Saving up for a down payment of 20% is great…for some homebuyers. However, many homebuyers may choose to forgo that option and go for a loan product that requires little or no down payment. In our current market, home sales are booming, which means home prices may soon rise. You may find yourself in a predicament…buy now with no money down, or risk home prices going up and save for a down payment. Here are a few reasons to take the plunge now:
- You’ll build equity quicker. If home prices do rise, your home will be worth more, and provide you with more equity just by owning it.
- You’ll beat the odds. By deciding to buy now, when the market is hot and rates are still good, you’ll be able to beat the chance that home prices, along with rates, will rise in the near future.
- You’ll be converting your rent into something tangible. Instead of throwing away money every month, you would be investing money. Every payment you make on your mortgage is equity you now own. In many cases, your monthly rent payment is now more than the cost of a monthly mortgage payment. In fact, a recent study shows that owning a home for only two years (in the majority of the country), balances out the costs of renting.
- You’ll use appreciation to your advantage. If you’re waiting to buy, appreciation is working against you. While you’re saving, the price of housing is going up. However, once you own your home, appreciation works in your favor, making the value of your home greater, which means you will eventually get a greater return from it.
- You’ll get tax benefits, especially if you’re a first time homebuyer.
If you’re ready to become a first time homebuyer, check out our guide!