Renting versus Owning
There has always been that debate of whether to rent for a while or buy. It has always been a great debate. Everyone has there differing life situations and that will ultimately make the decision for you. For instance if you know you may not be in a location for very long due to job transfer or relocation for personal reasons, need to get your finances in order, just started a new position, and have no desire to maintain a home then renting may be a great fit. However when you own a home you have an opportunity to build equity (investment) and later sell at a profit. There are also tax benefits and the secure feeling that you have more control over your housing situation.
If you're thinking of becoming a homeowner at in the near future here are a few things to considered..
Mortgage rates are still at historic lows!!
In late 2017, the Federal Reserve once again raised interest rates. With economic factors getting better every day there is no reason for the Federal Reserve to significantly lower rates any time soon. If you are considered a purchase or a refinance you need to lock your rate ASAP! Every fraction higher is more money out of your pocket every month. We all like to save money, right?
If for example you have excellent credit (meaning a score of 780 to 850), you might qualify for a 3.613% APR on a 30-year, $300,000 fixed mortgage. If your credit is good but not outstanding, you can snag a 3.835% APR on that same sort of loan. These are still extremely favorable rates compared to what we've seen historically, but we don't know how long they'll hold steady. Therefore, if you're thinking of becoming a homeowner at some point, 2018 is a good year to pull the trigger.
Under current tax law you can still write of mortgage interest
Currently you can deduct all your mortgage interest on loan amounts under $750,000. So if you have your eyes set on a very pricey piece of real estate and looking at a jumbo loan exceeding the $750,000 limit there are going to be limitations. However the average loan amount in the US is far below that number. Latest stats I have seen show around $255,000.
You should check with your accountant however as these items do change. Also if you take the standard deductions and do not itemize this may impact you tax benefits of ownership. Consulting with a good accountant can also bring to light many other deductions you may not have consider. These might be deducting the portion of the home you use as a home office for work related activities, do you ever AirBnB you home, improvements made to your home ect.
Todays market if very active
From the markets SunPointVMS services we have seen inventory shortages for the most part. This problem may be less dominant as rates rise and buyers qualify for less. In real estate most things are relative. For instance in a great market you may be able to sell your home quickly and for a awesome price only to find that your next ideal home is also priced higher and in high demand. When financing comes into the equation however this is never better for you to wait as rates are going higher.
Going from Renter to Owner is typically a great financial move, especially in a increasing market that we have experience in the past couple years. If you are ready to take the plunge let us know. We can direct you to one of our great Lender partners and assist you in making sure you are getting a decent deal on your new homes.