2016 just might be the best year to buy a home. Here is why:
- Interest rates are still at record lows.
It’s a fact that home loans are at historic lows, with a 30-year fixed-rate home loan still hovering around 4%. It’s likely we’ll never see interest rates this low again – your overall monetary savings add up to large sums at the current interest rates.
- Rent has skyrocketed.
On the other hand, renting is more expensive than ever. According to the 2015 Rent.com Rental Market Report, 88% of property managers raised their rent in the past 12 months and an 8% hike is predicted for 2016.
- Flexible down payment options.
One of the biggest things that prevents buyers from purchasing a new home is putting together a down payment. There are so many options available that make it easier for buyers today. For instance, the new Fannie Mae and Freddie Mac Home Possible Advantage Program allows for a 3% down payment for credit scores as low as 620, and zero down options are still available for lower income brackets with good credit.
- Flexible mortgage insurance options.
If you do decide to put less than 20% down on a home, you are then required to have mortgage insurance (basically in case you default). A workaround to handle this, however, is to take out a loan from the Federal Housing Administration. The fees are way down from 1.35% to 0.85% of the mortgage balance, meaning your monthly mortgage total will be significantly lower if you fund it this way. In fact, the FHA predicts this 37% annual premium cut will bring 250,000 first-time buyers into the market.
- Tax breaks!
Tax laws continue to favor homeowners, so you’re not just buying a place to live—you’re getting a tax break! The biggest is the ability to deduct all the monthly interest you are paying on that loan. Homeowners may also deduct certain home-related expenses and home property taxes.