“May your choices reflect your hopes, and not your fears.” Nelson Mandela

Our cities are waking up after being cooped up for a year. Mortgage rates are still low, and the real estate market is still hot.  It is decision time.  Do you buy a home, or do you continue renting?  What are some profitable exit strategies you can use later if you decide to move to another geographic area? 

Rent hikes are predicted to rise as the demand for housing continues.  How much has your rent gone up over the last three to five years?   If you bought a home that is a similar size to the one you rent, what would it cost you to buy it?  How much money would you need to put down?  What would your payment be?

 What would your fixed-rate principal and interest payment be?  How much lower would your house payment be compared to your current rent?  How would your fixed mortgage principal and interest payment compare to what you will be paying in rent over the next five years if your rent continues to increase?  

Freddie Mac predicts that home prices will rise by 6.6% in 2021, slowing to 4.4% in 2022.  High demand and the short supply of homes available for sale are pushing the prices up on homes to over 15% year-over-year.  Even though the forecast is for that growth to slow in 2022, it is still predicted to be strong real estate market. 

The Federal Reserve is playing a starring role in keeping mortgage rates low by purchasing well over $40 billion per month in mortgage-backed securities. The Fed has actually been buying over $100 billion dollars per month in these securities, but they quit making the dollar amount  of their purchases public several months ago.  

When the Federal Reserve begins someday to taper their mortgage-backed-security buying, mortgage rates are predicted to move up.  Mortgage rates are not tied to the Federal Reserve rate, but they move somewhat in tandem with the 10-year bond yield.  Inflation and global competition for the bond market are arch enemies of low mortgage rates.   

Some Advantages to Consider For Buying A Home

1. A fixed principal and interest payment on your mortgage with a low payment. (Taxes and insurance can move up but the P&I stays the same.)
2. Build up of equity and wealth when the values on the home increase.   
3. Build up equity and wealth as you gradually pay down your mortgage.
4. Abililty to receive income from renting the property to someone else.
5. Stability for your family by remaining in the neighborhood.
6. Ability to sell the property  for a profit.
7. Freedom to use the property in the way you choose.  (Check covenants and restrictions.)