If you’re considering buying a home in the suburbs, here are a few things that you may look forward to in the upcoming year: backyard BBQs and pool parties with all of your friends, impromptu happy hours on your back patio with cold beers and margaritas, hosting potluck dinner parties, your very own “man-cave”, a separate playroom for your kids, your own bathroom (that’s right — your own), and your dream kitchen that you love cooking in and have the space to entertain.
Sounds enticing, so why any hesitation? My clients tell me that they’re outgrowing their apartments, but are afraid of losing their social life if they move out of the city. They wonder if they’ll still see their friends. The answer is yes. To quote Field of Dreams, “if you build it, they will come”… or in most of these cases, if you buy it, they will come.
As many of us are getting married, starting families, etc. and the need for space and good, affordable school systems becomes a priority, moving to the suburbs is a natural transition. Plus, if you’re the first of your friends moving to the suburbs, you have the advantage of choosing exactly where you want to go, and your friends will likely follow suit.
If you’re still not sold on the idea of moving to the suburbs just yet, and are thinking that maybe you should just wait a few years, here are a few financial reasons to consider making the move now.
Mortgage Rates Are EXTREMELY Low
This is perhaps the single biggest reason why you should buy now. Just a few short years ago, 30-year fixed rates were above 6.00%. According to quickenloans.com, for December 2012, they averaged 3.35%. In simpler terms, this means that by buying now, you’ll likely save thousands of dollars a year on your mortgage payments, because interest rates have a huge impact on your monthly payment.
When I bought my place back in 2006, I got a rate of 5.75%, which was a decent rate at that time. Then, back in 2011, I was able to refinance for 5%, significantly reducing my payments. Now, this past October, I refinanced yet again for a rate of 3.65%, saving more than $8,000 per year from what my original mortgage payments were.
Once the rates start rising again, you’ll be paying the banks thousands of dollars more per year for your loan. Rates have never been so low, and may never be this low again (click here to see interest rate historical data, provided by Freddie Mac). Once you buy your place and have your rate locked in, you won’t have to worry anymore about interest rates rising, so take advantage now.
Rent Prices Are On the Rise
Historically, rents increase by 3.2% on an annual basis because Landlords have a tendency to increase rent every year or two to accomodate for inflation. However, Trulia recently reported that rents this year have actually shot up by 5.4%.
You won’t have to worry about the monthly payment increasing every year if you own your home. Having a fixed-rate mortgage means that you’ll make the same payment for the life of your loan, so you won’t ever pay more unless you want to. And that’s a pretty good feeling.
By buying now, you’ll stop throwing your money away, and instead, start investing your money into your family and for your future.
We May Have Hit the Bottom
Everyone wants to buy their home when the market has bottomed out. For years, we’ve been wondering — is this it? Is this the bottom? The market has been fairly stable over the past couple of years, and now Case-Shiller and Bloomberg are reporting an actual increase in home prices over the past year. Perhaps the bottom has already happened, and with home prices on the rise, you’ll want to purchase your next home before prices go up significantly higher from where they are now.
