Home Ownership: The Dream is Making a Comeback

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Home buying has been out of favor since the mortgage crisis of 2008-2009. That’s when everyone learned the dangers of being overextended with mortgage debt — and with credit card debt used to furnish a house and maintain a lifestyle. By 2016, the U.S. homeownership rate had sunk to 62.9 percent — a level not seen since the mid-1980s and far below the nearly 70 percent homeownership level of 2005.

Now that cycle is changing again — and it’s not too late to learn why home ownership has always been a big part of the American dream. Building equity in a home you can afford is a discipline that will likely pay off in the long run, whether you choose to sell in later years or use that equity in the form of a reverse mortgage to stay in your home.

The latest statistics show that Americans are reconsidering. The U.S. home ownership rate climbed to 64.8 percent — the highest rate since 2014. And the surge last year was the largest jump since 2004, according to the Mortgage Bankers Association.

Yes, there was a slight slowdown in the fourth quarter last year, as interest rates jumped a bit and made mortgages slightly more costly. Also, tariffs impacted some building materials prices, making construction costs rise. Both trends have tempered in recent months.

That sensitivity to mortgage rates and housing costs is a good reason why this spring might be the best time in years to purchase a home. The Fed has said it will patiently keep interest rates low. And it looks like progress is being made on trade agreements. Inflation remains contained, at least for now. Plus, the fall slowdown in home sales could lead to a surge of new spring listings, giving buyers an opportunity to negotiate.

There are, of course, still some potential negatives to home ownership — or at least some aspects you should consider. Rising taxes tops the list. If you live in a city or state that has budget problems, it’s likely that the burden will be covered by increased property taxes. Take that into consideration when considering total costs of ownership. And, of course, if you know you are likely to move or be transferred for your job, renting is always a better option.

A decade of potential home-buyers used these factors as a reason to rent. But instead of remembering past horror stories of overpriced home ownership, this is a good time to reconsider the benefits of buying. So, here are some techniques that can help you get the best deal.

–Prequalify for a mortgage. A written OK by a mortgage lender moves you to the head of the buyers pack. Check out Quicken’s Rocket Mortgage or Guaranteed Rate or Lending Tree for an easy online prequalification process.

–Consider the “Bank of Mom and Dad.” A new report by Legal & General Group says that help from parents and friends “supported the purchase of $317 billion worth of property across America in 2018. That accounts for 1.2 million homes, with an average sum of $39,000 lent or given.” The report says 20 percent of homeowners across the U.S. said they received help from family or friends in purchasing their current home.

–Clean up your credit report and raise your score. A higher credit score can make a big difference in your monthly mortgage payments. You’ll get the lowest rates if your score is above 740. Go to CreditKarma.com for your free score. Paying down credit card balances can make a big impact quickly.

Spring is the traditional home-buying season, no matter where you live in America. Economic factors may make this spring the best opportunity in recent years. Don’t wait till you read about surging home sales in the headlines. The early bird gets the best deal.

(Article written by Terry Savage)

(SOURCE: TCA)