Is Now A Good Time To Buy A House in State College?
Is Now A Good Time To Buy A House in State College?
Are you considering purchasing a State College home? If this is the case, you may wonder if now is a good time to jump. D. Shane Whitteker is the owner and chief broker at State College mortgage broker Principal Home Mortgage. We discussed with Shane some things to consider when buying a home in today’s buying environment.
Is Now a Good Time To Buy a Home in State College?
The answer relies on several factors, including your financial status, the state of your local housing market, and interest rates. If you can afford a down payment and monthly mortgage payments and expect to stay in the property for a long time, now can be a good time to buy. However, it is critical to conduct research and ensure that you are making a solid financial decision.
While markets experience changes, Whitteker doesn’t think it’s ever a bad time to buy a home.
“I tend to tell people that with lower rates you tend to be in a seller’s market and pay more for the home. With higher rates you see more of a balanced market where you pay a more average value for the home,” Whitteker says. “Overall, I don’t think that there are generally bad times to buy.”
When Were Interest Rates Previously This High? What Happened To Those Homeowners? Did They Lose Money In The Long Run, Or Gain?
Interest rates have varied over time, but they have historically been significantly higher than they are currently. Mortgage rates, for example, peaked at more than 18% in the early 1980s. Homeowners who bought during this period may have struggled initially with hefty mortgage payments, but they are likely to have benefited greatly in the long run as interest rates declined and home prices soared. It's crucial to remember that each housing market is unique, and numerous factors might influence the financial outcomes of homeownership over time.
“Rates were at this level up until around 2008 and slowly decreased over time. Rates are currently where they really should be after being at very low levels between 2012 and 2022,” Whitteker says. “Rates were extremely low in 2020 and 2021. These levels were abnormal statistically and were artificially created by the federal reserve.”
What Types Of Mortgages Can Be Used To Buy a Home? Which Ones Have The Best Interest Rates?
Mortgages used to buy a home include fixed-rate loans, variable-rate mortgages, FHA loans, and VA loans. Set-rate mortgages have a fixed interest rate for the loan's entire term, but variable-rate mortgages have lower initial interest rates that can vary over time. FHA and VA loans are government-backed loans that may have more lenient credit requirements and need a lesser down payment.
The best mortgage interest rate will be determined by your financial condition and credit score. Fixed-rate mortgages often have slightly higher interest rates than ARMs, but they provide the stability of a regular monthly payment. Comparing mortgage rates from many lenders is an excellent approach to discovering the best deal for your circumstances.
Is the State College housing market transitioning from a seller’s to a purchaser’s market? What Are Some Indicators That It's Becoming a Buyer's Market?
In State College, the housing market is slowly softening into a market that is more favorable to buyers than it had been. One indication is that the quantity of homes for sale has increased, providing purchasers with additional alternatives. Furthermore, homes may be on the market for longer, giving buyers additional bargaining power. Finally, price growth may slow, indicating that the market has reached a plateau. It's crucial to remember that real estate markets can differ greatly by area, so do your homework on the individual market you're interested in.
“The State College market is softening a bit and we are seeing sellers losing some leverage which overall needed to happen,” Whitteker explains. “Buyers are getting a reasonable amount of leverage back. This helps to keep the market more balanced. The State College market is still strong and should stay that way.”
While it hasn’t completely flip-flopped, the State College housing market seems to be softening a bit, according to Whitteker.
“I don’t think we are in a “buyer’s” market so to speak, but the leverage is not completely with the seller anymore,” Whitteker says. “Homes are taking a bit more time to sell, buyers are able to negotiate instead of paying above list price, sellers are more willing to help with closing costs and allow for home inspections and other contingencies.”
Will The Housing Market Crash? What's Different Now, Compared To When It Crashed In 09?
It's impossible to foresee the future with confidence, but there are no strong signals that the housing market will implode as it did in 2009. While there may be regional downturns or changes in specific sectors, the overall state of the economy and housing market has changed since 2009. Lending procedures and rules, for example, have been tightened, and homeowners now have more equity in their homes than before the last crash. Furthermore, there is now a housing shortage, which can help to stabilize prices. However, regardless of the situation of the market, it is always necessary to be cautious and make informed selections when purchasing a home.
Can I Use a Renovation Loan To Purchase a Home? How Would This Potentially Benefit Me?
A remodeling loan can purchase a home. It can be a wonderful alternative for purchasing a fixer-upper or a home requiring modifications or repairs. A renovation loan allows you to borrow money to buy a home and fund the cost of renovations all in one loan. It might be advantageous because it allows you to perform necessary repairs or changes without paying for them upfront. Furthermore, a remodeling loan might raise the home's value, making it a wise long-term investment. Working with a lender who has experience with remodeling loans is critical, as the procedure can be more complicated than a typical mortgage.
Whitteker says if you want to buy a home with a renovation loan, you essentially have two choices.
“Yes, you can use a renovation loan to purchase a home,” Whitteker explains. “There are currently two common options. The FHA 203K and the Fannie Mae Homestyle program. The benefit really is that you can find a home that needs repairs and purchase it for less than market value. Once the renovations are done a buyer may see significant equity gain on the home.”
Can I Use a Reverse Mortgage To Purchase a Home?
A reverse mortgage can acquire a home if the buyer is old enough. A Home Equity Conversion Mortgage for Purchase is what this gets called. You can utilize the equity from selling your present house or other assets to make a down payment on a new property, and the reverse mortgage will cover the remaining purchase price. One advantage of this choice is that you may be able to eliminate your monthly mortgage payment; however, you will still be responsible for property taxes, homeowners insurance, and maintenance charges.
How Long Do I Need To Live In a Home To Make Buying It Worth It? Why?
The amount of time you need to live in a property to make it worthwhile to buy it is determined by various factors, including the price of the home, the interest rate on your mortgage, and the maintenance cost. However, as a general rule, you should plan to stay in the house for at least five to seven years to be financially successful. It is because considerable upfront costs, such as closing costs and real estate agent fees, get connected with purchasing a property. The home's value might take several years to grow sufficiently to balance these expenditures. Furthermore, the longer you stay in the home, the more equity you can accumulate, which can help you earn a profit when you eventually sell the home.
“Typically, at least three years but going out to five is safer. If you need to sell your home with a real estate agent, you will pay 6% commission in most of the country. You typically need a minimum of 2 to 3 years for this level of equity growth but that is a bit tight,” Whitteker says.
Does a Shorter Mortgage Loan Period Make More Sense When Rates Are High? Why?
When interest rates are high, a shorter mortgage loan term may make more sense because it will save you money on interest payments over the life of the loan. It is because shorter loan terms have cheaper interest rates than longer ones. Furthermore, a shorter loan term allows you to pay off the loan sooner, which means you will pay less interest over the life of the loan. However, it is crucial to note that a shorter loan period can result in larger monthly payments, which can strain your budget. It is critical to balance the benefits and drawbacks of a shorter loan term and choose what is best for your specific financial position.
To learn more about buying a home and getting a mortgage in State College, visit the experts at Principal Home mortgage.
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