With the volatility of the markets, rates, and prices of real estate, you may be asking yourself, “Is now the right time to buy or invest in real estate?” and if not now, then when?
Let’s go over the things to consider when making the decision to purchase real estate.
Personal Residence
Purchasing real estate for your primary residence is a major investment. Depending on your loan type and option, your down payment will fluctuate. The higher the down payment, the lower the loan you have to take out will be, meaning lower mortgage payments. Usually, a down payment of at least 20% will excuse you from having to pay for mortgage insurance, another plus of a larger down payment. Your credit score also plays a large part in your loan interest rate.
The one thing the real estate industry brags about is, historically, prices will rise, if not this year or next, within the next decade it will (disregarding major global events such as the Covid-19 pandemic). Within real estate it is said that after purchasing your home, it will take about 5 years of ownership before the appreciation of the property will make up for all the purchasing costs. Though in recent years that return has been realized in one year or less.
Investment Real Estate
The investment real estate industry differs as you are looking for a property that will provide a return that is greater than your expenses. With the current higher interest rates, it becomes increasingly more difficult to find this. What the industry as a whole is seeing is that prices, generally, are seemingly at the peak, and even on the decline, from the unprecedented hikes seen in late 2020 and throughout 2021. Therefore, investing now may mean you are paying less for the property. As interest rates remain high, good prices on investment real estate are becoming easier to attain.
The Main Concern
As stated in both owner-occupied/personal residential and investment real estate, one of the main concerns is the interest rate. Interests rates are not expected to stay as high as they are for much longer, therefore purchasing or investing now opens the opportunity to refinance in the near-future and will allow you to capitalize on your property even more. Property owners are becoming more pliable and easier to negotiate with to obtain a better price.
Our Insight
Real estate is an unbelievable asset that is almost guaranteed to appreciate, whether a personal residence or investment. When considering buying or investing the first order of business is making sure you have the personal capital to initiate the purchase and loan process. With that being said, the best time to buy or invest in real estate is when you are ready. Though interest rates and the economy made an unwanted hiccup, the old proverb, “there is no time like now” applies. There will be an opportunity to refinance to a lower interest rate in the future, but you will be one step closer to achieving your goals and dreams to build wealth and security.
Don’t take this as us saying, “go recklessly into that real estate deal you have had in the back of your mind for a while”. All purchasing and investing decisions should be made with much research and thought. Have an understanding of the terms of your loan, plan your short and long term goals understanding the commitment that real estate ownership has.
Purchasing real estate is a big deal and should be treated as such. It is a major decision whether you’re looking to purchase a residence or invest your money in a property. All being considered, no matter if you are purchasing for your own residence or as an investment, it all could be considered an investment. Most of the wealth in this country has been made through real estate ownership and most nest eggs for retirement sit in the homes that they purchased many years ago. To get started on your home ownership journey see what you can pre qualify for by clicking here! https://www.cambridgehomeloan.com/application/
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