As a first-time homebuyer, you already know that saving for a down payment is the largest challenge. The decision of whether to buy a home today or wait until you have more saved for a down payment is an important one that requires careful consideration.
In this article, we’ll make the case for buying a home today instead of waiting until you have more saved for a down payment.
Home Prices Are Rising
Home prices are on the rise, and there’s no sign of them slowing down. According to the National Association of Realtors, the median existing-home price for all housing types in March of 2023 was $1,050,000, up 5% from February of 2023 but down by almost 20% compared to February of 2022.
While rising home prices may make it seem like waiting to save for a down payment is a good idea, the truth is that the longer you wait, the more expensive homes will become. By buying a home now, you can lock in a lower price and potentially save money in the long run.
Interest Rates Are Low
Believe it or not, interest rates are at still at historic lows. Yes, we loved those mortgage rates with 2’s and 3’s on the front of them but the truth is that these rates were being subsidized by the federal government. Even with rates in 6’s, we’re still historically low and so there’s never been a better time to buy than today!
Fannie Mae and Freddie Mac are actually providing incentives to first-time homebuyers by making it more affordable for folks with lower credit scores to borrow for home purchase. This can make it easier to afford a home now, even if you don’t have a large down payment saved.
One of the biggest advantages of buying a home is building equity. Equity is the difference between the value of your home and the amount you owe on your mortgage. As you make mortgage payments, you build equity in your home as you make payments to your principal balance and the home appreciates in value.
By buying a home now, you can start building equity sooner. This can help you build wealth over time and potentially provide financial stability in the future.
Owning a home comes with several tax benefits. For example, you may be able to deduct mortgage interest and property taxes on your federal income tax return. Please speak to your tax professional about your situation before making plans to purchase based on what you can deduct.
While tax benefits shouldn’t be the only reason you buy a home, they can be a valuable perk that can help you save money in the long run.
Owning Your Own Home
Finally, there’s the emotional satisfaction of owning your own home. Owning a home can provide a sense of pride and accomplishment that renting can’t match. Plus, you don’t have to ask permission to change the color of your walls or to hand pictures. You get to decorate it the way you want!
Additionally, owning a home can provide a sense of stability and security. You don’t have to worry about a landlord raising your rent or selling the property. Getting a mortgage means locking in your housing payment.
While saving for a down payment can be a challenge, there are several compelling reasons to buy a home now instead of waiting. Rising home prices, low interest rates, building equity, tax benefits, and the emotional satisfaction of owning your own home are all reasons to consider buying a home now.
As a mortgage and real estate professional focused on first-time homebuyers, I can help you understand these advantages, so you can make an informed decision about whether to buy a home now or wait.