If you’re trying to decide if you’re ready to buy a home, there’s probably a lot on your mind. You’re thinking about your finances, today’s mortgage rates and home prices, the limited supply of homes for sale, and more. And you’re juggling how all of those things will impact the choice you’ll make.
While housing market conditions are a factor in your decision, your life and finances may be even more critical. As an article from NerdWallet says:
“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.”
Instead of trying to time the market, it may help to focus on what you can control. Here are a few questions to clarify whether you’re ready to move.
1. Do You Have a Stable Job?
One thing to consider is how stable you feel your employment is. Buying a home is a big purchase, and you’ll sign a home loan stating you’ll pay that loan back. That can feel like a significant obligation. Knowing you have a reliable job and income coming in can help put your mind at ease. As NerdWallet explains:
“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?
Talk to a trusted lender to ensure you have a good idea of what you’ll need to save and what you can expect to spend on your monthly payment. They’ll 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 home purchase price you’ll need for a down payment and more.
The best part is you may find out you’re closer to your goals than you realized. You don’t necessarily need to put 20% down, unless it’s specified by your lender or loan type. As Down Payment Resource says:
“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 vital consideration is how long you plan to stay put. It takes time to build equity in your home by paying down your loan and home price appreciation. You may not recoup your investment if you plan to move too soon. For example, if you’re looking to sell and move again in a year, buying might not make sense now. As a recent article from CNET says:
“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.”
So, think about your future. If you plan to transfer to a new city with the upcoming promotion you’re working toward or you anticipate your loved ones will need you to move closer to take care of them, that’s 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 an excellent first step.
If you’re trying to decide if you’re ready to buy a home, these questions can help. But ultimately, your best and more reliable resource is the help of a Martino real estate professional.