Thinking about a buying a home in the near future? You may want to buy even sooner than planned — before the end of the year. Here are our top reasons for buying a home in the Winter:
The Big One: Tax Benefits: If you buy before New Year’s, you will enjoy some significant tax benefits. Here’s the breakdown of what you can deduct from your 2017 taxes:
Closing Costs: Closing cost deductions allow you to claim the points or origination fees on your new mortgage. This deduction only applies for the year in which you closed the loan. So if you wait until January to buy, you will have to wait a whole year to enjoy these savings.
Mortgage Interest: Since early mortgage payments are mostly interest (vs. principal), these deductions are significant and can really benefit buyers who are not able to make a big downpayment and first-time buyers. For example, a buyer taking out a 30-year loan of $500,000 at 4% will save $100,617 in taxes over the life of the loan (based on a 28% tax rate). That is $279 per month in savings!
Property taxes. Why not start the ability to deduct your property taxes now? If your taxes are paid out of an escrow account, check your mortgage statement for the amount paid in 2017.
Interest Rates are Low: Rates will likely go up again in 2018. While interest rates are still quite low, why not consider buying a home in the Winter before they increase again?
Inventory Will Remain Low: Housing inventory’s been low all year. For example, in the second quarter of 2017, the unsold inventory of homes (as a share of all households) was just 1.9 percent –and was the lowest second quarter percentage in 30 years!
One reason for the shortage that experts seem to agree on? Baby boomers and retirees are staying put more than they previously did. This generation of retirees does not seem to be migrating to warmer climates and/or downsizing at the rate previous ones did. Real estate experts predict that inventory will continue to shrink in some parts of the country, at least for the foreseeable future. What does that mean for you as a buyer? You'll have more to less to choose from as time goes on.
Less Competition: Fewer buyers are out looking this time of year versus the busy spring months. This is especially important when inventory is so low.
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