Apr. 3, 2018.
It’s the question you’ve been meaning to ask your loan officer — so we did it for you. Is buying a home now a good idea? The Cornerstone loan officers we asked were unanimous: “Now could be a great time to consider moving!” For those who aren’t ready to move yet, upgrading your existing home can make it feel good as new.
House-hunting is the fun part. Getting prequalified is the easy part. Take a few minutes to find out how much house you can afford before you start shopping online.
10 reasons not to wait: Buy now and reap the big benefits of moving
Maybe you’ve been thinking about a move for a while, or maybe the idea’s come out of left field.
No matter your personal situation, finances, or motivation (all factors you can discuss more in depth with your loan officer), there are at least 10 great reasons to buy a house this year:
1. Your home’s value has probably appreciated.
Ever fluid, the housing market has experienced big changes in recent years (and especially in 2018). One result, says Lori Richardson, Vice President at Cornerstone Home Lending, Inc., is that home appreciation has put most homeowners in a great equity position.
“That is certainly true here in Colorado. According to CoreLogic, the average Colorado homeowner has seen a 51 percent appreciation in the last five years,” she explains. That, Richardson says, puts many homeowners in a prime place to sell and move up, downsize, purchase an investment property, and more.
2. You could pay less than your monthly rent.
Renting, for many, is an affordable short-term solution. But take the plunge and buy a house when you’re ready, and you could save more over the long-term. (Use our free calculator to find out whether renting or buying is a better choice for you.)
If you’re moving from a rental situation, Richardson offers a friendly reminder. “Keep in mind that while you haven’t been paying your own mortgage as renters, you have been paying someone’s mortgage — your landlord’s.”
Rents have been on the rise in recent years, and many are continuing on that trajectory. In late 2017, an Apartment List survey, reported by Bloomberg, found that escalating housing prices left almost 20 percent of renters struggling to pay. As Richardson tells many of her renter clients, purchasing a home can offer automatic savings in your monthly housing expenses.
3. You could lower your monthly mortgage payment.
For homeowners hoping to move up, downsize, move to a new location, or purchase a second home, as Richardson mentioned in point number one, there’s a silver lining for you too. Richardson has seen among her borrowers, and throughout the mortgage industry, that a buyer’s mortgage payment may often be lower after moving, in many situations.
“It could be that due to home appreciation in the last five years — which for the average homeowner in Colorado is at 51 percent — a buyer could have a higher down payment on their new home,” Richardson says. A larger down payment is one factor that can help to lower your monthly mortgage payment.
4. You can get creative.
With renting, you have to ask before you paint the walls or add nice shelving. When you buy, you can remodel your home to increase its value, welcome a new family member, or create a special space — like a book nook for morning reading or an outdoor area for backyard grilling.
5. You could reduce your household debt.
When homeowners consider moving from one home to another, it’s not always to buy a larger house, Marcie Hines at Cornerstone, says. “Many homeowners these days are conscious of how much debt they have and are looking for new ways to reduce their debt load.”
The average U.S. household debt is on the rise, the Federal Reserve Bank of New York’s Center for Microeconomic Data confirmed at the close of 2017. While mortgage debt only increased 0.7 percent from the first quarter to the second quarter of 2017, with car loan and credit card debt topping the list at 2 percent and 2.6 percent, respectively, downsizing is one way to reduce total monthly bills (and total household debt). If a homeowner is downsizing to a lower price point, Richardson says, they may automatically see a lower monthly payment.
6. You could trade up without stretching your budget.
Whether you’ve experienced an increase in family size, moved to a new job across town, or simply would prefer more space to stretch out, Hines agrees that now is a good time to consider moving.
“All economic indicators point to the interest rates increasing this year, and depending on which market you live in, home values are on the rise as well,” Hines says. She tells her borrowers that now could be an ideal time to move and take advantage of the rates available, as well as current home prices.
