For those of you who happen to be planning to buy a home in the new year, there’s a whole lot to celebrate. Why? A variety of financial vectors has dovetailed to make this the perfect storm for home buyers to get out there and make a (winning) offer. Here are five home-buying reasons to be thankful while ringing in the new year:
Reason No. 1: Interest rates are still at record lows
Even though they may creep up at any moment, it’s nonetheless a fact that interest rates on home loans are at historic lows, with a 30-year fixed-rate home loan still hovering around 4%.
Reason No. 2: Rents have skyrocketed
Another reason home buyers are lucky is that rents are going up, up, up! (This, on the other hand, is a reason not to be thankful if you’re a renter.) In fact, rents outpaced home values in 20 of the 35 biggest housing markets in 2015.
Reason No. 3: Down payments don’t need to break the bank
Probably the biggest obstacle that prevents renters from becoming homeowners is pulling together a down payment. But today, that chunk of change can be smaller, thanks to a variety of programs to help home buyers. For instance, the new Fannie Mae and Freddie Mac Home Possible Advantage Program allows for a 3% down payment for credit scores as low as 620.
Reason No. 4: Mortgage insurance is a deal, too
If you do decide to put less than 20% down on a home, you are then required to have mortgage insurance (basically in case you default). A workaround to handle this, however, is to take out a loan from the Federal Housing Administration—a government mortgage insurer that backs loans with down payments as low as 3.5% and credit scores as low as 580.
Reason No. 5: You’ll reap major tax breaks
Tax laws continue to favor homeowners, so you’re not just buying a place to live—you’re getting a tax break! The biggest one is that unless your home loan is more than $1 million, you can deduct all the monthly interest you are paying on that loan. Homeowners may also deduct certain home-related expenses and home property taxes.