Get off the fence. This might be the best time to buy a home you’re going to see for a while. Here’s why.
Less competition for homes
Tired of having to duke it out for available homes and then losing out to higher offers? That’s a reality in many of today’s hot real estate markets, where bidding wars are the norm. In some micro-markets, all-cash offers are king. It’s hard to compete in that kind of environment, which is what makes the holiday season attractive to home buyers. Less activity during this season diminishes the competition, and can also help you get a deal.
“Since fewer people overall are looking to buy houses, you will have less competition for your preferred house — and this gives you leverage,” said moneytips. “Holiday home sellers often have to adjust their price downward or make other concessions if they want to sell. Keep this in mind as you search for homes. Bargains may be available, and listed prices may be more open to negotiation.”
President-elect Trump’s nominee for the Secretary of Housing and Urban Development (HUD) post has previously made a number of comments about the agency that could spell wide-sweeping changes for buyers, and not for the better.
Carson referred to Fair Housing as “communism in a 2015 Washington Times op-ed, saying that fair housing policies “mandated social-engineering schemes” that repeated a pattern of “failed socialist experiments in this country,” said the Wall Street Journal. That has housing insiders worried that affordable housing programs, and, specifically, low-rate mortgages from Fannie Mae and Freddie Mac may take a hit.
Chaney Capital Privatizing Fannie Mae and Freddie Mac would greatly limit available mortgages and have an especially detrimental effect on low-rate mortgages that many buyers depend on to get into the market. “Carson’s appointment could also affect taxpayer-supported subsidized housing, which primarily helps homeless, low-income, and even senior Americans”, according to Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, said Realtor.com.
Interest rates are on their way up
Even if you’re not ready to pull the trigger right this second, get pre-approved to lock in that interest rate now. That’s because rates have already risen some since the election, and all indications are that they’ll continue to rise after the new year.
And, of course, getting pre-approved will allow you to move quickly when you find a home you love instead of being held up by the bank and risking losing the home when someone who is pre-approved swoops in.
Because you’re ready to get your Joanna Gaines on
How badly do you want to rip out a kitchen and start over with something chic and pretty and chef-y in a place of your own? If you’re currently living in an apartment, you may not even have permission to paint the walls, let alone update the kitchen.
The good news about renovations, other than achieving a great new look, is that you can actually get loans to pay for them – and, the interest is a writeoff. “The IRS considers the interest on a home-improvement loan fully deductible, up to $100,000 in debt,” said MarketWatch.
DecoistLoans to look for include the FHA’s 203(k) program and Fannie’s HomeStyle Renovation Mortgage. “Unlike credit lines, these renovation loans require borrowers to show that the money was spent on the house,” said Bankrate. “In the standard FHA 203(k) program, the borrower hires a consultant to assess the construction plan and to perform an inspection before each draw is made. A ‘draw’ happens when a portion of the money is disbursed to the contractor. Borrowers have up to six months to finish the project and are allowed up to five draws. The HomeStyle program does not require a consultant to monitor the work, only an initial and final inspection.”
The FHA 203(k) can be easier to qualify for, as credit scores can be as low as 660. The HomeStyle mortgage require a minimum 740 credit score for the best rates.
Unless you find a house tomorrow and close much more quickly than is standard today, you won’t be able to reap the tax benefits this year. But there’s always next year—and every year after that. And tax savings can be substantial, amounting to thousands of dollars you’re not saving now.
It’s probably still cheaper than renting
The tax savings associated with homeownership isn’t the only way to save money. “It’s cheaper to own rather than rent in all but eight states and Washington, D.C., according to a GOBankingRates.com study of rent and mortgage costs,” said MSN.
When calculating the difference between renting and owning, make sure you look at as much of an apples-to-apples comparison as possible. Oftentimes, when people are looking at rent, they fail to factor in renter’s insurance, security deposits, pet deposits, and annual rental increases. Those numbers can add up.
Tired of that rent going up every year? Yeah, that stinks. If you live in Seattle, your rent is forecasted to rise another 7.2% this year, according to Business Insider. In Portland, it’s 6% and Denver 5.9%. Those are the cities that are predicted to have the sharpest rises across the country.
Unless you have an adjustable rate mortgage, which isn’t popular in today’s low-interest-rate, 30-year-fixed mortgage world, or you cash out your equity and raise your principle at some point, your mortgage payment will remain your mortgage payment through the life of your loan. With so many other unknowns and intangibles, it’s nice to know that what’s probably your largest monthly payment is always the same.
WRITTEN BY JAYMI NACIRI