Buying a house is often the biggest financial decision a person (or couple) makes in their entire lives. The questions that we get most often from first time home buyers usually revolve around timing. “Is now a good time to buy a house?” “Are interest rates good right now?” “Are there any programs out there right now that are good for home buyers?” And the list goes on… We figured we would address some of these questions below as well as accept new ones!
#1 Is now a good time to buy a house?
The answer is yes. Although everyone’s financial situation is different, there have been few times in the last 30 years better than now for first time home buyers to purchase real estate. Proof that now is a good time to buy? In the last few months real estate has been moving faster than ever because of pent up demand. At the same time, rent rates in many cities continue to rise. If you have a fixed rate mortgage, your principal and interest payment will not rise with inflation or demand as would rent rates.* Additionally, if interest rates go down (they are already low) you can always apply for a refinance.
#2 Are interest rates good right now?
The answer again is yes. Although interest rates have risen slightly from where they were a couple months ago, they are still much lower than the historical average. Many analysts predict that rates may continue to rise throughout the upcoming months making now the time to act for people thinking about buying. Again, you can always apply for a refinance if rates go down. Remember that interest rates not only depend on the economy, but also on factors like your credit score, debt ratios, loan program, and down payment. The better these factors are the better (lower) your rate may be.
#3 Are there any good mortgage programs available right now?
There are a plethora of great mortgage programs available right now. One of the coolest programs available right now that very few people realize is still available is a rural development (zero down) loan. This lets you purchase a house without a down payment and can be used in most of the cities right outside of Grand Rapids. There are also great FHA 3.5% down programs that are great for first time home buyers and even zero down VA loans with great interest rates for Veterans. Finally, once it comes time to pay taxes there is still the mortgage interest tax deduction that you can take advantage of.**
What questions do you have when it comes to real estate and mortgages?
*If you have an escrow account, changes in your property taxes and insurance may cause the escrow portion of your payment to increase or decrease.
**This is not intended as tax advice; contact your tax preparer for more information. Interest above the fair market value is not deductible for federal taxes.
*** Treadstone Funding is a local Grand Rapids mortgage company.