A new home for the holidays?

The holiday season is a great time to spend with family and friends.

For some, it might be about relaxing, playing board games or watching the Hallmark Channel. For others, it could be Black Friday shopping and finding a deal on a new TV or appliance.

Something that many don’t think of? It can be a great time to buy a home.

Most people think of spring as the best time to list or purchase a home, but there are also benefits to purchasing during the holiday season. Yes, it’s colder in the Midwest, inventory is limited (but hey — that’s nothing new), and you have parties and get-togethers to plan. That doesn’t necessarily mean it’s a bad time to purchase a home.

Here are some reasons why buying a home during the holidays and winter months can be beneficial.

Less inventory = less competition

You’ve likely been hearing about lack of housing inventory for quite some time, aka — less homes available for sale. The good news about the winter months is there are typically less buyers moving and less competition.

Sellers might be more motivated

If a homeowner is selling their home during the holidays, they could have a compelling reason to do so. Maybe their home has been on the market for a while. Perhaps they’re relocating for a new job, or there is a marriage or divorce situation. They also could have gotten their offer accepted on another home and must sell their home quickly.

Foreclosure properties aren’t as common as they previously were, but if the home for sale happens to be a foreclosure, you might have a better chance at a deal. Financial institutions often are motivated to get those properties “off their books” before the end of the calendar year. They have less to lose by accepting a lower price and might be more willing to negotiate.

You could get end-of-year tax benefits

Depending on your financial situation and your tax exposure, purchasing a property before the year’s end can provide significant tax advantages. If you itemize deductions, closing on the purchase of your home before the end of the year could allow you to deduct things like closing points, property taxes and any mortgage interest paid upfront. If you’re buying for investment purposes, there might be more tax benefits available.

Tax benefits from the purchase of real estate can give you some flexibility when it comes to determining what you’re willing to offer on a property, but you’ll want to confer with your tax accountant for more details.

Interest rates are low

The likelihood that mortgage rates will increase much by the end of the year is low. In October, the Mortgage Bankers Association (MBA) published its annual forecast for the mortgage industry and housing market for 2022 and beyond. The biggest takeaway is a gradual rise in borrowing costs during 2022. The MBA expects the average interest rate for a 30-year fixed rate loan to climb to the upper 3%-4% range by the end of 2022.

Let’s say you are purchasing a $200,000 house with a 10% down-payment. At a rate of 4%, your monthly payment would be about $100 higher per month than it would be at a rate of 3%. That’s $36,000 more in interest through the life of the loan.

Anticipate a faster, smoother closing

This, of course, is going to vary by lender. However, during the slower months of the year, closing turn-around times are typically reduced. Think of how many more people were purchasing a home in the spring and summer or were refinancing to a lower rate earlier this year. With less activity during the winter months, turn-times for lenders, appraisers and inspectors tend to be lower. Sellers also may be eager to sell before the end of the year, which also can speed things up.

Moral of the story? If you find a house you love, don’t discount purchasing this time of the year. Thinking of selling? There are plenty of pre-approved buyers looking to purchase a home.