Now may be the best time to cut through the misperceptions and start living in your dream home.
Perception: From all the news I read and hear it sounds like this is a terrible time to buy a home.
This is a fantastic time to buy, depending on your home and location it can be a challenging time to sell. Most people move up to a more expensive home so the important thing isn’t the selling price of your home, but the difference between your current home and your new dream home. For example: If you live in a $150,000 home and want to move up to a $250,000 home, that’s a $100,000 difference. If we assume that prices fell by 10% then your current home is $135,000 and your dream home is $225,000 or a difference of only $90,000. That means that if you buy now before the market returns to previous levels you save $10,000 and have a house that will appreciate more.
Perception: Foreclosures are bargains and many people getting them for great prices.
A new home offers many financial advantages over a foreclosure. It doesn’t have hidden defects or damage, is covered by a warranty, has the latest energy saving features, and never has undisclosed liens on it. You will never have to face expensive repairs to hidden damage or legal costs to resolve undisclosed title issues. A substantial cost of owning a used/resale home is the maintenance and energy expenses. A new home has efficient heating, cooling, electrical, and plumbing systems that require little or no maintenance and has the latest designs and features that will not require the large cost of remodeling to maintain value. When factoring in repair, legal, maintenance, and energy costs a new home is an incredible value.
Perception: Mortgages just aren’t available right now.
Even though mortgage standards have changed, there are a surprisingly large number of options still available and these loans still have great rates. Interest rates are still around the lowest they have been in 40 years; which with predicted inflation means it is likely they will increase soon. The rare combination of low prices and low rates creates a unique opportunity for current buyers.
Perception: Renting is a better option than buying right now.
Buying a home gives you the ability to build equity, benefit from future appreciation, and receive tax deductions from a relatively small investment. If you purchased a $200,000 home with a $10,000 down payment and your home appreciated 5% in a year, the home would be worth $210,000. Your $10,000 investment returned $10,000 or 100% and you got tax benefits on top of that. How many investments offer you a return like that and give your family years of enjoyment at the same time?
Perception: I should wait for market conditions to change.
It is impossible to predict the future, but all signs indicate that now is a buyers market with unprecedented great deals on new homes and excellent interest rates on loans. It is very unlikely that the unique combination of low prices and low rates will continue for long. Its a great time to take advantage of this opportunity to start living in your dream home now.