Tired of paying your landlord's mortgage? Keeping your eye on mortgage rates? Want to cash in on the tax benefits of homeownership? There are a million reasons why buying a home is a good idea, so we’ve compiled some of the biggest reasons why you should make your home purchase in 2017.
Mortgage rates are moving up but are still historically low.
In the last week of 2016, mortgage rates had climbed for the ninth straight week, averaging 4.32 percent with 0.5 points for a 30-year fixed-rate mortgage, according to Freddie Mac. Experts are predicting the 30-year rate to end 2017 no lower than 4.5 percent and no higher than 5 percent.
While a bump in mortgage rates can decrease home affordability, it’s important to remember that a mortgage rate in the 4 to 5 percent range is still historically low. See our infographic for the cost of a mortgage over time. Spoiler alert: in the 1990’s, the average interest rate was 8.12 percent.
Nevertheless, if you want to buy a home with a low mortgage rate, it would be best to act sooner rather than later.
Renting is still expensive nationwide.
According to Trulia’s most recent rent vs. buy study, buying a home is 37.7 percent cheaper than renting on a national basis for homeowners who put down 20 percent on their home purchase and stay put for seven years. As far as the nation’s 100 largest metros, it’s cheaper to buy in all of them.
Even with rising mortgage rates, Trulia says that rates would need to double, possibly even triple, to make renting the better financial choice over buying a home.
The economy is improving.
The Fed moved to raise their benchmark interest rate in December after recognizing the progress the economy had made toward their objectives of “maximum employment and price stability,” according to Fed Chairwoman Janet Yellen. While consumer confidence reached a 15-year high with considerable strength in the future expectations component, Yellen said the Federal Reserve expects “the economy to continue to perform well.”
Low down payment options have never been better.
No, you still don’t need a 20 percent down payment to buy a home. In fact, some of the lowest down payment programs like FHA and USDA Rural Development have made their programs even more affordable over the past couple years by reducing private mortgage insurance rates. See here for a list of loan programs that allow you to purchase with less than 20 percent down.
Home price appreciation is expected to slow.
Home prices rebounded astoundingly in 2016, posting a 6 percent year-over-year gain in the third quarter, according to the Federal Housing Finance Agency (FHFA) House Price Index. While prices are still expected to rise in 2017, the National Association of Realtors expects home prices to slow to a 3.9 percent growth rate.
With mortgage rates rising, a slow down in price appreciation would be beneficial to your home affordability.
For more information about what it takes to purchase your first home, download our free Mortgage 101 Handbook.