It's Time to Buy Some Real Estate

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There has never been a better time to buy a home! With interest rates at an all-time low and housing prices cooling off considerably, making 2016 the year you buy a new home will be one of the best financial decisions you've made.

 There are 5 reasons that will make it easier than it's ever been to buy a home this year; looser mortgage credit, lower down payments, cooling home prices, low rates and high rents. A set of new guidelines from Freddie Mac and Fannie Mae set the tone for this change earlier this month with more "normal" lending requirements, according to The Urban Institute. These government sponsored giants are lifting some of the harsh regulations that were previously in place, and they are relaxing on credit and underwriting requirements, therefore making it easier to qualify for a home loan.

Another reason why it's a great time to buy is because Freddie Mac and Fannie Mae have also decided to back loans with as little as 3% down, making it much easier for new home buyers to get  a leg up in the housing market. “Our goal is to help additional qualified borrowers gain access to mortgages,” Andrew Bon Salle, a Fannie Mae executive vice president, said in a statement. “We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers.”

In addition, housing prices are continuing to cool off. The overall pace of housing price growth has slowed considerably. Also, increases in housing inventory may also help to push down prices in some places. Depending on your area, this may vary. That being said, studies have shown an overall increase in home values. There may be a "cooling", the increase is at a lower rate than usual, but housing values do continue to rise yearly.

Also, rates are at an all-time low. A host of economic and geopolitical factors combined to keep rates lower than anticipated this year. Right now the average for a 30- year fixed rate is about 3.5%, far below historical averages. According to Janet Yellen, Chairwoman for the Federal Reserve, Increases in interest rates probably won’t come before mid-2016 at the earliest. This gives you plenty of time to take advantage of the low rates available now before they go back up.

The price for renting is also at an all-time high. Renters in metropolitan cities spend nearly 50% of their monthly income on rent!

If you’re growing your family and need more space, it may make more sense to purchase rather than rent a home. This gives you control of your own property while letting you build equity in the home. It’s certainly better than giving your money to a landlord.