Say you’ve been working a few years, have good credit and have been able to put a little money aside. You like where you live and want to stay in the area for a while. You feel ready to buy a house. So, do you settle for something that’s available and you can afford right now, or do you hold out for the perfect Jacuzzi tub, granite countertop, steel appliance-filled home?
While the answer isn’t the same for everyone, we’d like to make the case for Nevadans to get into that first home sooner, rather than later. (Just embrace the wood paneling and overgrown juniper bushes!) Here are five reasons to get into a starter home now.
1. Mortgage rates are still relatively chill
In 2000, the average annual mortgage rate on a 30-year fixed was 8.05 percent. In 2008 it was 6.03 percent and last year it averaged 3.99 percent. Rates have been trending down for some years, but they’re starting to tick up again. Even with this trend up, today’s rates are still a good value for buyers. According to themortgagereports.com, “Rates are better today than they have been in 85% of history.”
Brent Hart, Mortgage Loan Originator with HIP-approved lender Prime Lending, explains it this way, “The Federal Reserve is expected to increase their Fed Funds Rate three more times this year which will have a trickle up effect on mortgage interest rates over time. With the spring real estate market underway, now is the time to buy before mortgage rates trend higher.”
2. Inventory is getting tighter on the daily
It’s true the housing inventory in Nevada is currently tight, but it’s also getting tighter every day. Construction largely froze during the housing crisis that bottomed out in 2012 and has been ramping up slowly only in the past few years. That means new housing inventory is still quite limited and will be for a few more years while developers and builders catch up. Translation: houses that go on the market are getting snapped up ninja quick. So, while homes do come on the market regularly, overall, the longer you wait, the fewer choices you’ll have.
3. Say “hey” to down payment help
If money for down payment is what’s been keeping you from a home purchase, help is here! Of course we speak of Home Is PossibleTM, the Nevada Housing Division’s homebuyer program that provides you with bonus money of up to 5% of your loan value to use for down payment and/or closing costs. There are rules and such (homebuyer education, income limits, etc…), but boy-howdy, HIP is quite the boon for qualified buyers.
4. A house is like a savings account, but you can live in it
Leasing doesn’t build equity, but owning does. Why build your landlord’s nest egg when you could use that money to build your own? If you can afford a monthly mortgage, plus the added costs of being a homeowner, buying a home is a no-brainer as a financial investment.
Nicole Dion is a first-time homebuyer who bought a home in Reno with her partner Robert Moretti in 2016. She saw an opportunity to build equity for a future home purchase. "I absolutely love our house, but I acknowledge that it's not our forever home. The goal is to fix it up enough so that when it comes time to sell, we have profit that we can put toward the next house."
As a homeowner, you get to deduct the interest you pay toward your mortgage on your taxes each year. While the amount decreased recently under federal law (it is now limited to debt that totals up to $750,000), that is still a nice fat stack of Benjamins for homeowners. For Nicole, it was around $13,000 last year.
5. Your first home could become your forever home
Even if your first home has floral pastel wallpaper and a 1978s avocado stove, it may have potential to become your #1 love. Is there room to add on? Could you remove walls to make key rooms larger? Could new flooring and paint transform how it feels? If you like the location, school district and neighborhood, consider what you could do to make your first home your dream home. It may be easier, and less expensive, than buying up.