Top 3 tips for buying a home in 2011
Will 2011 be a good year to buy a home?
Yes—as long as current trends hold. The economic recovery is expected to continue, if slowly, which should make buyers more confident. Plus, rents should continue to rise while mortgage interest rates and home prices will likely remain low.
There are signs that homebuyers are already growing more active. Last year, the volume of home sales was at its lowest level since 1997, according to the National Association of Realtors. But in December, the pace perked up. Sales of previously owned homes jumped 12.3 percent over November—a seven-month high.
If you’re in the market to buy a home in 2011, here are 3 tips to help you get the most for your money.
1. Get a 30-year fixed loan
Mortgage loan interest rates aren’t at their bottom—that happened last October, when rates were at their lowest in 60 years. But they’re still super low. The average rate for a 30-year fixed loan is about 4.74%, according to Freddie Mac. With rates like this, adjustable rate, interest-only, and other types of loans just don’t make sense for most homebuyers.
2. Look for ways to create equity
We’re not going to see 5 to 10 percent year-over-year gains in real estate values, as we did during the boom. These days, you need to create your own home equity. The best way is to buy a home with room for improvement. You might add a deck, expand the basement, or convert a room or space into a fully-wired home office. Some improvements add more value to your home than others, so check with your Realtor before you start.
3. Plan on being in your home for a long time
Buying a house is a big long-term commitment. And home values aren’t expected to rise much over the next few years. In fact, some areas may see further decreases in property values. So if you think you may need to move within five years, you’d probably be better off renting in the long run.