With low mortgage rates and high inventory; the housing market is offering once-in-a-lifetime opportunities. If you are looking to buy, now is the time.
7 Ways Homebuyers Benefit
1. Affordability is high. The housing affordability index, which measures the ability of an average household to afford a home, has registered favorable numbers for the past several months. This is especially encouraging for first-time homebuyers.
2. New tax credit for first-time buyers. First-time homebuyers, defined as people who haven’t owned a home in the past three years, are eligible to receive up to $7,500 in tax credits, based on a joint filing couple earning less than $150,000 annual income. Individuals earning less than $75,000 can receive up to $3,750. The tax credit is actually a zero interest loan that is repayable over 15 years. The credit applies to homes purchased prior to July 1, 2009.
3. Selection is great. With more homes on the market, homebuyers can be more selective than in previous years. Inventory is at a 15-year high. The more success buyers have finding the house that is suited for their budget, the more stable the market will be in the long run. Many sellers are willing to negotiate and work towards a win-win situation that works for both parties.
4. Interest rates are low. Thirty-year fixed rate mortgages (FRMs) have been hovering around 6 percent for the past several years, representing the most stable period for interest rates in the past 40 years. Rates are expected to stay low for the near future.
5. It’s a great time to move up or invest. Affordable home prices and a good selection mean good news for people looking to move up or find bargains. For homeowners looking to move up to a larger home, selling your home now may result in a slightly lower sale price, but the difference will be reclaimed with your next purchase. Real estate investors can use this time to find great real estate opportunities on homes around the country that can be turned into vacation rentals, family retreats and second homes.
6. A home is still the best long-term investment. A recent study released by the Federal Housing Agency has confirmed that housing values have climbed significantly throughout the nation during the past five years. Thanks to the power of leverage, a homeowner’s return on investment is even more impressive over time.
7. The recent news is good. Recently, Congress announced a plan to buy a huge portion of mortgage-backed securities from Freddie Mac and Fannie Mae. As a result, interest rates dropped more than 1 percent , enough to lower monthly payments several hundred dollars, and consumer response was overwhelmingly positive. The following week, the Mortgage Bankers Association announced that home loan applications increased a record 112 percent, with the highest level of applications in nearly a year.
The Federal Reserve study shows that the average homeowner’s net worth is 46 times the net worth of the average renter. The average homeowner’s net worth is $184,400 compared to $4000 for renters.
