This is the time of year where many people begin shopping for the holidays. They purchase gifts for their friends, family, and loved ones. But one item that you may want to consider buying for YOURSELF this holiday season is a new home. There are many benefits to purchasing a home in December, like:
1. Less competition Many consumers who are interested in purchasing a new home wait until after the holidays to start searching through the listings. While the malls have more customers this time of year, the real estate market actually experiences a decrease in shoppers during the holiday season. So, if you find a home that is perfect for you, you'll probably have fewer competing bids from other prospective buyers. And that leads to our next benefit of buying a home this time of year…
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2. Good Deals If a house has been on the market for a few months -- and didn't sell during the late summer and fall seasons -- the seller may reduce the price during the winter months. In fact, in many areas of the country, homes prices are typically at their lowest during the month of December. Homeowners who are showing their homes during the holiday season are often hopeful to sell it before the end of the year because of tax purposes, so they may also be more willing to negotiate on the price.
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3. It's a slow time of year for realtors and lenders, too! Sellers aren't the only ones affected by the drop-off in home sales during the winter months. Realtors and lenders also feel the sting of their industry's slow season. That means you may be get more personalized attention from your real estate agent, and a lender may shave a few points off your interest rate, just so they can get one final sale and home loan on their books before the year is over. Also, because they are juggling fewer deals in December than at other times of the year, it's likely your paperwork will be processed faster as well.
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4. Tax deductions We've already addressed that many homeowners are hoping, because of tax purposes, that their home will sell before the end of the year -- but if you buy a home in December, it can also be to your benefit during tax season as well. Closing on a home before the end of the year means you can deduct certain settlement costs from your taxes for 2012. That includes any pro-rated property taxes and prepaid mortgage interest paid at closing. And, since discount points are considered prepaid interest, you can deduct those from your taxes as well. Speaking of taxes, it wouldn't be right if we only discussed the benefits of buying a home in December, without discussing the possible downsides as well… Some homeowners use their mortgage interest to itemize deductions on their tax returns rather just paying the standard deduction. They include smaller deductions like work-related expenses, charitable donations, etc. But if you buy a home late in the year, you may not pay enough in interest to be able to itemize those deductions on your taxes. Of course, if you don't itemize your deductions, and just pay the standard deduction, then you don't have to worry about this possible downside.
There's one more thing to remember if you plan on house-hunting in December -- fewer homeowners may be showing their homes during the holidays, and realtors may be on vacation during this time of year. However, if you can find a home you are interested in, and one where the seller and the real estate agent are willing to fit you into their holiday schedule, there are many benefits to purchasing a home before the end of the year.
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