As a mortgage lender, I am often asked the question: “Is now a good time to buy?”
My easy answer: If you are planning to stay in the area for at least five years, then “Heck yeah! It’s a great time to buy.”
Home Ownership vs. Renting
The cost of home ownership continues to remain at historically low levels even with the recent increase in mortgage rates. Home prices are appreciating at a nice, modest pace. The average appreciation this year for Dane County is on track to be about 3.9 percent.
Compare that to the cost of renting. According to Realtor.com, the cost of renting has gone up 20% since 2010. This means a monthly rental payment of $1,000 in 2010 is $1,200 today.
If you take out a 30-year fixed rate home loan, your monthly mortgage payment is going to stay the same for the next 30 years. Not only will your housing cost remain the same, but with every payment, you are building equity in your home. You just do not get that benefit from renting. In addition to all of this, your home is increasing in value.
Some Perspective on Mortgage Rates
At the heart of the “Is now a good time to buy?” question is concern over whether the buyer will benefit from the current mortgage interest rate.
This rate may change from day to day or may stay the same for weeks or more. So what does it mean when we hear that interest rates are low? To offer some perspective, consider the mortgage rates from 30-40 years ago. Interest rates were at roughly 7.25 percent in the early 1970s. By the late ‘70s, mortgage rates rose above 10 percent. Mortgage interest rates peaked in the early ‘80s somewhere between 17-18 percent. By comparison, check out today’s mortgage rate at SBCP here.
State Bank of Cross Plains offers a mortgage loan calculator on our website to help you determine what your loan payment might be based on your down payment and today’s interest rate. If you’d like help getting started or want to get pre-approved for a mortgage loan, talk to one of our mortgage loan officers at the SBCP location near you.
Money isn’t Everything
From a dollars and sense perspective, it definitely makes sense to purchase a home. Home ownership, however, is not all about the money. There are benefits to owning a home that you just cannot put a price on. Just a couple of examples include:
- Providing a stable living environment for your family
- Being more connected to the community you are living in
So no matter how you measure the value of home ownership…Heck yeah! It’s a great time to buy.
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