In recent years, buying a home in Colorado has felt like trying to catch a speeding bus. Maybe you weren’t quite ready in 2016 when rates were at an all-time low. And maybe you were afraid to hop on in 2017 amidst soaring Front Range housing prices. So now that we’ve turned the corner to a new year, you may be wondering, “Should I buy a home in 2018, or is to too late? What if prices are out of reach? What if I’ve already missed the low-interest rates?” It may feel safer to keep renting. But here are 5 reasons why you should hop on board and buy a home in the new year.
Rates are still at historic lows
Yes, mortgage interest rates bottomed at 3.36% in July 2016, tying the lowest rate on record. But with January 30-year fixed mortgage rates still hovering around 4.1%, they remain at historic lows. This means that for many, a house payment is still lower than a rental payment. But experts agree that these historically-low rates won’t last forever. Interest rates have already begun to rise, and are likely to continue to climb. In fact, according to the Mortgage Bankers Association, mortgage interest rates are expected to climb to 4.6% by the end of the year, and to 5% by 2019. This means that by simply waiting to buy until later in the year, your mortgage could cost hundreds of dollars more. So it’s a good idea to lock in now.
And no matter what your rate, one benefit of locking in a conventional loan means that your payment will stay the same for the life of the mortgage. This translates to significant savings over renting, especially since overall rents in Colorado Springs have increased from around $660 in 2002 to $1133 in 2017 – a 170% increase. “Unlike rent, a fixed mortgage can’t go up (even if inflation does),” says CB&T Mortgage loan advisor Theresa Anderson. All the more reason to hop on board and lock at a low rate now.
Home prices are still rising
In 1940, the average home price in the U.S. (adjusted for inflation) was only $30,000. Home prices have more than quadrupled over the past 70 years, making home ownership an exceptional long-term investment. Rising home prices in Colorado have outpaced the national average in recent years. But don’t let that deter you because there’s still room to grow. The local housing market is still going strong, with a 5.2% price increase expected in Colorado Springs in the next year. With its robust economy, low unemployment rate, and innovative downtown commercial projects, Colorado Springs continues to be a desirable place to live and work. These are some of the many reasons that Realtor.com recently rated the city as one of the top 10 hottest housing markets in 2018. So why let the seller pocket those price increases? Hop on board and buy now so that you can start building the ultimate nest egg with an asset that appreciates over time.
Increased Loan limits
To match rising home prices, the Federal Housing Finance Agency (FHFA) increased the maximum conventional mortgage loan limits to $453,100 for 2018. Conventional mortgage loans feature competitive rates, low down payment requirements, and increased flexibility over other types of loans, making them a great option for many buyers. This 6.8% year-over-year increase from the previous limit means that financing a home in 2018 will keep pace with current home prices.
Winter is a good time to buy
Many people think that they need to wait until spring or summer to start house hunting. But there are many good reasons to get a jump on the peak season and start shopping for a new home in the winter, instead. There are fewer buyers to compete with in winter, which means less chance that there will be multiple offers on a property. Lower demand also keeps prices in check in winter versus the hot season. And even though there are fewer homes on the market, the sellers are more motivated and willing to negotiate. Put on a coat and get out there now in the New Year, while you have the upper hand.
Home ownership has perks
Homeownership gives you the freedom to create your own domestic comfort. From painting to remodeling a kitchen or bathroom, to adopting a dog or cat, you don’t need a landlord’s blessing. Owning a home also means owning a part of your community. Homeownership allows you to have an impact on your neighborhood with a voice in how your neighborhood is run. As Theresa Anderson of CB&T Mortgage states, home ownership means that “you make an investment for your future,” not your landlord’s.
Indeed, there’s no place like home. So don’t let another year pass you by. The conditions are ripe in the New Year for you to hop on board and become a homeowner.