While there’s no question the coronavirus crisis has created challenges in how we live, there are some very compelling reasons to buy a new home now…especially for first time homebuyers. The leap from renter to owner may actually be closer than many think, with many renters discovering they can qualify for a home of their own with almost no money out of pocket. So if you’ve been renting and would like to take advantage of some of the lowest interest rates in history, competitive pricing, and down payment assistance programs…and social distancing has made you realize you don’t love where you are sheltering in place, read on for a few reasons why now might just be the best time to buy a new home.
From building your own equity (not your landlords!), to tax deductions, and fixed-rate payments, owning your own home provides many personal advantages. Consider these key facts:
- Equity: If you own, you are building equity in your home that can benefit you financially, vs. monthly rent payments that benefits your landlord, not you. Why not build that long-term nest egg?
- Tax Deduction: The interest portion of your mortgage payment may be tax-deductible. Paying rent offers no tax advantage.
- Privacy: When you rent your landlord can access your rental property at any point in time and raise your rent as they see fit. A fixed-rate mortgage locks in your monthly housing expense.
- Pride: Owning your own home allows you to customize and renovate as much as you like, which can lead to a sense of stability and pride.
- Finances: If you pay $2,500 in rent for three years, you’ve basically given someone else $90,000. Make that money add up for you, not your landlord. In most cases, ownership can be cheaper than renting.
What About a Down Payment?
One of the biggest obstacles for first time homebuyers is the cash needed to purchase a new home. Down payments and closing costs can add up, and many just don’t have that cash available. The good news is there are loans that offer assistance to help with down payment and closing costs, which translates to little or no out-of-pocket costs to the buyer. If you are in California, ask your loan officer about the CalHFA Program and how it could help you become a homeowner by reducing your out of pocket expense.
Bottom Line? Timing is Everything
Just keep in mind that while current market conditions offer an incredible opportunity for homebuyers to lock in historically low interest rates for a mortgage, rates are going up quickly because experts are saying many people are refinancing. If you wait too long to buy, you may miss the money-saving boat, so make sure to read up on the latest mortgage rates first. The takeaway? It matters more than ever to get pre-approved for a mortgage so you can calculate your budget, lock in a great interest rate, and take advantage of first time homebuyer assistance programs.