Why You Should Buy a House Now

Photo (cc) by Images_of_Money

If you’ve been sitting on the sidelines of the housing market but your ultimate goal is to own a home, Money Talks News founder Stacy Johnson has a few words for you:

When it comes to buying or refinancing a house, I’ve got some advice. Do it. And do it soon. I can’t say what’s going to happen in next few months. But over the next few years, odds are home prices with increase, and so will interest rates. If you don’t buy now, one day you’ll look back and wish you had.

In the video below, Stacy explains why now is the time to buy. Check it out, then read on for more information.

Why buy: Prices have seen their lows

It’s no secret the nationwide housing market took a dive during the Great Recession, with prices plunging and Americans walking away from, or losing, their homes.

Fast-forward to today: Pent-up demand, decreased supply and an improving economy are showing up as higher home prices. According to the S&P/Case-Shiller Home Price Indices, housing prices nationwide were 10.2 percent higher in the first quarter than they were in the first quarter of 2012. And prices in some of the hardest-hit and most active markets jumped even more. Phoenix saw a 22.5 percent increase, followed by San Francisco with 22.2 percent, and Las Vegas with 20.6 percent.

While every real estate market is local and it’s unlikely the recovery will continue at such a blistering pace, it’s safe to say the bottom in housing prices is behind us.

Another buy signal is the cost to own vs. rent. Trulia found it’s cheaper to buy than rent in many markets. For example, they say it’s 58 percent cheaper to buy in my hometown of New Orleans, assuming a 3.5 percent mortgage rate. In Detroit, it’s 70 percent cheaper to buy than rent. Statistics like these suggest more demand on the horizon.

Why buy: Rates have seen their lows

When Stacy shot the story above, just a few weeks ago, mortgage rates were bouncing along at historic lows — less than 4 percent for a 30-year fixed-rate mortgage. Today? You’ll be hard-pressed to find anything as low. (Use our mortgage search and see for yourself.)

According to HSH.com, the days of rates below 4 percent may be fading. It wrote at the end of last month:

While there is some reason to expect a little settling of rates after the market upset subsides, there is probably not a whole lot of space for rates to fall, and given the sensitive and nervous nature of the bond and stock markets at this point, probably somewhat more room to rise. As such, over the next nine-week period, we think that the average overall 30-year fixed as measured by HSH’s FRMI will wander a path between 3.82% and 4.16%.

HSH found that the average rate for a 30-year fixed-rate mortgage was 4.63 percent on Monday, the Los Angeles Times says.

Nothing’s guaranteed. If the economy weakens, both interest rates and home prices could pull back. But if the recovery stays on track, it’s likely both rates and prices could rise further, suggesting it’s time to get off the fence and either take out a mortgage or refinance one.

Should you buy?

It’s never a good idea to buy anything — especially something as expensive and complicated as a house — without thoroughly thinking it through. Consider these points before you start shopping:

  • Can you afford it? Most lenders suggest not spending more than 28 percent of your gross income on housing. That includes your mortgage payment, insurance and real estate taxes. Sites like Zillow and Trulia will give you an idea of what to expect cost-wise.
  • Do you have a down payment? During the housing crunch, many lenders were asking for 20 percent down, but that’s changing. Zillow says some lenders are accepting 10 percent down from buyers with good credit, and others are going as low as 5. (FHA loans can be had for as little as 3.5 percent down.) But remember: The more you put down, the lower your monthly payment and the less interest you’ll pay overall.
  • How’s your credit? According to the Los Angeles Times, the average successful mortgage applicant had a 764 credit score. Get your credit reports and scores at least six months, preferably a year, before you start applying and work on raising your numbers. Lower credit scores mean higher rates, something that can cost tens of thousands in extra interest over the life of a mortgage loan.
  • Are you staying put? Homebuying is for the stable. Because transaction costs are high, it can take years to break even. If you’re unsure about your ability to stay put for at least five years, you may be better off renting.

How to get started

If now’s the time, here are the first steps:

  • Get preapproved for a mortgage. Preapproval means you’ve applied for a mortgage and the lender is prepared to cut the check. Because it takes more time to qualify for a mortgage than some houses remain on the market, shopping without preapproval is a waste of time.
  • Think before you shop. Make a wish list, including number of bedrooms and bathrooms, and yard size. Focus on the features you need, then those you want. And don’t overbuy. Remember, every extra square foot costs more to buy, maintain, heat, cool, furnish and clean.
  • Find a real estate agent. While you can certainly buy without one, an agent familiar with your favorite neighborhoods can save a lot of time. Just be sure to take your time finding the right pro.

Have you been waiting on the sidelines for the right time to pounce on the housing market? What are market conditions like where you live? Tell us on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
5 Renovations That Can Impact Your Home Insurance
5 Renovations That Can Impact Your Home Insurance

Home improvements can affect your home insurance policy for the better, the worse or both.

16 Products That Solve Everyday Annoyances
16 Products That Solve Everyday Annoyances

These items put an end to the daily irritations that bug you the most.

8 Reasons Your Parents Had an Easier Retirement Than You Will
8 Reasons Your Parents Had an Easier Retirement Than You Will

Here’s why the last decades of life are harder now than they used to be.

5 States Where Drivers Pay the Most for Car Insurance
5 States Where Drivers Pay the Most for Car Insurance

Auto insurance will cost you more than three times as much in one state compared with another. Here’s how to lower your rates no matter where you live.

8 Ways to Slash the Cost of Homeowners Insurance
8 Ways to Slash the Cost of Homeowners Insurance

Reviewing this critical insurance policy takes a little effort, but it pays off big.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

Taking a Multivitamin? Here’s Why You Should Reconsider
Taking a Multivitamin? Here’s Why You Should Reconsider

A new study has bad news for the millions of Americans who spend money on multivitamins.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

11 Huge Retirement Costs That Are Often Overlooked
11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

7 Tricks to Cleaning Your Bathroom Faster
7 Tricks to Cleaning Your Bathroom Faster

These tips can get your bathroom sparkling with little time and no elbow grease.

20 Amazon Purchases We Loved in 2020
20 Amazon Purchases We Loved in 2020

These practical products made everyday life a little easier last year — and will do so in the new year, too.

10 Times You’re Right to Be a Cheapskate
10 Times You’re Right to Be a Cheapskate

Clever shoppers can save money without sacrificing quality. Here is how to do it.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.