Buying a home has long been defined as the American dream, a way of building wealth and something that could be passed down to your kids eventually.  When it comes to such an astronomic and potentially life-changing purchase, timing really matters. Deciding when to buy would be different from person to person given their financial and personal life goals. If planned properly homeownership could help you build wealth over time. However many buyers rush into the process leading to a huge setback in their financial and life goals. Here are the factors to consider that would help to make a better-informed decision. 


The first thing to consider when buying a home is your finances. Few things are more stressful than owning a home you can barely afford. The general rule of thumb is to not have your mortgage payment exceed 28% of your income. Most lenders have certain fundamental requirements for homebuyers. Just like any loan, you will need to prove to the lender that you have the ability to make the monthly payments on the loan. You’ll also need to provide proof of income with paycheck stubs and income tax returns for the last two years as well as proof of your current employment. Credit score still another crucial element because it helps determine the rate and conditions you receive on a mortgage loan. Lastly having enough down payment. Most lenders require a considerable down payment of 20% of a home. At the same time, many lenders are willing to forsake the large down payment if you elect to purchase private mortgage insurance resulting in a higher monthly payment.


The second thing to consider is how the market is doing. Understanding the differences between a buyers market and seller’s market will help with making a decision. A buyer’s market is beneficial to the buyer while a seller’s market is beneficial to the seller. The main distinctness between the two types of markets is that, in a buyer’s market supply is greater than demand and in a seller’s market demand is greater than supply. This means that in a buyer’s market there is competition among sellers to sell to the limited number of buyers thereby resulting in a fall in prices. In a seller’s market, there is a competition among buyer thereby driving up prices. Interest rate is another factor that fluctuates depending on market conditions. Rates have been historically low but have been moving up fast recently.  Taking that into account, many are purchasing a home before rate rise even higher.


The third thing to consider is the season. Usually, Spring and Summer is the peak season with more option to pick from. However, that also means more competition, multiple offer situation, and potentially higher prices. Late Fall and winter months have fewer options but that could mean less competition and lower prices. Sellers who have had their house on the market since the Spring or Summer will be extra motivated to sell which could result in a great deal. 


In conclusion, when deciding when to buy a home, first consider what your financial and personal goals are. As mention above, everyone is in different situation and circumstances. Therefore there’s not a set perfect time to buy. Given how your situation, use the above as guidelines as to when it is the best time to buy for yourself. Hope this helps. Thank you


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