The housing market is something that people have been talking about and watching like a hawk since 2007 when it completely fell apart. Some people today are still struggling with selling their homes without losing money if they purchased their house before the Great Recession. The millennial generation is not buying into the American dream of being a home owner in the same numbers as we’ve seen in the past. Rental properties are continuing to grow in demand.
With all these factors in place, the big question is – should you buy a house now? In my opinion, yes, now is the time to buy.
There are obviously personal and financial matters you should first take into consideration, but there are several factors that make this a great time to buy a house.
Reason #1 – Mortgage Rates Are Incredibly Low Right Now
Mortgage rates aren’t just low, they are at a historic low. In 1976 the median 30-year mortgage rate in the Southeast was 7.95%. After that it climbed up to almost 20% before calming down to float around 10% for many years.
Today’s mortgage rates are about 4.25%. That’s like the bank letting you borrow the money almost for free!
The difference in payment from a 7.95% rate and a 4.25% rate on a $250,000 mortgage is $595.85 per month!
Rates have already started recovering, so buying now guarantees that you’ll be able to take advantage of these low rates.
Reason #2 – Investment Opportunity for Retirement
If you buy a house now at a great price, you don’t necessarily have to sell it. Instead you could rent it out when you’re ready to move.
Before you have paid off your house, you can rent it out for an amount that either covers your mortgage payment, or even a little extra to start an income flow. Once you’ve paid off your house, if you are renting it out, the money you are bringing in goes straight into your pocket.
By now I’m sure you are well aware that I just released my book, You Can Retire Sooner Than You Think. In researching the differences between happy and unhappy retirees, I learned that happy retirees on average have about 2.6 streams of income after retirement.
Income Stream Options:
Social Security – this won’t be around too much longer
Pension – not a lot of these floating around anymore
Stock market investments – yes
Government pension – maybe
Part-time work – maybe
Rental property – could be a maybe!
A rental property is a great way to be sure you’re reaching that happiness threshold of 2.6 streams of income.
Reason #3 – Live With Family and/or Friends
I mentioned at the beginning of this blog that the millennial generation isn’t buying into the American Dream just yet. Well if your child falls into that category and is still living at home with you then it just gives you another reason to buy to a house! Your child can pay you rent (maybe a lower amount than they would anywhere else) helping you pay off your mortgage each month.
This doesn’t have to just be family, though. Perhaps you have a friend who has just moved back into town, or someone you know isn’t ready to purchase their own house just yet. Open your house up to roommates. Having people paying you rent while you’re also living in the house is a wonderful way to cut down the cost of your mortgage allowing you to put that money towards other needs.
The mortgage rates today are just too low to ignore. Now is a great time to buy, and doing so can lead to great financial opportunities for you. If you still are unsure about buying a home, sign up for Wela’s Home Buying Boot Camp to quickly learn the financial basics with buying a house.