Why It’s (Almost) Never A Bad Time to Buy a Home
If you’ve put your homebuying plans on hold because of rising rates and prices, think again. It could still be a very good time for you to buy. Here’s why:
Today’s inflation may be creating a better outlook for buyers, as it tends to reduce competition for homes. And the equity earned by homeownership has always been a good “hedge” against inflation.
You may be happier buying now. Homeownership offers a sense of belonging and security that everyone in your family will appreciate. You’ll also avoid future rent rises while reaping attractive tax benefits (your tax advisor can fill you in on these).
Attempting to time the real estate market is tough. The 2020 arrival of COVID was a big reminder that nobody can predict tomorrow’s markets. So, if you’re waiting for interest rates or home prices to fall before buying, you may end up waiting for years while you miss out on the economic and personal benefits of homeownership.
What’s a Mortgage Recast?
If you’ve recently come into a large sum of money, you may be considering paying off or paying down your outstanding loans, including your mortgage. When you pay down a substantial amount of your loan you may benefit from what many mortgage lenders call a loan recast. Our friends Steve Gouveia and Mike Thompson at Envoy Mortgage explain that this is when your lender recalculates your monthly payments based on your outstanding balance and remaining term, lowering your monthly payments over the life of the loan. While a recast doesn’t require a new appraisal, a fairly large lump sum is required. In addition, not all mortgages allow them.
Additional points to consider:
Do you want a shorter loan term?
A recast doesn’t allow this; instead, it lowers your monthly payments. If you want to pay off your mortgage ahead of schedule, you may be better off refinancing to a shorter loan term or making additional payments towards your loan’s principal.
What about other debts?
If you have outstanding student loans or credit card debt, your cash flow may see a bigger improvement if you use your windfall to pay down or eliminate these. Paying down higher-interest debt may also increase your credit score.
A special thanks to Mike Thompson and Steve Gouveia at Envoy Mortgage for contributing their insights into the housing market. For additional information or to get your preapproval, call 610-401-4165