Year after year, as early as the first day of school in autumn, many of us see holiday merchandise advertised on television or online – we may even see holiday items already for sale at local retailers. And what do we usually say? Probably something to the equivalent of: “It’s not even Halloween yet!”
Many of us experience the stress that’s exacerbated by increased activity during the holiday season, but imagine how much more overwhelmed we would feel if we bought a home during that time, as well. Home buyers have a lot to do before they can close on a home. They must: search for the right house, interview different real estate agents, research interest rates, get credit checks, monitor their finances – the list goes on and on. So, is there any real advantage to buying a house during the holidays, or is waiting until spring a better idea?
Unbelievably, there are 5 primary benefits to purchasing a house during the holiday season:
1. Less competition in the market. During the holidays, most people are too busy trying to complete a slew of tasks on their “to-do” lists, but looking for a new home is generally not one of them. So, people who are searching for a home during this time, benefit from less competition in the market. The fewer people searching for a house means the fewer people to compete with, which thereby giving home buyers leverage, and a wonderful opportunity to (potentially) buy their dream home.
2. Lower interest rates. Even though there is less traffic in the market during the holidays, houses still need to be sold. So, because of a reduction in traffic, interest rates tend to be lower. According to 1Bankrate, “Your mortgage’s interest rate is set by market forces beyond the mortgage lender’s control. Mortgage interest rates are determined mostly on the secondary market, where mortgages are bought and sold…Without a secondary market, mortgage lenders would be more reluctant to lend to you, because the lender’s money would be tied up as you gradually repay it over the years. When the lender sells your mortgage, the lender gets the money back immediately, at a profit…It’s these investors in the secondary market who collectively determine the interest rate of your mortgage loan. Your lender offers you an interest rate that investors on the secondary market are willing to buy.” Due to the reduced demand during this time, lenders are inevitably competing – and they use lower interest rates to do it.
3. Houses are priced to sell. Sellers want to get their house off the market by closing a sale quickly. Dave Ramsey, an American businessman, radio host, and motivational speaker told home sellers this: “…most new sellers will decide to wait until the first of the year or even springtime to put their homes up for sale. That’s great news for you because you won’t have to compete with dozens of other homes just like yours to get home buyers’ attention. Reduced inventory means more home buyers checking out your home, either online or in person. Keep their attention by making sure your home is priced to sell and that your home is in “show” condition at all times.”
4. Potential tax advantages. As you begin filling out the paperwork for a mortgage, a tax professional may surprise you with some exciting, and “money-saving” news. In Northeast Ohio, 3WKYC (Channel 3, and part of TEGNA Media), is “one of the largest, most geographically diverse broadcasters in the U.S.” They reported that you can subtract the points you paid at closing, in addition to property taxes, and mortgage interest, by itemizing your taxes. Considerations such as how many deductions you have this year, and how many you expect for next year, are factors that indicate whether it is to your advantage or not to buy before the year’s end or after. The tax professional that you choose to work with should be able to effectively assist you with your tax questions. WKYC states, “…even though you do not want to make a decision on a home purchase strictly for tax reasons, it could be to your benefit to close before the end of the year.”
5. Faster closings. Because of home sellers actively looking to sell their homes during the holidays, confident home buyers end up getting better deals on homes more often than not. The holidays usually incline people to be nicer, kinder, and more helpful to others. The holiday spirit affects most of us – and that is true of those who work at the receiving end of the mortgage loan approval process. Closing on a home usually goes faster.
Buying a home can be an exciting, hopeful, wonderful, and inspiring experience. But in the joyful feelings that home buyers may have, it’s important to remember what U.S. News Money said: “Saving thousands of dollars on a home purchase may sound appealing, but executing the correct steps to secure these savings and a new property is still just as important. Don’t hastily sign anything without first considering whether it makes the most financial sense for the long term. After all, in many cases, you might be stuck with this decision for 15 years or more.”