On the fence about buying your first home?
Over the last few years, mortgage interest rates have reached record lows in order to help the post-recession market recover. While low interest rates are great for homebuyers, this has not been a profitable time for those with liquid assets in savings accounts.
A typical savings account at a big bank in Arizona is currently earning 0.01% APY. On top of that, an account holder must maintain a minimum balance in order to waive a monthly service fee. That monthly service fee probably costs more than the interest earned per month. Many people are paying the bank to hold their money and the bank is earning both the monthly service fee and interest off of other people’s money.
If the money in savings exceeds the minimum balance requirement, a bonus 0.05% interest might be earned, brining the total earnings to 0.06% APY. Still, the bank is the only one winning!
The average home in Phoenix is set to see a 5.9% gain in value this year. For example:
$200,000 X 0.059 = $11,800 in added home value.
In addition to that, every house payment is like putting a portion of monthly income into savings. Along with the equity earned with the rising value of a home, money is being put away for the future when it is time to sell and move elsewhere. To sweeten the deal more, mortgage interest is tax deductible.
Whether a buyer plans to live in their home for 3 years or 30 years, now is the time to make that purchase. Interest rates are still low, meaning a typical house payment is cheaper than rent. While renters should expect hikes in the cost of living, homeowners will have the satisfaction of knowing their monthly mortgage payment will remain stable. Buy now before interest and appreciation rates peak!
This is just a small look at why the benefits of owning exceed the benefits of renting. For more questions, feel free to give me a call!