5 Reasons Why You Should Buy a Home Now

I decided to write this article because I was pondering what advice I would give to my two sons who are 18 and 20. I would tell them, "Absolutely! Buy a home if you can afford it! Now is the perfect time to buy." Here's why...

1. Low Prices: We all know that real estate has lost a substantial amount of value since 2005. Who wants to buy a home if it's just going to lose value? But this is how I look at it: Imagine the bottom half of a circular clock where 6pm is the very bottom of the real estate market in terms of value. The reality is that we probably won't know where the bottom is until we're already on our way to 7pm. Whether you buy at 5pm or buy at 7pm, you have bought at the same price!

Another point to consider with price is to not be so focused on getting the lowest price that you don't get the lowest interest rate. Believe it or not, the interest rate will have a much bigger impact on your finances than the price of the house. For instance:

You are purchasing a home with a $400,000 mortgage. Today, Freddie Mac is reporting 30 year fixed interest rates at 4.55 percent. If you own the home for 10 years, you'll pay $244,637. If the interest rate goes up just a half a percent to 5 percent, you will pay $13,037 more over that same ten years. If the interest rate goes up to 6 percent, you will pay $43,147 more over that same ten years. Also, the sooner you buy, the sooner you can start to take advantage of that mortgage interest deduction on your taxes. Based on the value of houses in Northern VA, that can save you upwards of $10,000 a year—yet another figure that will offset the price of the home you buy.

2. Interest rates: As I already shared, interest rates on 30 year fixed mortgages are at 4.55 percent today. That's amazingly low! The reason rates are so low is mostly because the government put programs in place to keep mortgage interest rates artificially low in an effort to jump start the housing market. These programs are being phased out so interest rates will start to increase this year and most likely continue to increase. I expect interest rates to increase at a more rapid rate than the rate of any further loss in housing values.

3. Rising Rent: One of the effects of the sluggish home sales market is a greater demand for rentals. The law of supply and demand kicks in causing rents to rise—a whopping 8 percent from this time last year. Rents are expected to increase over 5.4 percent in 2011 and over 4 percent in 2012. A few years ago, it was definitely cheaper to rent than own in the DC metro area, but that is no longer the case.

4. Neighborhood/Home Choices: There are always those rental properties that are very well cared for by the owner, but the reality is that most owners are not interested in maintaining a rental property to the same standard as their own home. It is also more difficult to find rental properties in certain sought-after neighborhoods—limiting where you can live.

5. Quality of Life/Home: My first "my very own place" home was a rental apartment in Illinois. The carpet was 1970's green; the walls were painted a hideous yellow; and the kitchen...well we just won't even go there! It was what I could afford so I'm not complaining, but I wanted so much to be able to paint the walls to freshen things up...or at least make the walls match the carpet! The owner was adamantly against it. I remember longing for the day when I could buy my own home so that I could paint it whatever color I wanted to and hang as many pictures on the walls that I wanted to.

Home is so important. The atmosphere of home can be the difference between feeling peaceful and productive or not. Home is often the focal point for family and friends where laughter and life occur. We all want to be able to create a wonderful home atmosphere, and we have much more control over this when we own our home.

For my sons, if they have saved the money for a 3.5 percent down payment (see my blog post about buying a home with 3.5 percent down) and some closing costs (sellers are typically contributing 2 percent of the sales price towards a buyer's closing costs these days), their mortgage payment is similar to what they would pay in rent, and they don't anticipate needing to sell for at least 5 years, of course I think they should buy!

I blog about real estate and life in Northern Virginia at MargieMac.com.