Once the glitzy New Year’s parties are over and 2016 has officially begun, it’s time to put those resolutions for a fresh start into effect. If this is the year you’ve determined to be the one where you finally buy that new home, don’t hesitate because the beginning of the year is an excellent time to buy.
Homes are cheaper in the winter months.
Less people are buying and selling homes during the colder months, so homes on the market in the winter tend to be priced lower. And with less competition for homes, buyers are in a more favorable position for negotiations. Those homes that remain on the market in the winter commonly belong to sellers who are looking for a quick sale. Less homes on the market, means less options, but buyers who aren’t as particular in what they are looking for can find some outstanding deals. Fewer homes on the market doesn’t mean you won’t find your dream home – it might be out there and at a better price than in it will be in the summer.
Interest rates are still low – for now.
Interest rates are still at historic lows, but that could change at any time. Interest rates have already risen slightly, and the federal government will continue to gently raise rates in the coming years. The longer you wait to approach a lender about a home loan, the higher your interest rate could potentially be. While the rise in interest rates seem small, even a tiny increase can add thousands to the overall amount owed for the home. A $200,000 30-year loan at 4.5% interest costs $1,013.37 a month. A .3% increase to 4.8% increases the loan to $1,049.33 a month. That may be only around 36 dollars more a month, but over the course of 30 years, that becomes an additional $12,960.
Your tax deductions will be greater.
Interest paid on your home loan is tax deductible, so buying early in the year really maximizes the tax benefitsat year’s end.Depending on your situation, you could be eligible for deductions for closing costs, local property taxes, points and private mortgage insurance (PMI) premiums. You can even collect deductions for home improvements and earn energy credits throughout the year.Tax credits are especially valuable because they are deducted dollar-for-dollar. A year’s worth of these benefits deducted from your taxes can get your second year in your home off to an outstanding start.