As we bid farewell to 2016 and usher in the New Year, it’s important to set realistic goals and resolutions.
This year, many Americans will be adding ‘Buy a new home,’ to their list of resolutions—and with good reason. First, the national unemployment rate is down to its lowest level since August of 2007 at just 4.6%. The Conference Board Consumer Confidence Index®, which had increased considerably in November, posted another gain in December and now stands at 113.7 (1985=100). Lastly, home values in more than half of the nation’s major markets have recovered, giving home owners the gift of home equity.
Here are three reasons to resolve to buy a new home early in the New Year.
- Lock in interest rates before they increase even more. Although mortgage rates are slightly more than a quarter of a point than they were in the fourth quarter of 2015, they are likely to increase even more. That quarter of a point increase translates into a mortgage payment that is 3% higher than before the increase. As such, the beginning of the New Year is an ideal time to secure a mortgage rate.
- January and February are typically slow home sales months. Even in hot markets like New York City, buyers face less competition during the first quarter of the year compared with other months. Harsh weather deters many buyers from house-hunting yet the level of inventory is only marginally lower than during the spring and summer months. This means you’ll have a better chance of having your offer accepted since you are competing with less potential buyers for a similar amount of inventory.
- Holiday downtime is ideal to determine your financial fitness. Use the time you have off from work to organize your financial information. This will make it much easier to procure a pre-approval letter from a mortgage company and ultimately strengthen your offer once you find your dream home. While competition is less during January and February, it can still be fierce in popular NYC neighborhoods, so don’t make the mistake of forgoing a pre-approval letter.