If youre trying to decide if youre ready tobuy a home, theres probably a lot on your mind. Youre thinking about your finances, todaysmortgage ratesandhome prices, the limited supply of homes for sale, and more. And, youre juggling how all of those things will impact the choice youll make.
While housing market conditions are definitely a factor inyour decision, your own life and your finances may be even more important. As an article fromNerdWalletsays:
Housing market trends give important context. Butwhether this is a good time to buy a house also depends on your financial situation, life goals and readiness to become a homeowner.
Instead of trying to time the market, it may help to focus onwhat you can control. Here are a few questions that can give you clarity on whether youre ready to make your move.
1. Do You Have a Stable Job?
One thing to consider is how stable you feel youremploymentis. Buying a home is a big purchase, and youre going to sign a home loan stating youre going to pay that loan back. That can feel like a big obligation. Knowing you have a reliable job and income coming in can help put your mind at ease. AsNerdWalletexplains:
A mortgage is a big commitment . . . Wait until your employment is stable before thinking about buying a house.
2. Have You Figured Out What You Can Afford?
To make sure you have a good idea of what youll need to save and what you can expect to spend on your monthly payment, talk to a trusted lender. Theyll be able to tell you about the pre-approval process and what you can borrow, current mortgage rates and approximate monthly payments, closing costs to anticipate, what percent of the purchase price of the home youll need for adown payment, and more.
The best part is you may find out youre closer to your goals than you realized. You dont necessarily need to put 20% down, unless its specified by your lender or loan type. AsDown Payment Resourcesays:
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 . . .
3. How Long Do You Plan to Live There?
Another important thing to think about ishow longyou plan to stay put. It takes time to buildequityin your home through paying down your loan andhome price appreciation. If you plan to move too soon, you may not recoup your investment. For example, if youre looking to sell and move again in a year, it might not make sense to buy right now. As a recent article from CNETsays:
Buying a home is a good idea if youre 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 youd earn in proceeds if you sell after only a year or two.
So, think aboutyour future. If you plan to transfer to a new city with the upcoming promotion youre working toward or you anticipate your loved ones will need you to move closer to take care of them, thats something to factor in.
Above all else, the most important question to answer is:do you have a team of real estate professionals in place?If not, finding a trusted local agent and a lender is a good first step.
Bottom Line
If youre trying to decide if youre ready to buy a home, these questions can help. But ultimately, your best and more reliable resource is the help of trusted Seven Gables real estate professionals.
