If you are one of those home buyers that has been watching and wondering if you should buy a house before the new year, HomeFinder.com says now is your time.
In fact, they give us 5 reasons to buy now versus in 2014.
1. Avoid rising interest rates. Currently, interest rates have risen 2% in 2013, and the Mortgage Bankers Association has projected to rise another 5% throughout the next year. One mortgage professional commented that, “if you buy now and rates drop, you can always refinance, but if you wait and rates rise, you are stuck.”
2. New Lending Rule. In 2014 a new lending rule will go into effect that will make it more difficult to get a loan, according to Todd Huettner of Huettner Capital based in Denver. The total debt-to-income ratio, or DTI, will fall from 45% to 43%, essentially meaning you will not be able to borrow as much with the same income as of January 1, 2014.
3. Financing. Because the new changes will make it more difficult to get financing, the possibility for those waiting for home prices to drop could end up seeing their opportunity-train pass the station.
4. Declining Sales=High Inventory. Historically, sales do slow down around the holidays, and this year is following suit. The National Association of Realtors reported a consistent decline in sales month over month in the fourth Quarter 2013. Although it seems that all we heard throughout 2013 was that inventory was low, and prices were getting to be very competitive, with sales declining and a surplus of inventory, this very well may be time to benefit.
5. Tax Benefits. By purchasing in 2013, the deductions for interest and closing costs could be taken advantage of come this spring. Purchasing in 2014 would postpone any tax benefits until 2014 taxes are due.
Todd Heuttner also gives some helpful hints for those planning to buy in 2014. He recommends paying down as much debt as possible especially if you do not foresee an income raise.
Paying off car loans can be a great way to decrease your DTI as is paying off smaller debts with a high payments and consolidating debts into a lower payment can be helpful as well.
After all, a home is where many memories are made and especially ones around the holidays. That could be one heck of a present to unwrap this year.
Thank you, we'll be in touch!