Why Now is a Great Time to Buy

I still get this question on occasion, so I thought I'd address it in a blog post but yes, in case you're wondering, now is a great time to buy real estate in most markets. Why? Well, let me tell you...

Mortgage rates are the lowest they've been since 1971. After the Fed cut interest rates to their lowest level in history last week, mortgage rates responded by falling to their lowest levels in decades. If you're looking at Lexington, Kentucky real estate for sale, you'll find area interest rates in currently range between %5.25 and %5.50 on a 30-year, fixed-rate mortgage and loan officers I've consulted say they expect rates to stay low for the immediate future.

With rates at this level, the amount of house you can buy for the same payment increases, meaning you can get more house for the money. If you compare this to rates at the peak of the housing boom in 2005 (when rates hovered between %6.50 and %7.00), you will be saving a significant amount on your monthly payment. On a $100,000 loan, for example, you'll be paying around $100 less per month than you would on the same loan if you purchased now versus 2005.

Home prices are lower in virtually every market. Although the Lexington Kentucky real estate market hasn't been hit as hard as many markets in the country, prices have still drifted downward, making this a great time to get a bargain. Price adjustments vary somewhat by neighborhood in the Lexington area, but depending on where you're looking, you can expect to save %5 to %10 on the cost of most houses. So in addition to the savings you'll experience with the incredibly low interest rates, you can expect to find a house that would have sold for, say, $200,000 in 2005 selling for $180,000 to $190,000. Sellers are becoming more tuned-in to the challenging market, and it's not uncommon to find houses priced less than a recent appraised value.

Selection is broader. A few years ago, if you were looking at Lexington, KY real estate for sale, you would have had somewhere between a 3 to 6 month inventory to choose from (the time it would take to sell all the houses currently for sale) which runs a little on the low side. We now have about double that amount of inventory, which means that no matter what price range you're looking in, you'll have about twice as many homes to choose from. This, of course, makes it more likely that you'll be able to find a home that fits your needs within a relatively short time, which is a lot more pleasant than having to look at 100 homes over the course of 6 months to find what you're looking for.

There's a $7500 tax credit for buyers who haven't owned a home in at least 3 years. This isn't just a deduction, but an actual credit. Check with your accountant, of course, but generally speaking, if you were to normally get $1000 back in your tax refund, you could expect $8500 back after add back in the $7500 credit.

Now, you should know that at you would need to pay the money back to the irs over a period of 15 years, so the tax credit is, essentially , an interest-free loan that you can take out whenever you buy your house. But it's a great way to have a significant amount of money given to you in one lump sum to help furnish your new house or do other improvements.

There are tax benefits to buying a home. Again, you'll want to check with your accountant, but generally speaking, you get to deduct many of your inital costs of purchasing a home during the year you buy it and each year thereafter, you can deduct the interest you pay on your mortgage loan. This is significant since, especially during the first few years of your mortgage, most of what you pay is interest, so the bulk of what you pay i mortgage payments would be deductable, saving you potentially a great deal of money in taxes.

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