has more value than a rental property. Consider the benefits of making this type of contribution to your future month after month.
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This article was obviously written by a realtor!
Any VETS out there? I used the VA Loan process and didn't have to put 20% down and go thru all the hoops. If you are a VET you would be a fool NOT to use the VA Loan. Being a VET avoids hunting for the money. Bam, you are prequalified for at least $350K (check out their details, depending where you live). Check it out, it was the only way I could have moved into a dream home on 1/2 acre. The cost???? On a $250K home, my wife took out $25K from her 401(k) and I was the vet who got the VA Loan. Our cost came to.....10% down. After 1 year, we refied from 4.3% to a 3.2% loan. VET USE THE VA LOAN!!!!!!
Rhetoric aside, as long as you breathe, you'll have to have some type of housing, buy it or rent it. The big difference is that is you have any intelligence and have kept informed, this time in the housing market will not come again. Renters are saying their's is the right way, but I'll tell you what changed me.....
My wife and I were renting at the time, a terrible place, we would drive 15 mins to a laundramat to avoid the neighborhood. We had been doing wash there for 3 years. One day, we watched an elderly couple hobble in and commence doing their wash. It was then that my wife and I decided that we did NOT want to end up like that, still renting.
NOW is the time to get a house, when rents cost more than a home, what is the point of renting? Our rent was $1300 for a 2 bedroom in the ghetto. Our house payment is now almost $900, not including insurance, taxes and such. What does the renter get back on their "investment?" If you can afford it, houses will never be this cheap again, the interest rates will never be this low again, especially after the Fed stops spending $85 BILLION A MONTH to shore up the stock market.,
When your rent goes up, and then goes up again, and then goes up, remember those fools that are warm and snug in their HOMES and all the benefits you miss out on. Sure there are cost, but that is the "cost" of living.
It's not to late...........
Articles like this only get people worried about "missing their chance at homeownership." This can lead to mistakes and errors in judgment! Set a price that you are comfortable with, not what the bank, broker or agent says you "can qualify for." This means do not buy more house than you can pay for and still pay your other financial obligations (food, utilities, insurance, taxes, etc.). Don't rely on brokers or agents look out for your best interests. They make their living by selling not educating." If you want to buy a house you must educate yourself. A start can be an amazon ebook "stuff I told my kids about how to buy your first house." I got this for my kids (24 and 21) to read so they can get some basic info BEFORE they see anything with a real estate agent.
I lost my house in 2011, bought the house I am in now last Fall. I had to rent for a year and a half and got scorched on taxes. My house is now worth $100K more than I bought it for and I will be getting money back after this tax year.
For the dummies out there, please keep thinking that way and I will soon have houses I can rent you at a higher price than the mortgage and taxes and still make a profit. Then I will raise the rent a $100/mo every year so soon I will not have to work. LOL all the way to the bank.
Buy a house when you are good and ready and stable. Don't rush! The market will be whatever it is when you are ready. Don't worry about that now if you are not ready. Better to pay 3% more on your mortgage down the road, and be in a house that you love, than to buy something that is simply the best house available for your current price range, only to want to sell it 3 years later because of some big life changing event.
If you are going to buy a house, make sure you are ready to stay there for at least 20 years. Don't get a mortgage with plans to refinance every chance you get. Let the mortgage age so you have a chance at actually paying down the principal.
And while we're at it, don't keep buying new cars. Pay your car off and keep it for as long as you can with no car payment.
These are the best ways to financial gains/freedom for us poor people.
If you put 20% down on the purchase of a home, you already have quite a bit of equity. Also, when you sell your home, you do not pay taxes on it unless you profit over $250,000 or haven't lived in it for a period of 2 years or more.
buying a home is such a waste of cash. The only real benefit you get from it is the credit score points.
All these writers try to trick you into the equity claim, but what about the typical maintenance costs of owning a home? They talk about selling your home in 5 years for a profit. Yeah Right! The first 5 years you pay almost nothing towards principal and when you sell it you have to pay the realtor for selling it. Odds are you will lose money if you sell your house before 12 years of ownership.
As to the maintenance unless you have a house made of composit materials throughout (which no house is) you have repairs that need to be made yearly. Furnace doesnt last forever, water heater either. New carpets after a few years, repainting interior walls, painting the exterior of the house if there is wood. These are things most people NEVER think about when it comes to buying and selling a house. But the biggest one is the realtor fees and not to mention if you profit from the sale of your house you have to pay taxes on it.
The only true way to come out ahead if you are to buy a house is to live in it until its paid off and use as many composit materials as possible. They have a lot longer life span.