There are many advantages and disadvantages to owning real estate. You most likely know all the stated advantages to owning your home and the disadvantages to owning your home. There is no secret that owning a home is better in the long run for anyone who wants to build individual wealth, by building equity, not to mention the tax advantages to writing off mortgage interest.
As a result, many of you that are currently renting a home have the dream of owning a home at some point in the future. Is it attainable or just a pipe dream? What is it costing you to wait? Is it the right time to buy a home with the market the way it is? First of all, it is always a good time to own real estate and buy it. But, to take it a step further, I will be discussing exact reasons why you should buy now and what it will cost you to wait. What would be the cost to wait six months to a year before you buy your first home?
The common thought process at this time with 1st time home buyers is to wait for the real estate market to "bottom out", where they can get the best price and will not lose any value after they purchase that new home. The problem with this scenario is that there is no guarantee that our market will "bottom out". In fact, it has been predicted that Raleigh and the Triangle will be one area that will see positive appreciation this year. Despite the difficulties across the nation last year, this area saw a positive appreciation of about 3%. Can you risk that the housing prices will fall this year when every indication is the slight recession that the nation is experiencing will be short-lived and may be over by the end of 2008. So, if you wait to buy a home until the end of the year, you risk paying a higher interest rate on your home due to an improving economy.
It is no secret that the first thing that the Federal Reserve Chairman typically does when the economic numbers are good is to raise the prime rate to prevent inflation. This prime rate is a funny thing when it comes to the home mortgage rates. When the prime rate falls, you do not see an immediate effect on the mortgage rates as it may take a few months to the rates to fall. However, when the prime rate goes up, you will see almost an immediate increase in the mortgage rates. For the profit minded people, this is no surprise since the lending institutions make more money when the rates are higher than they do when the rate are lower. So, it makes sense that they will go down slower then they will go up.
With this in mind, you could actually have a situation where you may pay less for a home in six months than you will today, but have a higher mortgage payment since the rates will most likely be higher in six months than they are today. We all know that the bottom line is how much we have to pay a month and not how much we actually pay for the home.
Another trend makes it more advisable to purchase your home today is the incentives that builders are giving to sell their homes. I have seen where a builder is paying $10,000 towards upgrades or closing cost on a home priced in the high $100,000-low $200,000s. Others are discounting there homes by $50,000 to sell their inventory. You see this trend with the national builders who are seeing a major downturn in their business in other areas of the country and want to make up the difference here.
The fact that the economy is slumping a bit means that it is a great time to buy a home in the Raleigh, Cary, Durham areas. Money is very cheap and sellers are very motivated to sell. Whenever it is a buyer's market, it is a great time to buy. My mantra has always been that it is always a great time to buy and own real estate, but there are varying degrees as to when is more advantageous than others. With the effects of the national real estate market making its way into the mindset of many North Carolina homeowners, it makes this the perfect time to buy a home. My lenders will tell you that money is still available to borrow and there are many programs still available for the 1st time home buyer. Call or email me if you would like to see if you can buy a home today.
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