Check out these four tricks used to get you to spend more (without you knowing it).
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A new year always brings a renewed sense of optimism, and 2015 looks especially promising! The job market is the strongest it’s been in years, and salaries could see a welcome boost before the ball drops over Times Square again.
This news comes as a breath of fresh air to many Americans. But what does it mean if you’ve been waiting on the sidelines to buy a home? Here are five signs 2015 could be your year to make a move.
Rent Hikes Just Keep Going Higher
If you’ve been holding out on buying a home because you think renting’s cheaper, think again. Research shows rental costs grew 4.9% in 2014, while home prices rose by just 4.6%. True, average home prices continue to nudge closer to their 2006 peak, but the days of double-digit gains are over. The National Association of Realtors expects price gains to inch upward about 4.5% in 2015, a sign the market is finally stabilizing.
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Mortgage Rates Are Down . . . But Not for Long
We’ve seen mortgage rates hover around 4% for a few years now. But that trend won’t stick around forever. In fact, many experts predict rates will hit 5% by the end of the year. A 1% increase may not sound like a big deal, but consider the cost difference for a $200,000 15-year fixed-rate mortgage: Jumping from 4% to 5% adds about $100 a month and more than $18,000 over the life of the loan.
Fewer Obstacles Stand in Your Way
Want a bit of good news? You shouldn’t have to fight as hard to get the home you want in 2015. The inventory shortages that fueled the past two years of buyer frenzy should ease up in 2015 as sellers gain confidence and all-cash investors retreat from the market. Here’s another buyer bonus: New-home builders plan to up their entry-level ante this year, adding even more affordable options into the mix!
You Can Actually Afford It
Of course, market conditions don’t mean a thing if your personal economy isn’t right. So how do you know you’re ready to take the leap?
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- You’re debt-free with a 3–6 month emergency fund in place. This ensures you can handle any unexpected expenses that come your way once you own a home. You don’t want Murphy to send you packing the first time the roof leaks!
- You have a good down payment. Dave’s favorite way to buy a home is to put 100% down. If paying cash for your home isn’t in the cards for 2015, set a goal of saving at least 10%, but 20% will put you in an even better position.
If you decide to go ahead with a mortgage, stay conservative. Dave recommends keeping your payments at no more than 25% of your take-home pay on a 15-year fixed-rate mortgage.
You Have a Trustworthy Pro as Your Guide
A real estate agent who helps you buy a house is called a buyer’s agent. Having a buyer’s agent by your side brings two big benefits:
- Save money. In most cases, the home seller pays the commission for your agent. So you pay nothing to get expert help! Even better, a buyer’s agent can save you thousands of dollars on your dream home by fighting for your best interests at the negotiation table.
- Save time. Without a buyer’s agent, you’ll have piles of paperwork to wade through. Life’s too busy for that! Let an expert who knows all of the laws and regulations specific to your city take care of the red tape for you.
If you don’t have a pro you can trust, we can introduce you to the top agents Dave recommends in your area.