With home prices rising rather dramatically over the past year and interest rates rising as well, the home affordability index has begun to increase after bottoming out late last year. The index looks at a combination of home prices and interest rates relative to the median household income. In late 2012, home prices hit an affordability level not seen since the 1960’s. Atlanta was especially hard hit during the recent recession, meaning that we were even more affordable than the national average. The flip side is that the metro area is now experiencing appreciation in home prices that exceed the national average, so we are on the rebound. The point is that we still have a nice window to take advantage of prices and rates that are still wildly affordable. With the exception of 2012 when rates hit the 3’s we had only seen rates in the 4’s for long term mortgages over brief periods in history. There is a high probability, that if you bought a house last year or anytime in the next 6-12 months, you will be looking back years from now patting yourself on the back for making the leap. So if you are thinking of acting now, here are some things to consider:
- Selling your existing home – There are two possibilities here;
- Purchase a home first and then put your existing home on the market or sell before you buy the new place. This works if you have savings, you can get a gift, or you have an existing equity line of credit on your existing home that you could tap for a down payment. There are numerous loan possibilities that might work that allow for very low or no down payment options as well, which we can explore with you. This option is preferable if you want maximum flexibility because finding a new home that is perfect for you can take time since inventory levels are very low. That way if you sell your home quickly, you are not forced to find something in a rush or rent for a period of time.
- In some cases you have to sell first to tap the equity for a down payment on the new home. If this is the case, make sure you have a “Plan B” in place in case you can’t find a new home fast.
- Renting your existing home – There are two possibilities here;
- Renting your home and being able to qualify for both mortgage payments (the old and new one)
- Or renting your home and being able to utilize the rental payment to offset the old mortgage payment.
Every situation is different so if you are thinking about this, give us a call so we can walk you through the various options that would be available.
- You’re currently renting or you are a First Time Homebuyer – This is a fantastic opportunity to get into the housing market. The trick is “positioning yourself” to take advantage of buying opportunities when they come your way. In this market you need to move fast because there are potentially many others vying for the same property. Call us before you even start looking to learn more about our Certified Homebuyer program that allows you to be fully approved before you even make an offer on a new place….learn how we keep you ahead of the competition!