The global real estate market is still recovering from the housing bubble, but now is the perfect time to purchase a new home. However, it won’t be a buyer’s market for much longer. In a few years, prospective buyers will pay higher interest rates on mortgages, and sellers will increase their prices. If you get into the market today, you can start building your equity immediately.
The Housing Market Is Still Improving
Buy today, and your home’s value should steadily increase over the next few years. A $100,000 investment today might be worth $125,000 in 2015, giving you a tidy profit when you go to sell. Although the economic recovery is sluggish, it continues to improve — just at a slower pace than expected. The last thing you want to do is wait to buy until prices are even higher.
Competitive Interest Rates
Governments around the world continue to keep bond interest rates low to stimulate economic growth, and low interest rates will save you a huge chunk of change on your home loan. A good 30-year mortgage from 2005 charged a 5 percent interest rate, but you can find 30-year mortgages today with interest rates as low as 3 percent. That 2 percent difference equals $105,000 in savings over 30 years, and if your current mortgage has a high interest rate, you should refinance as soon as possible.
Start Building Equity Today
When you pay your monthly rent, you lose that money forever, but when you buy a house, you start to build equity. Some of that money goes towards paying interest, but any principal that you pay is your equity forever. With that 30-year 3 percent mortgage, you’ll build about $30,000 of equity in the first five years alone. Combined with a $50,000 down payment and $20,000 property value increase, you’ll have a total of $100,000 of equity.
Save for the House of Your Dreams
One of the hardest decisions new homeowners make is settling for an older home with some aesthetic problems. The windows might need to be replaced, or the old carpet is threadbare. Remember that it’s important to get into the market today to start building your equity. After you purchase your first house, you can start saving money on the side while building your equity, and you’ll be able to afford the house of your dreams in five or ten years. Make sure to thoroughly discuss all your options when seeking mortgage broker advice, they are there to assist and help you as needed.