Purchasing a home is the single biggest purchase you will have to make in your life, so it’s crucial you know all the elements necessary to make a decision of this magnitude. With any decision, timing is key, and the time is now. To make things easier for you, we have laid out the top reasons for why buying a house in 2017 is an absolute must.
Rental Prices Are Increasing
Across the housing market, rental prices are increasing rapidly. With these prices on the rise, renting is becoming an increasingly demanding burden for otherwise potential homeowners. No matter which city you live in, if you are paying rent then you are helping to build someone else’s equity. Look at it from this perspective: over the course of 10 years at $1,000/month, you could either pay down your own mortgage or someone else’s by $120,000. Which would you prefer?
Low Down Payment
One of the most prominent reasons people don’t buy a home is because they think they are required to come up with a 20% down payment. While there are many advantages to making a higher down payment, including better rates and the possibility of avoiding mortgage insurance, there are various options available to buyers who would like to put down less than 20%. In fact, buyers can put down as little as 3% in many cases and still be approved for a loan. Many people view down payments as a barrier of entry to the homebuying process. The realization that this barrier may not exist as you once thought makes buying a home that much easier. If you’re interested in a prime property, the highest minimum down payment you will be required to come up with is 5%.
Mortgage Rates Are Increasing
Mortgage rates are slightly higher than they were at the end of 2015 — about 3% higher. As the market continues to stabilize, potential buyers need to keep in mind that rates are likely to continue to rise — as much as an additional 9%.
There’s no denying that mortgage rates are up heading into 2017. However, it’s important to put this in perspective. First, rates vary depending on several factors, but as of February 2017, the average interest rate is in the mid-4% range.
In 2006, the average mortgage rate was 6.41% and in the late ‘80s, mortgage rates were between 9% and 10%. Comparatively, today’s rates are still looking great.
Home Values Are Up
Home values are now higher than what they were before the 2007 crash, increasing by as much as 5% from 2015 to 2016. When buying a house in 2017, housing experts expect an additional 2% to 3% jump in prices.
Inventory Continues to Decrease
Low inventory levels have been a problem that has been plaguing the industry for a couple of years. Although interest from potential buyers and sales are up, supply is down. This past fall, home sales peaked late in the season at an abnormal rate. As demand spiked, so did mortgage rates — adding to a new sense of urgency.
Because of this unusually strong demand during a slower time in the year, home buyers can expect at least 10% fewer homes for sale than last year. This trend is predicted to continue, at least for the foreseeable future.
Check Your Credit Score. A credit score is a representation of your credit report. FICO scores range from 300 to 850, and the higher your score, the better. Typically, you’ll get the best interest rate on a loan if your score is 740 and above. Correct any errors that may pop up on your report, make sure to pay all your bills on time, and aim to get your credit limit raised.
Interview Potential Real Estate Agents. If you know someone who is a real estate agent, that’s great. This person might be the perfect agent for you. But you owe it to yourself to shop around. Look for a real estate agent who is knowledgeable, honest, and can assist you with buying a house in 2017
Keep Tabs on Interest Rates. Not everyone qualifies for the same interest rate on a mortgage loan. It all depends on your financial situation and the lender you choose to work with. Take some time to shop around for the lowest interest rates. Note that closing costs can vary too, so make it a topic of discussion with your real estate agent on ways to keep these costs down.
Find a Mortgage Lender. Before you start shopping for a new home, connect with a mortgage lender to find out if you can afford to buy a home, your realtor will likely recommend someone that they have previously worked with. Take a look at what the lender has to offer, review the costs, and how long it would take to close on a property you would like to purchase.
Get Preapproved. When you decide on the lender you would like to work with, make sure to review the costs and get preapproved for a loan. To prepare for this, you will need:
- Tax returns for the past two years
- Paycheck stubs from the past few months
- Proof of mortgage or rent payments for the past year
- A list of all your debts, including credit cards, student loans, auto loans, and alimony
- A list of all your assets, including bank statements, auto titles, real estate, and any investment accounts
The Peak Corporate Network of independent, affiliated companies is staffed by experts with the unique skill set and field-tested experience to help you navigate the complexities of the real estate business, make the right decisions, and maximize the value of your property. By drawing on the power of the Peak Corporate Network and its inclusive range of services, clients save time and maximize the value of their assets. For help navigating the hottest 2017 real estate trends contact us today!