Time To Buy A Home
When is a good time to buy a home? This is a good question. Ideally, when you are considering to buy a home the decision should be based on these factors, need vs. want, timing, and finances. It should never be pushed or persuaded from the assumption or outcome of the current Real Estate market and trends. Unless of course, you are looking to invest in property. Let me take a few minutes to explain.
Many of the calls we receive regarding the desire to purchase a home revolve around rent going up, purchase prices increasing and rates are low but expected to rise. Yes, rents are rising. Yes, purchase prices are still high. As for rates, yes, rates are still low, but as for the Fed raising rates…this is false when pertaining to mortgage rates. The Fed doesn’t set the mortgage rates, they can affect mortgage rates but again they do not set them. The Fed fund rate changes which affect prime rate is tied to short-term borrowing (i.e. credit cards, HELOCs, savings accounts, education loans and auto loans). Learn more here.
Bottom line, rates are always changing, regardless of how low/high they might go this should not be the determining factor on if you should buy right now. More factors need to be in play such as finances (down payment, income, debt, etc.). Purchase prices will continue to rise, maybe they will start to plateau. The greater the demand the higher the value, same goes for rent. Ultimately this is a good thing. It’s nice to see the economy getting more stable and strong. But, none of these factors should pressure you into buying a home. These can be helpful factors just not determining factors. Basically, the right time to buy is when it’s the right time for you.
Let us look at the key factors of when it is an ideal time to look into and consider purchasing a home.
Need vs. want– We all can be guilty of having a want for something more than an actual need. A need for a home is typically when you have simply outgrown your current living situation. Whether that is going from single to married, no kids to having kids, getting a pet and needing a yard, bringing grandparent/s to live with you, etc. When your needs outway your wants column, then it may be a good time to start the process. Which leads into the next two factors, timing & finances.
Timing– This can be based on a few main areas. Work and health, to name a couple. If you are expecting a baby, changing jobs or expecting a new position, this may help determine your timing. Or perhaps your health, such as needing something that has fewer stairs or no stairs. Climate, altitude, and weather may also have health determining issues for the need to move. Timing is greatly affected by finances.
Finances– The end all to knowing if it is time to purchase is your finances. Do you have a down payment? Do you have money saved (reserves)? Do you have high debt? No debt, but also no credit established? Do you need to sell your current home and how much can you use towards the next purchase? There is so much revolving around finances that all that was previously mentioned finances will override them. Because, bottom line, if you don’t have the funds and the approval to purchase, then all else is irrelevant. Rates, purchase prices, rents rising, etc. There are programs available for down payment assistance, but they do not cover all the costs needed to purchase.
Purchasing a home takes planning with lots of preparation and research. If you feel like this is your time to purchase discuss it with a lender, give us a call.