For the past several months, home prices have been rising at rapid rates, making it difficult for prospective homebuyers to find the right home because of a tight and highly competitive market.
At the same time, rental costs have been rising to high levels that make it hard for people to find units they can afford. In fact, a recent WSFS Mortgage survey found that 66% of renters in the Greater Philadelphia and Delaware region feel that rising rents and competition for units have made it harder to afford where they live.
While the homebuying market remains competitive, renters may be better off in the short-and long-term if they invest in buying a home. Realtor.com’s May 2022 Monthly Housing Market Report saw a 6.3% increase in new listings nationally compared to a year ago, indicating inventory level issues could be starting to ease.
Here’s why buying now should be considered and how you can get started.
Buying Provides Cost Certainty
Whether you are currently renting and extending your lease, or searching for a new unit, your new lease is likely going to include a significant increase in monthly rent. In addition to competition for rentals, spiking prices, inflation, and materials shortages may impact landlords’ costs for repairs, appliance replacements, and other necessary investments into their property; some of these costs are being passed to tenants through increased rents and security deposits.
While renters don’t have much control over these factors, buying a home offers a degree of cost certainty when locking in an interest rate and securing a mortgage for a home. Just remember to work closely with your lender to make sure other costs are factored in, like property taxes and insurance, so you can budget accordingly.
Owning Your Home Helps Build Wealth
Buying a home is an investment in both your present and future. In the present, you are establishing cost certainty. For the future, you are building equity as you pay down your mortgage over time, and presumably, increasing the value of your home.
Owning real estate is a great way to build wealth, along with other investments, such as your employer’s 401(k).
Get Started by Teaming Up with a Realtor and Lender
The first step in making any large purchase is understanding all the potential associated costs. Having a realtor that knows the area well can help you pinpoint neighborhoods that best fit your wants and needs for now and the future.
Many realtors also know mortgage lenders they can refer you to. However, make sure you are comfortable with your lender, as buying a home is most likely the largest purchase you will make in your life. Make sure your lender is taking a consultative approach to determine how much home you can buy and all your upfront costs.
Learn About and Discuss Assistance Programs
Speaking of upfront costs, do your own research and speak candidly with your lender about what you feel comfortable spending and what options are available to you for help with down payments, closing costs, and other move-in expenses, like utility deposits.
Check with your employer to see if they have home purchase assistance programs, as well as your local and state government programs. Your realtor and lender can also help identify these programs and more, including Federal assistance programs and grants.
Also, check with your lender about their own homebuying assistance programs that offer not only cash, but educational resources too.
Finally, make sure you have all your finances and paperwork to get pre-approved for a mortgage. By doing this before making any offers, you’ll make yourself a more attractive homebuyer and potentially have a leg up on your competition.
Jeffrey M. Ruben, President, WSFS Mortgage, joined WSFS through its acquisition of Array Financial, a full-service mortgage banking organization, and Arrow Land Transfer in August 2013. Ruben formed Array and Arrow in 2005, having previously held senior executive roles at financial and legal institutions.