If you have good credit and a down payment, what are you waiting for? Interest rates remain low with the Federal Reserve deciding not to raise rates over the summer. That doesn’t mean rates won’t go up by the end of the year. For buyers, especially millennials, that could be bad news.
Money Magazine says, “if mortgage rates hit 6%, a third of millennials (people younger than 35 years old) wouldn’t be able to afford homes as they’re currently listed.” The magazine looked at analysis by housing-data analytics company HouseCanary. A rise in rates can change the monthly payment by hundreds of dollars.
While FHA loans seem to be popular for first-time home buyers, new loans from Fannie Mae require as little as three percent, according to The Mortgage Reports. Known as the 97% LTV (Loan To Value) loan or Conventional 97, it can be more affordable since the program does not require an upfront mortgage insurance premium. Its annual mortgage insurance rates are cheaper, as well.
Buying a home could end up being cheaper than renting. The Mortgage News Daily says mortgage payments on a three-bedroom home were more affordable than paying rent — in at least 66 percent of counties recently analyzed by Realty Trac.
Tax deductions is another perk of buying a home. When you pay rent, you get nothing in return, other than a place to live. By owning a home, you can deduct your interest, unless your loan is more than $1 million. Any points you paid on your loan, as well as property taxes are also deductible the year you paid them. Bankrate says these taxes are an annual deduction as long as you own your home.
Another reason to buy a home is lower PMI (Private Mortgage Insurance). If you put less than 20-percent down on your first home, you must pay PMI. However, a recent change has dropped the annual premium to 0.85% from 1.35% of the loan balance. Keep in mind, your PMI may also be tax deductible.
So what are you waiting for? Contact me and let me help you find a home!