Buying a house is most likely the most expensive thing that you will do in your life. However, since it’s such an enormous and life-changing purchase, you need to make sure that the timing is absolutely perfect. It’s completely normal to have fears that you will make a wrong decision when looking at houses to buy. Nevertheless, as long as you examine the market and your situation, you will surely manage to find a great deal.
Although there isn’t a crystal ball in real estate that will tell you exactly when the right time to buy a house is, there are some basic and clear signs that you can follow in order to make sure you buy the right home. Here are some of the most important factors to consider when purchasing a home.
Examine Your Finances
Of course, the first thing that you’ll need to pay attention to is your financial situation. In case you need a mortgage to buy a house, you will need to have money to make a down payment. If you’re taking a conventional loan, you will need to have 20 percent of a home’s price in order to get a mortgage. Since scraping together this kind of cash can be difficult, there are some lenders that require as little as 5 percent of a home’s price as the down payment.
The next step that you need to take is determining how much you can afford on a monthly mortgage. You can calculate this based on your income and current debts. The ideal situation would be that you have a high income and little or no debt. Finally, you’ll need to have a good credit score. This is measured by how well you’ve managed to pay off previous debts. Lenders always look at your credit score in order to get a clue of how well you will pay them back.
If you don’t have any credit history, you will need to get some. In case your credit score is not great, you should do everything that is in your power to bring it back up. Having a good credit score means that you will be able to get a better loan.
Examine Housing Markets
If you’re looking for a new home, then you should know that it is impossible to find the perfect time to make the purchase. Nevertheless, it’s still important to examine housing markets before buying a house. The first thing that you should do is go through listing for your area.
If the properties are being bought up in a matter of weeks or months, then you’re in a seller’s market. This means that the prices of the properties will probably go up due to buyer bidding wars. On the other hand, if most properties have been on the market for six months or longer, then the market is slow and the prices are most likely good.
Depending on the market conditions, interest rates on home loans can fluctuate. Interest rates are currently really low but are expected to rise, which is why many people think that now is a good time to buy a house.
Renting or Buying
Deciding whether it’s better to rent or buy is a huge decision. Buying a new house is a huge investment and commitment, which is why you need to be certain that this kind of purchase is the right move for you. In case you want to remain flexible for professional or personal reasons, then you may be better of renting.
Additionally, if you’re not ready for the responsibilities every homeowner faces, such as yard work, maintenance, and repairs, then buying a house may not be the best option for you. On the other hand, you should be aware that renting is more expensive in the long run and that there is zero equity in renting.