Buying a home can be a complicated process. There are many factors that you need to consider before making a decision. Is the real estate market strong? How much is your mortgage payment going to be? What about interest rates and taxes? These questions might seem daunting, but we’ve created this checklist of considerations so you can find out for sure if now is the best time to buy a house!
1. How is the real estate market in your city?
Why it matters: The real estate market can have a big impact on many things. It can affect how much you pay for homes, what kinds of houses are available, and whether it’s financially sound to buy a house at all. Make sure you are aware of the conditions of your local market before you get too far along in buying a home.
Low housing inventory and increased demand mean more competition for houses available for sale, which means you have a better chance of getting a house that’s just right for you. On the other hand, if the housing market in your city is stagnating or declining, it might be a better idea to wait until there are more houses on the market and demand falls.
Interest rates play a big role in home buying because they determine how much your mortgage payments will be. If interest rates are going down, it is a good time to buy a house. Interest rates going up means that it is likely a good time to refinance a mortgage or a good time for potential home buyers not to buy yet.
Is the economy doing well? For home purchases, an economic slowdown typically leads to less demand and appreciation of homes, which means you pay less for them. This can be a good choice if you are looking to buy a home as an investment property because the value of homes probably won’t go up much or at all in the near future.
2. How is your credit rating?
Why it matters: All lenders determine approval for home mortgages based on your credit rating. It’s important to establish or re-establish good credit before applying for a home mortgage because it could either lead to better terms or prevent you from being approved at all. Have you ever declared bankruptcy? Are there any other outstanding debts that are severely overdue? Even if these things happened years ago, they can still have a negative effect on your ability to get a loan for a mortgage.
3. Can you afford it?
Why it matters: If you can’t afford a home, you probably don’t want to buy one in the first place! It might be necessary to put some money down, have a higher credit score, have a larger income, or all three. If you have a down payment saved up and a strong credit history with no outstanding debts to repay, you might be able to get approved for a home loan even if your income isn’t that high. On the other hand, borrowers with weaker financial profiles need larger down payments and low-interest rates from lenders in order to get approved.
It might not be a good idea to buy a house if you don’t have the financial means. It’s also advisable not to put yourself in too much debt by applying for a mortgage with a low down payment and high-interest rates. If you meet all these considerations we listed above, we think it is a good time for you to look for houses and find the home of your dreams!