Irvine is one of the most desirable housing markets in the United States. If you are thinking about purchasing real estate in this Southern California city, you will more than likely think about financing your acquisition. Here are 4 of the top benefits of financing Irvine real estate.
1. Low Interest Rates
As of April 2017, the average interest rate on the benchmark 30-year fixed mortgage is still too good to pass up. According to personal finance website Bankrate.com, mortgage interest rates were still under 3.9 percent even after a slight uptick compared to earlier in the year. The fact that it is still possible to lock into a rate lower than 4 percent in 2017 is amazing. However, it is important to note that the Federal Reserve plans to increase the prime rate at least twice this year, and thus prospective buyers who wish to finance Irvine properties should follow this situation closely. When it comes to taking a position in the Southern California real estate market, timing is everything, and the current time is highly conducive to financing a purchase.
2. Good Economic Sense
The lucrative California housing market lends itself to financing. Case in point: Mark Zuckerberg, CEO of leading social network Facebook, who famously financed his Silicon Valley home even though he could have easily purchased it with cash. Zuckerberg is hardly the only one who thinks home financing makes good economic sense. Legendary American investor Warren Buffett believes the low interest rate environment in the last few years is simply too good to pass up. This assumption makes even more sense in Irvine, a real estate market where average prices are a little higher than the national median.
3. Opportunity Cost
Every prospective homeowner is a property investor at heart. In Irvine, houses for sale should be approached from the financial angle of opportunity cost, which looks at the property as an investment that is likely to appreciate in value with a certain level of risk tolerance. The key to evaluating opportunity cost is to consider the rate of value appreciation. If the property is appraised at increased values that are higher than the lending rate, it makes more sense to finance the purchase than to settle it with cash. The advantage of Irvine is that this planned city has a long history of real estate value appreciation and high demand thanks to quality of life.
Liquidity is an important aspect of financial management. Prospective homebuyers who think about pooling their cash resources to buy a home in Irvine, CA, should consider how much liquidity they would have at their disposal after the closing. Financing allows homebuyers to retain a certain degree of liquidity in case of emergencies. Such is often not the case with outright cash purchases due to the current average cost of American real estate.
If you’re interested in buying real estate in Irvine, now is the time. Make sure to connect with a trusted local agent who knows the market and can help you find the property you’re looking for. Call 714-454-6304 today to learn more.