Today, a Guest Post from Crystal –
Purchasing a home is a very real investment and there are a number of factors which need to be addressed. This involves much more than your financial liquidity alone. Let us take a look at some external variables which should be carefully considered well in advance. You will then be able to make the most appropriate decision when the time is right.
All About the Location
Every state is associated with its own set of housing prices. Mississippi, Indiana, and Michigan are currently the three cheapest states in terms of these costs. For instance, the median home value is Mississippi is $120,000 dollars. This is markedly lower than the nationwide average. However, this needs to be taken with a grain of salt. The average yearly salary within Mississippi is approximately $35,000 dollars; much lower when compared to areas such as New York or California. The other major concern is whether or not the state is a good state to live in. Cost of living, access to healthcare and average lifespans will naturally differ. Those states which offer the cheapest housing are often associated with lower values of these variables.
Fixed or Variable Interest Rates?
One of the benefits associated with choosing fixed interest rates is that they can make it easier to afford a home. However, this is assuming that predominant rates will rise. The other option is to opt for variable rates. The benefit here is that should these rates fall, your mortgage will not be as expensive. Still, rising rates may cause you to pay more than if you had selected a fixed plan. This is the reason why it is important to predict the long-term status of the interest rates set by the Federal Reserve.
Domestic politics will also play an important role. An example of this can be seen in the recent tax plan unveiled by the Trump administration. The president has campaigned with a pledge to reduce the overall tax burden on consumers and if he does indeed revitalize the domestic economy, this could prove beneficial in terms of house prices (as well as rises in average salaries). However, we have yet to see whether or not his proposals will become a reality. He still faces strong opposition from the democratic party and a tranche of his own supporters.
From a general perspective, the single population tends to have more difficulty in purchasing a home due to a lack of a secondary income. Married couples and those over 50 years are generally associated with more available liquidity. Regardless of which applies to you, there are several incentive programs to consider. For example, the Federal Housing Administration (FHA) can provide you with a one-time loan. The Department of Veterans Affairs (VA) has similar packages in place if you served in the military. Some other options worth considering are:
- The Good Neighbor Next Door program (for police personnel, firemen and teachers).
- Fannie Mae and Freddie Mac loans.
- Energy Efficient Mortgage (EEM) programs.
- Local first-time buyer offers through banks and lending institutions.
It is always a good idea to research these in more detail.
The Overall Housing Market
From a general point of view, the United States housing market is considered to be quite strong when compared to a handful of years ago. This could signal that prices will rise. However, the market tends to follow the movement of salaries and other benchmark indicators. Many predict that the this sector will continue to perform well in the coming years.