There are probably many things on your mind as you consider whether or not you’re ready to purchase a home. You consider your financial situation as well as the high cost of homes and current mortgage rates, as well as the scarcity of available properties. And you’re juggling how each of those factors will affect the decision you’ll make.
Although the state of the housing market is undoubtedly a factor in your choice, your own life and finances might be even more crucial. As stated in an article from NerdWallet:
“Housing market trends give important context. But whether this is a good time to buy a house also depends on your financial situation, life goals and readiness to become a homeowner.”
Consider concentrating on what you can control rather than attempting to time the market. You can decide whether you’re ready to move forward by answering the following questions.
Do you have a Reliable Job?
How stable you perceive your employment to be is a factor to take into account.You will sign a home loan agreement promising to repay it because purchasing a home is a significant investment. That might seem like a significant duty.Your mind may be at ease if you know that you have a steady job and income. NerdWallet explains:
“A mortgage is a big commitment . . . Wait until your employment is stable before thinking about buying a house.”
Have you established your financial limits?
Speak with a reputable lender to ensure that you have a clear understanding of how much you will need to save and how much you can afford to pay each month. They will be able to provide you with information on the pre-approval process, the amount you are able to borrow, current mortgage rates, the approximate monthly payment, closing costs to be prepared for, how much of the home’s purchase price you will need to put down, and other details.
The best part is that you might discover that you’re closer to your objectives than you initially thought. Unless your lender or loan type requires it, you are not required to put down 20% of the purchase price. According to Down Payment Resource:
“A 20% down payment on a home is great, but . . . Many mortgages require no more than 3% to 5% of the purchase price as a down payment. Plus, there are loans and grants that may help cover these costs. Search for down payment assistance in your area, and discuss your results with your mortgage lender . . .”
How long are you intending to stay there?
How long you intend to stay in one place is something else to consider. Through loan payoffs and home price increases, equity in your home can be built over time. You might not get your money back if you move too soon. For instance, it might not make sense to buy now if you plan to sell and move again in a year. In a current CNET article, it is stated that:
“Buying a home is a good idea if you’re planning to stay put for at least three years. Home values typically increase between 2% and 5% annually, so you could end up paying more in closing costs than you’d earn in proceeds if you sell after only a year or two.”
Consider your future in this manner. You should take that into consideration if you intend to relocate to a new city in order to accept the promotion you’re vying for or if you think your family will require your care at a closer location.
If not, finding a reputable local agent and a lender is a good first step. The most crucial question to answer is: do you have a team of real estate professionals in place?
