Yes, we all know this is a “Buyers’ Market,” but what advantages are there to buying today as opposed to buying 6 months or a year from now? Here are a few factors currently in place to help buyers make the most of this Buyers’ Market…
Historically Low Mortgage Rates
Just two weeks ago, the average 30-year fixed mortgage rate dropped to a record low of 4.96%. It has since gone up to 5.10% this week, but this is still far below what it was in October (6.46%). Buyers who lock in at a rate this low stand to save a significant amount of money over the life of the home loan. Many current homeowners have scrambled to refinance in the past few months to secure a better rate – but you have the luxury of getting in low the first time around.
Federal Reserve Initiatives
Late last year, the Federal Reserve announced it would buy mortgage-backed securities to help stimulate the national housing market. As a result, average mortgage rates dropped to record lows. With a new presidential administration at the helm, the Fed is hard at work coming up with additional unconventional strategies to help jumpstart the economy and make home loans more affordable.
Bargain Home Prices
In a buyer’s market, there is an excess inventory of homes for sale and a limited number of buyers. This gives you better leverage to negotiate lower prices and optimal contract terms. Also, the current supply of foreclosures, REOs (real estate owned), short sales and motivated sellers provide good opportunities to get deals on all sorts of properties. Many of these listings have reduced prices or incentives – but make sure to hire a professional real estate agent to help you with this type of purchase because it can be even more complicated than a conventional transaction.
First-Time Buyer Income Tax Credit
If this is your first property purchase, or you have not owned a “principal residence” for three years or more, you could qualify for a maximum $7,500 tax credit. It is only available for homes purchased before July 1, 2009 and you must be within the income limitations to be eligible (annual income of no more than $150,000 for married couples or $75,000 for singles). The credit is a dollar-for-dollar reduction taken out of what you owe in income taxes. It acts as a no-interest loan which must be repaid over the course of 15 years.