When you look at the real estate market today, the frenzy has ended and buyers are now on the hunt for the lowest mortgage interest rates they can find from lenders.
Lower interest rates from mortgage companies mean that buyers can afford more house for the same amount of money. Given that you’ll likely pay a higher price for a home than you would have in years past, you might wonder if there’s a benefit to buying real estate at all in today’s market.
To help you decide, here are a few reasons to purchase a prime piece of real estate for yourself:
Diversifying Your Portfolio
If you want to grow your money to build long-term wealth, you’ll have to develop an investment portfolio. You might consider investing in the stock market, mutual funds, or even digital currencies like bitcoin. But all of those alternatives heavily depend on the same factors that make them rise and fall.
You can invest in different market sectors to lessen your risk of loss. You can also take some of your money and invest it in real estate. Property values tend to appreciate over time that should net you equity as your mortgage balance decreases.
The bottom line is this: growing equity is a good reason to buy rather than rent. With renting, you aren’t accumulating wealth over time.
Current Interest Rates
Just because low mortgage rates are in the past doesn’t mean great real estate deal are gone too.
Of course, interest rates aren’t as attractive as they used to be. And sellers aren’t fetching top prices, so it’s only natural that the housing market continues to be slower than usual. That means houses are sitting a bit longer and not experiencing the bidding wars they were in the past. This fact ups your chances of securing a deal at a reasonable price and locking in a fair rate before they rise again.
And finding a good deal on a real estate platform doesn’t necessarily mean you have to move either. You could use the property to rent and have someone else pay down your mortgage while you build equity.
Hedging Your Bets
As inflation continues to rise, mortgage rates naturally follow. So you might wonder if there’s something you can do to counteract the hit to your bottom line. The good news is that real estate appreciation tends to run alongside inflation.
So, investing in a property while the market is competitive and inflation is going up means you could see significant gains in equity. So, while the dollars in your bank account are suffering due to the higher prices of most things you buy, your real estate is likely offsetting your excess necessary spending.
Shop Around and Look Forward
Investing in the real estate market under any conditions takes not only skill and patience but may also require professional help for effective navigation. That’s especially true in a market where there are more buyers than there are properties available.
But if you can work with a realtor and find a deal that seems reasonable to you, real estate can be of great benefit to your overall net worth in the short and long term.
Photo Credit: MarkMoz12
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