Interest Rates Are Low, Is Now The Time To Buy A Home?
Homebuying: Is Now a Good Time to Buy a State College Home?
Should you buy or refinance your State College home now or later? When mortgage rates are at a record low due to the prevailing unpredictable Coronavirus situation, you can do something positive. If you qualify for a great mortgage, buying your home now may save you a lot of money and put you on the road to a better financial future after the uncertainty is over, but is now the right time?
Shane Whitteker is the owner and chief broker at State College mortgage broker Principle Home Mortgage. Because of the financial benefits owning a home brings, Whitteker believes it’s always a good idea to consider home ownership.
“There is rarely a bad time to buy a home. There are better and worse times but usually not bad times,” Whitteker says. “Now is good because values are going up each year. The home will be more expensive next year, so if you qualify and are prepared, buy now.”
Factors that Contribute to Favorable Home Buying Conditions
Low-interest rates translate to the low cost of obtaining a mortgage. Affordable credit empowers potential home buyers since they can confidently apply for a mortgage and get more home for their dollar. The best time to buy a home, if you can, is when interest rates are low.
A Well-Performing Economy
An expanding economy creates favorable conditions for home buying. Spending power increases with: a thriving GDP, high employment rates, rapidly expanding manufacturing industry, favorable prices of general consumer goods, among other factors. People have more money to spend.
Interest rates are favorable at this time, which makes it an excellent time to buy, however the best time is when all the factors make it affordable to you. It is not always that you can rely on speculation to determine the most appropriate time. If you do your preparation and all the necessary factors, including funding, are in place for you, then now is the best time to buy a home.
“Rates go up and down based on the economy,” Whitteker says. “When the economy is doing well we typically see rates start to increase. When the economy is not doing as well rates are cut to help bolster more economic activity. So yes, rates will go up again and will come down again. This typically follows the cycle of the economy.”
Factors to Consider When Selecting a Mortgage Broker
A good mortgage broker should have the following values:
- They should ideally be a local mortgage broker. A local broker will be there every step of the way, and will take a personal interest in your mortgage - unlike a faceless, impersonal national mortgage company.
- The local mortgage broker should be well-versed about different loan options and which one to recommend to you as their client.
- They should have a relatively quick response time to all your questions and explain terms and conditions that you may not understand as a non-professional.
- They should have experience working with all types of mortgages.
How Home Ownership Creates Wealth and Helps You Save
Although some people struggle with the idea, owning a home increases your net worth and saves you more money than you can imagine. Here is how:
- Home prices generally go up, so you’ll be able to sell it for a profit one day.
- Successful mortgage payment builds your equity value while monthly rent diminishes your bank account without adding value.
- Mortgage installments are on a fixed basis, whereas monthly rent may fluctuate (generally on the higher side).
- A rented apartment is restrictive, while in your own home, you are free to keep pets or have a productive garden.
According to Whitteker, home ownership can be an often overlooked path towards the accumulation of wealth.
“I read a quote about 10 years ago suggesting that the average baby boomer was retiring with about $50,000 in their 401K and around $200,000 in home equity on the average. This is a huge factor to consider that most people don’t ever think about .”
Home ownership as a means towards building a financial nest egg is a long term strategy, but one that - if you’re patient - can pay off in the long run.
“It’s a slow process but owning a home has a significant impact on your wealth. I am not sure how much you save on owning vs renting but the biggest factors are the fact that your property will typically grow in value at the same time you are paying down the principle,” Whitteker explains. “So if you rent a $200,000 home, that home will increase in value while you pay the rent. So the value increase and principle being paid down is a benefit to the owner of the home. The financial impact of owning a home is the main aspect that should be considered here in my opinion.””
A fixed-rate 30-year mortgage can save you as much money as you would have used to pay rent for the entire period. It may also earn you a considerable tax relief. If you have a credit score of more than 600, low debt, and a sufficient monthly income, you can most likely qualify for a mortgage. If you lack steady employment, and are in a lot of debt, you will likely fail to be eligible for a mortgage.
Centre County Realtors are observing strict safety measures to keep their customers and themselves safe during the Coronavirus pandemic. Local mortgage brokers, including Principle Home Mortgage are doing the same.
To learn more about how home ownership can help improve your long term financial picture, give your local mortgage broker Principle Home Mortgage a call at 814-308-0959.
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