If one of your New Year’s resolutions was to buy a house, you couldn’t have picked a better year to make it happen.
While there are some new ‘curve balls’ you’ll face, like a lower inventory or fast-moving market, there are plenty of reasons 2021 is the best year to buy a home, but act fast – here’s why.
Even if you’ve heard this 100 times already, it’s worth repeating. Today’s interest rates are lower than we’ve ever seen in our lifetime. Taking advantage today means you may have greater buying power (can afford more).
It may even mean you can get approved for a loan when before you might not have because your debt-to-income ratio was too high.
Either way, taking advantage of today’s low-interest rates does a few things:
First-time homebuyers are taking advantage of these low rates, allowing them to become homeowners much sooner than they thought possible.
COVID-19 changed the market tremendously. It went from a ghost town with no one doing any real estate transactions to millions of people wanting to move at once. It’s safe to say the demand greatly exceeds the supply, but it’s getting better.
As more people realize they have the freedom to move where they want since millions of employers are still working from home, the supply will increase. As a buyer, you’ll have more options, but don’t move slow – there are just as many hungry buyers looking for a home like you.
Despite rumors that COVID-19 forced lenders to tighten mortgage restrictions, they’ve since relaxed. Even though millions of people are still unemployed, many have gone back to work and can qualify for a mortgage today.
Fortunately, the guidelines remain simple. Homebuyers also have many loan options to choose from today including:
Here are the basic guidelines most lenders follow.
Low down payment requirements
Today, you can buy a home with as little as 3.5% down. First-time homebuyers with decent credit may even put down 3% on a conventional loan.
This means a down payment of $3,000 - $3,500 for every $100,000 you borrow. On a $200,000 loan, that’s $6,000 - $7,000 down.
No down payment options
Some borrowers even qualify for a no down payment loan. If you served in the military or you’re a low to moderate-income family living in a ‘rural’ area, you may qualify for a VA or USDA loan respectively. Both loans are government-backed and don’t require a down payment.
Even if you aren’t a veteran or live in a rural area, FHA and conventional loans allow the use of gift funds for the down payment, even allowing the gift funds to cover up to 100% of the down payment.
Flexible credit guidelines
Most people believe you need ‘perfect’ credit to secure a mortgage, which isn’t the case. Today, especially with government-backed mortgages, you can secure interest rates as low as 580 with a 3.5% down payment.
If you have higher credit scores, it works in your favor, as you’ll be able to secure today’s lowest interest rates and best terms, but if you have less-than-perfect credit, there are many opportunities to secure a purchase mortgage.
Employment is required
One area of mortgage guidelines remains strict. You must be employed to secure a mortgage. But, if you had a gap in employment due to the pandemic or you changed jobs because of it, most lenders can work around it.
The key is to have stable employment as much as possible outside of the pandemic. If you can prove you have stable income and employment in and around the pandemic and have other decent qualifying factors, including average credit and money for a down payment, you’ll be on your way to owning your own home.
If the above reasons aren’t enough to encourage you to buy a home in 2021, think of the tax deductions. Even without the Biden Administration’s promise to give first-time homebuyers a $15,000 tax break, there are plenty of tax deductions homeowners enjoy.
If you itemize your deductions, you may be able to deduct:
If homeownership has been on your radar, 2021 is a great year to make it happen. As more houses pop up on the market and interest rates remain attractive, it’s a great time to jump on board.
Don’t let time get away from you and the lowest interest rates most of us have seen in our lifetimes go away. Enjoy the low rates, attractive terms, and the opportunity to jump into one of the most lucrative investments you’ll make in your lifetime.
Are you ready to see what rates and terms you could get when applying for a mortgage? Head over here for a free quote and see the possibilities!
2021 is a great time to buy a house and start fresh. Whether you’re moving across the country or buying your first house, there are loan programs great for everyone today.