7. You can enjoy stability.
Renters face the threat of a rent increase with every lease renewal. Worse, your landlord might sell your apartment or home, forcing you to move with little warning. But once you become a homeowner, you have a reliable place to hang your hat, and if you agree to fixed payments, you’ll know exactly what your bills will be each month.
8. You could lock in a competitive mortgage rate before the next increase.
Speaking of stability, buying a house sooner rather than later could help you to secure a competitive mortgage interest rate before the next projected increase. “We are seeing an increase in rates, and most experts agree that we will see rates increase by 0.250 to 0.500 percent by the end of 2018,” says Richardson.
Even with a slight jump in rates, Richardson puts it in perspective. The current outlook for buyers is still good, and rates are historically low. “The average interest rate in the year 2000 was 8.05 percent, and in 1985, it was more than 12 percent! No, we aren’t seeing rates in the 3 percent range anymore, but we are still at historic lows.” Taking all these factors into consideration, Richardson believes now could be a great time to buy and sell.
Buying a house would be easy, they said. (And we agree.)
9. You can grow your investment.
If you choose to rent, you can invest the money you don’t spend on the hidden costs of buying a home, like property taxes, insurance, and yearly maintenance. But you may have to pay taxes on what you invest. If you buy, and your home appreciates in value as so many have, you can sell it at a profit. That profit is tax-free up to $250,000 if you’re single and $500,000 if you’re married.
10. You could get more house for less money.
Buying now, with the guidance of a loan officer who can assess your personal and financing goals and match you with the right loan program, could get you into a home loan that provides big benefits to eligible buyers.
- The USDA loan, a personal favorite of loan officers, helps people with low- and moderate- incomes find a house in eligible rural (and many suburban) areas.
- The FHA loan is often geared toward student-loan-debt-holders — another loan officer favorite because it doesn’t require 20 percent down. Qualified buyers can secure an FHA loan for as low as a 3.5 percent down payment.
- Other affordable loan options include the VA loan and the Fannie Mae HomeReady® mortgage program, both with little-to-no down payment.
A skilled loan officer can help you find an affordable loan program that could give you more purchasing power. This extra edge can be especially beneficial if you’re a first-time buyer.
How to upgrade without moving: 4 home loans you can use to renovate
Maybe it’s not your year to move for reasons personal, financial, or otherwise. Maybe you love your house too much to let it go. Luckily, there are still plenty of mortgage loan options available that you can use to stay put, upgrade, and make your home feel new again.
- The FHA 203K limited loan works well for both homebuyers and homeowners who are refinancing for an upgrade. This loan is popularly used for minor cosmetic, health, safety, and livability upgrades and has a maximum repair amount of $35,000.
- The FHA 203K full loan has fewer restrictions than the limited version and can be used for structural and major rehab projects. This loan has a repair minimum of $5,000 with a maximum set at less than a local county’s FHA loan limit.
- The FNMA HomeStyle® Renovation program is an all-in-one renovation loan, preferred by many refinancing homeowners because of its flexible credit requirements. Even better, this loan can be used for almost any improvement, whether a small repair or a luxury pool upgrade, as long as it adds value to your property. You can also finance your remodeling project for up to 50 percent of your home’s “as completed,” post-upgrade value.
- The FNMA Postponed Improvements loan can be used by buyers purchasing new construction and by homeowners refinancing a mortgage. Like the HomeStyle loan, almost any renovation is permitted, as long as it’s not DIY and adds value to your property. With this loan, you can finance your remodeling project for up to 25 percent of your home’s post-upgrade value.
You have questions, and we have answers. To find out if the time is right to buy, contact a Cornerstone loan officer near you. Cornerstone loan officers are friendly, local, and highly trained in assessing up-the-minute mortgage market news to help you find the right loan — and a competitive rate. Your loan officer is only a call or an email away.
For educational purposes only. Please contact a qualified professional for specific guidance.
Sources are deemed reliable but not guaranteed.