Over the years, your family, friends, and co-workers may have encouraged you to purchase a home. But you may be wondering whether buying a home is the right decision. While having reservations is normal, there are several smart reasons why you should buy a house, even while the pandemic is in full throttle.
Should you buy a home now or continue renting?
If you still have your old job, your salary is still intact, and you’ve been shopping for a house for some time, now may be the right time to buy a house. Despite the low supply of homes, many Americans are still buying. In fact, CNBC has noted that in 2020 more homes were bought than in the year 2006. But should you follow suit? Below are five reasons why you should buy a house right now.
Low-interest rates
The monetary policies of the Federal Reserve in response to the pandemic have reduced short-term loans interest rates, and they’re likely to stay that way until the end of the year 2023. In addition, long-term interest rates are also low. The Fed has been purchasing mortgage-backed securities as a response to the pandemic, which has led to the 30-year fixed mortgage rates dropping to historic lows. Therefore, the current low mortgage interest rates have made it possible for Americans to buy homes amidst the pandemic.
Rising home value
If you buy your dream home now, you will enjoy the high home price growth. According to the Federal Housing Finance Agency, home prices have risen by nearly 20 percent over the last year. This has given home sellers serious profits. Therefore, if you decide to buy now, you will be able to capitalize on the high price growth and build your equity very fast.
A variety of mortgage options
Today, there are a variety of no and low-down-payment mortgage options. This means that buying a home is affordable now. Although you may have to pay private mortgage insurance if you have less than 20 percent of the down payment, it’s not always a bad thing. This is because you may be able to buy your dream home sooner and enjoy the low mortgage interest rates. Because houses are still increasing in value, waiting till you save up the 20 percent down payment means you will have to buy your house at a higher price.
Digital tools have made purchasing a home easier
Small open houses, video calls, virtual home tours, and e-closings have made it possible to buy a house during the pandemic while keeping safe. These tools will most likely be used even after the pandemic. However, homes are selling fast, mainly because buyers have outnumbered the number of available homes for sale. Therefore, you should highly consider working with a real estate agent to help you understand the local market, provide you with a variety of homes for sale, and help you make a strong offer.
Renting a house won’t offer you a return on investment
Although house prices are growing fast, rents have also started to recover, with a 5 percent growth rate. However, this isn’t universal, and the price difference will mainly depend on the house’s market price, the size of the house, and the location. Therefore, ensure that you speak to a realtor to run the numbers for you before deciding. But keep in mind that renting a house doesn’t have an ROI. Therefore, you should also factor in your long-term financial goals rather than just the cost.
Homeownership is undeniably an essential part of the American dream. Fortunately, the low-interest rates and variety of financing options can help you achieve your dream today. Therefore, despite the pandemic, you should highly consider purchasing a home now.
