If you are ready to buy a home today, go ahead and make that decision for if you continue to put off buying a home, you might kick yourself next year for dilly-dallying when interest rates and home prices are not the way they are today.
NASDAQ recently published an article about why 2014 is a great year to buy a home and we couldn’t agree more. Think about the money you can save if you buy a home this year. Check out the chart below.
As you can see from the chart, the amount of money you can save is huge if you are financing at a low interest rate. Now if interest rate increases, and it would, you will have to pay more for interest expense alone. Mortgage experts are predicting that the average rate on a 30-year fixed mortgage will rise from 4.5% to 5% next year.
Why it is a great time to buy this year? Mortgage interest rates are near a 14-month low according to Freddie Mac’s mortgage rate survey of more than 100 banks. Home buyers who have already bought a home early this year have benefitted from low interest rates. Refinancing households are benefitting, too.
The current index in NAR’s national Housing Affordability Index dropped to 159.3 from 179.3 in 2013. Note that the higher the index, the more affordable the market. Home prices have been rising while mortgage interest rates are above the record lows of a year ago. These two factors– home prices and mortgage rates – affect housing affordability. With home price growth and mortgage rate increase, it will be more challenging for people to buy a home.
The bottom line, don’t make the same mistake this year. If you plan to move into a new home, the sooner the better.