By Kelly Smith
- cheap, or
- mom makes a pretty great meatloaf dinner,
we want you to know that 2017 is the perfect time to leave someone else’s nest and make (or buy) your own.
Reason # 1 – Rent prices are going up
Rent prices keep going up. If you’ve been a long-time renter, you know that you are at the mercy of the landlord and what he/she charges. You don’t necessarily know when the price will increase and may get very short notice when it does. This can make budgeting and planning difficult especially if you’re living paycheck to paycheck, trying to pay off debts, or trying to save money for retirement, a new car, or a down payment. When you own a home, the principal and interest payment are fixed over the course of the loan (typically 30 years).
“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.” -Harvard Report
Reason # 2 Interest Rates are going up but remain low
Interest rates are on the rise. Though still relatively low by historical comparisons, interest rates are currently over 4.0% and some say could reach close to 5.0% by 2018. Your monthly payment is greatly affected by interest rates. Let’s consider the example below on a $220,000 home (current median price of a home in Billings, MT) with a conventional loan assuming a 5.0% down payment. We’ll use today’s interest rate of 4.375% and factor in a conservative 3.0% appreciation in value for the year (last year, home values in Montana appreciated at a rate of 4.6%). Considering principal and interest only, the mortgage payment would be $112.00 more per month if one waited to purchase the same house a year from now.
Reason # 3 Create your own nest egg
Either way you look at it, you’re paying a mortgage—
yours or your landlord’s. If you’re in a position now to purchase a home, why not start creating your own wealth and increasing your net worth? Watch what happens to a homeowner’s equity over the course of six years on a $250,000 home. Now that’s what I call creating your own nest egg.
Reason #4 Life transitions
Many people buy a home because they are experiencing some sort of life transition. If you’re getting married, having your first child, or you’ve outgrown your old house, you’re probably considering something more suitable to accommodate the growing needs of your life and family. 35% of all homebuyers are experiencing a lifestyle change which causes them to look for a new home. If you are a first time homebuyer, consider how long you would like to live in your first home. Will it accommodate your life as your family grows or will you use it as a stepping stone to a bigger home in a few years? Either way, buying your own home will get you started to creating stability and family wealth for the long-term.
Reason #5 Safe, stable, and healthy living
You want to live in a more stable, healthy, and safe community. If you’ve been a renter for any length of time, you probably have some horror stories about the noisy neighbors living above you, the sketchy guy who lives down the hall, or the lack of care your landlord has for maintaining the space you live in. You’re ready to have a place that you can make and call your own. You’re excited to have a home you can be proud of that is safe for your kids (or future kids) to play in the yard or the neighborhood park and to have a quiet sanctuary for yourself and your family. You are ready to have a home that is safe and healthy to live in—one where you don’t have to worry about mold issues, lead paint, or faulty wiring and plumbing.
These are only five reasons among many to buy your first home this year. Many renters make assumptions that make that first home purchase seem far out of reach. Don’t assume that you have to have to have a large sum saved for a down payment. There are mortgage loans available that require only 3.5%. Don’t assume that you have to have stellar credit. Over 50% of homebuyers with approved mortgages have scores between 600 and 749. Meet with a lender (we recommend Western Security Bank) and/or home finance counselor (we recommend The Home Center– it’s free) to discuss what it would take to purchase a home before 2018. You may be surprised that you can actually afford it! Are you ready to make your own nest?