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
20 Generic Brands That Amazon Created
20 Generic Brands That Amazon Created

Amazon’s growing collection of private brands offers everything from toilet paper and coffee to motor oil and clothing.

7 Tricks to Cleaning Your Bathroom in Minutes
7 Tricks to Cleaning Your Bathroom in Minutes

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

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Awesome Places You Can Retire Overseas on $2,000 a Month or Less
5 Awesome Places You Can Retire Overseas on $2,000 a Month or Less

In this week’s podcast: tips on retiring overseas — from someone who’s been helping American expats for decades.

8 Products That Make It Easier to Get Fit
8 Products That Make It Easier to Get Fit

Amazon reviewers give high marks to these tools that can help you get in shape without a gym.

View this page without ads

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

Get Started

Most Popular
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.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

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.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

7 Surprising Features That Boost Your Home Value
7 Surprising Features That Boost Your Home Value

You can add value to your home without hiring a contractor to do expensive renovations.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

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.