If you’ve been on the fence or dragging your feet waiting for the market to return to “normal” before you jump into a mortgage…you might want to consider the possibility that we are in a new “normal.” In fact, here are three strong reasons why you should consider making a move sooner rather than later.
1) Prices are still historically low. Even with the extreme price appreciation we experienced last year, home values are still nearly 20% lower than their peak in 2006. In fact, according to the S&P/Case-Shiller Home Price Index, average U.S. home prices are at levels not seen since summer 2004.
2) Rent is increasing. In 2013, some areas of California experienced rent hikes as high as 4.2%. And according to Trulia’s rent vs buy calculator, if you live in Orange County and plan on staying in a property longer than five years, secure a mortgage interest rate under 4.5%, and are in a minimum tax bracket of 15%, buying is still at least 2% cheaper than renting.
3) Interest rates are low…but probably not for long. Over the past few months, mortgage interest rates have been relatively steady. But with the Fed’s stimulus soon coming to an end, we could see these low rates begin to climb. In fact, some experts are predicting that we might hit 5% by Q1 2015. Even just a small jump in rates could equal tens of thousands of dollars more in interest over the life of your loan.