Is it a good time to buy a house? Maybe you’ve been contemplating a move for a while, or maybe the idea just crossed your mind. Whether you’re ready to stop renting or ready to sell and trade up, multiple market factors indicate that now is the time.
Reap the benefits of moving: 11 signs it’s a good time to buy a house
For both renters and homeowners, there are at least 11 potential payoffs of buying a home this year:
1. Your home’s value has probably appreciated.
The housing market has experienced major changes in the last year:
- One result is that increased home appreciation has put most homeowners in a strong equity position.
- According to CoreLogic, the average homeowner has seen a $26,300 surge in equity in the past 12 months.
- This places many homeowners in a prime spot to sell and move up, downsize, or purchase an investment property.
Mark Fleming, First American’s Chief Economist, explains, “As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity.”
2. You could pay less than your monthly rent.
Renting can be an affordable short-term solution:
- But take the plunge and buy a house when you’re ready, and you could save more over time.
- It helps to remember that while you haven’t been paying your own mortgage as a renter, you have been paying someone else’s — your landlord’s.
- Use our free calculator to find out whether renting or buying is a better option for you.
Rents have been rising. ATTOM Data Solutions’ 2021 Rental Affordability Report shows that owning a house is still more affordable than renting in almost two-thirds of markets in the U.S. With today’s rates hovering around record lows, many renters are able to take on a monthly mortgage payment equal to or less than what they were paying in rent.
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.
3. You could lower your monthly mortgage payment.
For homeowners hoping to move up, downsize, relocate, or purchase a second home, there’s a silver lining for you too. Just like a renter, it’s possible that your new mortgage payment may be lower after moving, in many cases.
This could be due to recent home appreciation. The thousands of dollars in equity you’re likely to have accumulated can go toward a higher down payment on a new home. 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 make extra space — like a home office nook or an expanded outdoor area for family dinners.
5. You could reduce your household debt.
When a homeowner considers moving from one home to another, it’s not always to buy a larger house:
- Many homeowners today are conscious of how much debt they have and are looking for new ways to reduce this load.
- Because of the economic and income changes caused by the pandemic, more households have buckled down on debt — paying off the largest amount of credit card debt to date in 2020, totaling $108 billion.
- Selling and downsizing is a helpful way to reduce total monthly bills (and total household debt).
If a homeowner downsizes to a lower price point, they may automatically lower their monthly payment.
6. You could trade up without stretching your budget.
Whether you’ve experienced an increase in family size, started a new job across town, or want extra space while spending more time at home, now is a good time to buy a house.
Economic indicators point to mortgage rates beginning to increase this year, and home values are also on the rise. If you’re a homeowner hoping to move up, it’s an ideal time to take advantage of today’s low rates — and current housing 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 monthly bills will be.
8. You could lock in a competitive rate before the next increase.
Speaking of stability:
- Buying a home sooner rather than later could help you to secure a low mortgage rate before they begin to climb.
- Rates are creeping upward: Logan Mohtashami, HousingWire’s Data Analyst, says, “Mortgage rates should rise as we are in the early stages of getting our economy working again.”
- Even with a slight jump, the outlook for homebuyers is still good as rates remain at historically low levels.
Compare the current average rate of around 3 percent to the average interest rate of more than 12 percent in the 1980s, and you’ll find that today’s mortgage payment may be over $1,600 cheaper.
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 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.
Buy now, and you may qualify for one of many loan programs that provide big benefits to eligible buyers. Like:
- The USDA loan 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 and remains popular because of its reasonable down payment requirement — as low as 3.5 percent.
- Other buyer-friendly loan options include the VA loan and the Fannie Mae HomeReady® mortgage, 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.
11. You could improve your mental health.
It’s no secret that living through these unprecedented times has elevated stress and taken a toll on mental wellness. Adults have seen an increase in symptoms of anxiety and depression, but studies also show that turning a new page — and pursuing novel experiences — can positively affect happiness.
This may include moving:
- United Van Lines’ 2020 Annual National Movers Study confirms that, among customers who cited COVID as a factor for moving in 2020, 60 percent listed their motivation as concerns for personal/family health and wellbeing.
- Over half of the respondents moved to support a lifestyle change or better quality of life.
- A large number of homebuyers have also opted to move out of the city and into the suburbs (which may have cheaper housing and living expenses).
Others move for weather — a potential influencer of mood — or to be closer to family. Moving, for many, offers hope of a new chapter.
You have questions, we have answers.
Our loan officers are friendly, local, and highly trained in assessing up-to-the-minute market news to help you find the right loan — and the right rate. To find out if you can benefit from buying, connect to a loan officer in your area.
For educational purposes only. Please contact a qualified professional for specific guidance.
Sources are deemed reliable but not guaranteed.