Home Equity Benefits of Buying a New Custom Home
Posted by HiLine Hal
July 2, 2015
Home values are going up faster and faster, according to experts. If you are in the market to buy a home, you can achieve instant equity benefits when builders offer price guarantees. In the less than 5 months it takes to build a new custom home on your lot through HiLine Homes, your home will likely be worth more than you paid. According to an article by realtor.com, a home bubble only occurs when the demand for homes increases faster than the supply of homes on the market. The median list price for homes is up 11 percent this year compared to last, reports realtor.com. Some of the home equity benefits include not owing PMI or private mortgage insurance for as many years and being able to more easily refinance if rates dip.
Getting ahead fast
In terms of home appreciation, it’s an unprecedented situation. According to a study this year by zillow.com, homebuyers break even in less than two years when they buy versus rent. In the Seattle area, it took less than two years to break even after accounting for closing costs. When you work with a new construction builder that offers incentives, it’s even more financially advantageous to buy versus renting. In the past, real estate experts talked about the “5-year rule,” which suggested it takes at least five years to ahead as a homeowner. But that’s no longer the timeline. This may be especially true if you are replacing your manufacturer home on your lot.
Avoiding PMI costs
Private mortgage insurance is the extra fee your lender charges when you put down less than 20 percent on a home purchase. In many cases, the PMI charge drops off of your mortgage after you have at least 20 percent equity. If you put down 5 percent and pay on your mortgage while the home values rise, the PMI will likely come off sooner than you originally anticipated.
Depending on your personal financial situation, you might wish to refinance or take out a home equity line of credit when your children go to college. With equity benefits of a new construction home, access to a HELOC or a cash-out refinance could happen sooner. Even if you never tap your home for a home equity loan, just having equity increases your net worth and gives you greater financial peace of mind. If something unexpected happens and you need to sell, you’ll feel great knowing you will likely walk away from closing with money. Realtors say it’s easier to sell a newer home with energy-efficient features than it is to sell an older one.
At HiLine Homes, we offer up to 100 % financing on new custom homes with equity benefits for our clients. We offer a guaranteed build time of 140 days. Our home consultants will show you dozens of different feature-rich custom homes on your lot. For more information about our guaranteed build time as well as our price lock guaranteed, please contact us.