The Time to Buy a Home is When Your Finances Allow For It

The Time to Buy a Home is When Your Finances Allow For It

Deciding when to enter the realm of real estate ownership is an extremely personal decision. As the years pass, most of us begin to realize just how imprudent it is to pay rent, especially when compared to the benefits offered by homeownership.

The real estate business has changed dramatically (for the better) over the past few decades; mostly attributable to technology and innovation. Therefore, the real estate market now requires asking the more existential questions like:

  • Will home prices continue to rise?
  • Will interest rates remain stable?
  • How long should an interest rate be locked in?

However, the answers to these questions are only as relevant as you wish them to be. The reality is, market predictions are at best, ridiculously difficult to accurately predict. Therefore, it is best to avoid overly intricate market analyses. If you find that now is the right time FOR YOU, why wait?

If you haven’t decided if the time is right, ask yourself the following questions:

How long do I intend to live in the home?

Closing costs are expensive, so it is advantageous to only buy a home if you have the intention of remaining in the property for at least a few years. Each purchase and sale generates their own expenses which will mount quickly over time. The time it benefits a buyer who intends to only own the property for a short while, is when they intend to flip-it, or have an innate hunch that the property will appreciate.

Can I afford to finance 80% of the home’s purchase price?

The best mortgage terms one can receive requires a 20% down payment. Financing 80% of the purchase avoids expensive mortgage insurance and sets up a scenario where you can obtain the most competitive mortgage interest rate. To put the mortgage insurance fee in perspective: If you buy a home for $220,000 with a $20,000 down payment, you will be required to pay a monthly Private Mortgage Insurance fee of approximately $166.

Have you saved enough for ongoing repairs and maintenance?

Owning a home is a costly decision because your monthly housing expense includes your mortgage payment, your real estate taxes and your homeowner’s insurance. A homeowner must feel financially comfortable enough to budget for maintenance, repairs, while maintaining the ability to meet monthly bills. As a general rule, homeowners are encouraged to budget approximately 1% of the property’s sales price each year.