With the effects of the COVID-19 pandemic still on the housing market, is it a good time to buy a house? There are several factors to consider when deciding to buy a home. Some are individual considerations, while others have to do with the housing market.
When You Have the Money
Buying a home costs money. From your down payment to closing costs to your monthly mortgage payments, homeownership requires a substantial amount of money. Other financial considerations include additional fees, such as mortgage insurance, property taxes and home warranty.
Answering whether it is a good time to buy a house starts with looking at your financial situation. You can use a home loan calculator to get a better idea of just how much the house you are looking at will cost on a monthly basis.
When You Want to Settle Down
Do you plan on staying in your new home for at least five years? Because of the financial investment of a home, you will spend less money overall when you own the home for at least five years before selling. For example, if you sell before two years and the house appreciates, you will pay capital gains tax on the appreciation. Not to mention, the hassle of listing and prepping your home for a sale and the additional costs associated with selling a home add up quickly if you sell too soon.
When You Want to Secure Your Financial Future
Real estate is a good financial investment strategy. For example, if your local real estate market is strong, your home could see a high appreciation rate. This is great because the value of your home will go up, which increases the equity you have in the home. Simply put, this means you will gain profit on the entire home value, rather than just your initial down payment investment when you sell.
Housing Market Considerations
When Mortgage Interest Rates are Down
A mortgage interest rate is the amount of interest you pay on your loan amount. When rates are down, you pay less money. When shopping for mortgage loans, consider the current mortgage interest rates, where even a small difference in percentage rate can make a big difference over the life of your loan. Because the current mortgage rates trend suggest low interest rates will continue in 2021, compare mortgage rates to help you answer the question, “Is it a good time to buy a house?”
When Home Inventory is Steady
You shouldn’t have to compromise when it comes to purchasing your dream home. When home inventory is low, you may not be able to find the right property for you. And even if you do, the asking price may be too competitive for your budget. Consider purchasing a home when home inventory is steady.
When You Meet Loan Pre-Approval Requirements
In order to obtain your loan pre-approval, there are certain requirements you must meet. These include proof of reliable and steady income and employment, a solid credit score (the higher the score, the lower the interest rate) and minimal debt.
So, is it a good time to buy a house? Analyze the individual considerations against your current financial situation and long-term plan. Then consider the current housing market and pre-approval requirements. With this information, you can better answer if it’s a good time to buy for yourself. We encourage you to take a look at the most common mortgage questions and reach out to us when it is a good time to buy a home for you.