Is It a Good Idea To Purchase a Home When Inflation Is Rising?

First-time buyers can still reap rewards of homeownership, even as interest rates rise.

Even as homes sell fast—and often over list price—first time buyers need to remember that rental costs aren’t headed downward, and that homeownership is a great way to build wealth.

For example, homeowners take advantage of:

·        Growing equity vs paying rent

·        Tax deductions for interest paid on the mortgage

·        Appreciation of their home’s value

Buyers may feel disappointed that as interest rates rise, the price they can afford to pay for a home goes down, and that the home they purchase may not be exactly what they’d like.

However, most buyers are not able to buy their dream home with their first purchase.  The important thing is to start somewhere.

Here are some advantages and disadvantages of home buying in today’s market that might help you decide if now is the right time to purchase a home:

You may be ready to buy if:

·        Your mortgage would cost less than your rent

·        You’ve saved a down payment

·        You are preapproved for a mortgage loan

·        You are patient—you may have to make several offers before one is accepted

You might hold off on purchasing a home if:

·        You can save more by renting than buying—set aside the difference every month for your down payment

·        You don’t have a large enough down payment

·        You need some time to boost your credit score

·        The thought of buying and owning a home is stressful

Once you’re ready to take the plunge and start home shopping, be sure to follow a few guidelines: know your budget and its limits—don’t buy more home than you can afford; consider buying a home that would benefit from “sweat equity”; and be open to looking at other home types—maybe you are better suited to a condo, for instance, than a single-family home.

Buying a home is always a big decision, but those consumers who are well-prepared will reap the rewards of homeownership—even as interest rates rise.

Post authored by Lora Bray.

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