This guide covers the top 5 reasons to buy a home now rather than wait. Rents are increasing across the nation with no signs of a pullback. Home prices have been rising nationally. There has been double-digit yearly appreciation in many parts of the country since 2012. In many parts of California, there are housing shortages.
More people are looking for apartments or homes than there are units available. With a major housing shortage from coast to coast, it only makes sense to buy a house instead of rent. This holds true if the mortgage payment is close to or lower than the current rent.
If new housing payment on a home purchase is significantly higher than rent payments, then buying a house may not be on the top of the list to do things on the agenda. However, buying a home is a no-brainer if new mortgage payments and housing expenses are virtually the same or close to what renters are paying. This blog will discuss the top 5 reasons to buy a home now rather than wait.
The Top 5 Reasons To Buy a Home Now
The top 5 reasons to buy a home now is due to being an excellent investment. This little fact that a new home will be the largest and best investment for most families in their entire life has not changed for many decades. There was a “hick-up” in this philosophy. We all know rates are high, and inflation is out of control. However, housing prices are still rising due to low inventory and high demand.
Home prices are increasing, and the whole country is witnessing a bull housing market. In the following sections of this guide, we will be covering the top 5 reasons to buy a home now before inflation and increasing rates stumps you out of the housing market.
The “mortgage crisis” and the housing bubble are over. Regardless, looking at the larger picture, the overall housing market has impacted countless Americans. Most may have seen it on the news, while others have witnessed and gone through it. Mortgage delinquencies hit historical records. Most importantly, even at the worst of the mortgage crisis, more than 90% of homeowners continued to make their payments.
The Top Reasons To Buy a Home Now Due To Inflation
In general, homeowners build equity over time. Every time a homeowner makes a monthly mortgage payment, a portion of the housing payment gets applied toward the principal of the loan balance. The housing payment consists of principal, interest, taxes, and insurance, commonly called PITI. The P is the principal. The I is interest. The T is for property taxes and the I is for interest. Every payment towards the principal reduces the mortgage loan balance. The combination of the principal balance reduction plus the home’s appreciation means equity for the homeowner.
With every monthly housing payment made, a percentage of the mortgage payment is applied to the principle of the mortgage balance. At the same time, homeowners are making a payment that reduces the amount they owe on their home, the house will appreciate which means the homeowners builds equity. This makes the house a big piggy bank. Renters do not build any equity. Their rent payment is an expense.
The government adjusted to protect against a future housing bubble and mortgage meltdown. Many of the high-risk mortgage programs, such as “no-doc” or ‘liar loans” and “interest-only” loans in that there is no credit to the principal with every mortgage payment, are no longer in existence. They are not even legal in most states. Ultimately, the government believes that this homeownership model is essential to the further growth of our economy. Buying a home is a good investment; you can get tax benefits as a homeowner, not a renter.
Related: Purchasing Another Owner-Occupied Home After Refinancing
Top 5 Reasons To Buy a Home Now Due To Tax Benefits
The third of the top 5 reasons home buyers should buy a home now is due to the benefits of Tax Write Off- Home Mortgage Interest is still tax-deductible. As taxes continue to rise and our deductions are cut or scrutinized, home mortgage interest has remained an income tax deduction safe harbor. Renters do not have this deduction. The way this works, especially with a 30-year mortgage, interest is front-loaded, or most of the mortgage payments are in the first several years of a mortgage.
The rise in mortgage rates has not made a dent in slowing the housing market down. There is more demand for housing than inventory of homes.
If you pay a $ 2,000-a-month mortgage, about 90% or more of that payment goes to pay the interest. 90% of $2,000 is $1,800. $1,800 multiplied by 12 equals $21,600. If a family earns $85,000 a year worth of taxes, they will use the mortgage interest tax deduction of $21,600 above to reduce their taxable income. Using a simple example number such as 30% multiplied by $21,600 equals $6,480. This is for demonstration purposes only, and you should consult a tax professional for accurate tax planning advice. However, a renter benefits from none of these tax advantages, but his/her landlord does take full advantage of these tax deductions.
Top 5 Reasons To Buy a Home Now Due To Growing Family
One of the top benefits of being a homeowner versus a renter is having the pride of homeownership. Being a homeowner does offer its benefits. Have the freedom to do anything as a homeowner.
Renters cannot paint their home with the color of their choice without landlord approval. Renters cannot get pets if they want and need the permission of the landlord.
The fourth of the top 5 reasons you should buy a home now is having a growing family- It’s not a secret that human beings procreate. Living on someone else’s property, you cannot typically make improvements as needed, such as when you expect a new baby. Putting up a fence due to adopting a new puppy will require the landlord’s permission. If you live in a two-bedroom apartment and already have one kid and another on the way, there is never a better time to buy a new house.
Putting Up With Neighbors
The last of the top 5 reasons renters should buy a home now is putting up with the neighbors. The biggest problem with renting and especially in an apartment is the neighbors. You can’t have people over when you want. As a homeowner, you will not have a landlord to tell you what to you and what you cannot do, says Ronda Butts, a dually licensed realtor and loan officer at Gustan Cho Associates:
Probably the best thing about having your own home is having the ability to have people over whenever without having to deal with the neighbors or the possibility of landlord complaining.
Kids have to be super quiet when they walk around the house. They can’t play music loud on a weeknight due to a celebration or promotion. Good luck having a party or a cookout.
Appreciating Home Prices and Volatile Mortgage Rates
Home prices have been appreciating double-digit since 2012 in many parts of the United States. Florida, Georgia, Texas, California, New Jersey, Pennsylvania, Michigan, Illinois, Colorado, and many other states. Homes values have been appreciating year after year with no sign of any correction. Mortgage Rates have been increasing and are at the highest levels since 2010.
The Federal Housing Finance Agency (FHFA) and HUD have increased conforming and FHA Loan Limits for seven years due to rising home values.
Homebuyers no longer have to wait until they meet the minimum mandatory wait period after a housing event or bankruptcy with our non-QM loans. Non-QM Loans have no waiting period after bankruptcy or foreclosure.
Alternative and Non-QM Mortgage Loans
Gustan Cho Associates offers non-QM loans with no waiting period after a housing event or bankruptcy with a 10% to 20% down payment. Non-QM loans are non-traditional mortgage loan programs that do not require income docs or tax returns and have limited waiting period requirements after bankruptcy and foreclosure.
There are no loan limit on non-QM loans. There is no private mortgage insurance is required on non-QM loans. The amount of down payment is dependent on borrowers’ credit scores. Interest rates depend on the loan-to-value and credit score of borrowers.
There are more than the Top 5 reasons to buy a home now rather than wait. Please contact Gustan Cho Associates Mortgage Group at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available evenings, weekends, and holidays seven days a week.
Related> New Fannie Mae And Freddie Mac Guidelines For First-Time Home Buyers
