Once again, the housing market finds itself on a wild ride as Americans navigate through a global pandemic, increasing unemployment and withering job security. Couple these obstacles with low housing inventory and homeowners vying to capitalize on a seller’s market, and potential homebuyers find themselves asking – is buying a home still a good investment?
The short answer is yes. Mortgage rates are at historic record lows and wouldn’t you rather be paying yourself?
Low Interest Rates
Current mortgage rates are the lowest we will likely see in our lifetime, as feds continue to boost the struggling economy. With mortgage rates hovering in the 2’s, you are likely to qualify for a higher loan, which gives you more purchasing power. Additionally, the housing industry is being pinched this winter and active sellers are having to cut their asking prices as home prices slowly weaken.
Renting Costs More Than Buying
The old saying still rings true: In the long run, you’ll spend more money renting. Yes, renting is cheaper on the front end. That’s because you don’t have to secure a down payment or fork out other costs associated with buying a home. However, if you plan to stay in your home for a while and you can manage the upfront costs of purchasing a home, buying is still a better financial bet.
How to Start
First things first – figure out your finances. Make sure your finances are in order and determine how much house your can afford. The great thing with low interest rates is you’ll get more bang for your buck.
- Is your job secure?
- Do you have good credit?
- How big is your nest egg?
When you feel confident your finances are in order, speak to a loan officer about the next step. When buying a home, make sure you stick to the 30/30/3 rule.
- Don’t spend more than 30 percent of your gross annual income.
- Have 30 percent of the cost of the home saved for a down payment.
- Or cap your budget for a new home at THREE times your annual gross income.
Historically, springtime is the busiest time to buy and sell a home; inventory is usually a bit higher in the spring than the fall. And with any luck, spring 2021 is just about when Americans will be coming out of quarantine.