When is the Best Time to Buy a Home? 5 Factors to Consider
So you’ve already locked in on the house you’ve been wanting to buy. You did your part and saved up for it. The what and the how have already been taken care of. The question now is when should you but that house? Before you go looking for title loans in Salt Lake City or Philadelphia, take into account the different factors that affect the real estate market.
Buy When You’re Prepared
First things first, you have to be financially stable. One of the biggest investments and purchases you will ever have in life is your own home.
- Have you saved enough? Having enough savings will play a major part in your home purchase. Mortgage analysts recommend having enough savings to make at least a 20% downpayment on the property. Just make sure you still have enough savings left to get you by life’s uncertainties (like losing a job or a sudden sickness).
- Do you have a stable source of income? A typical home loan can run up anywhere between 15 to 30 years. Having a long-term income source matters a lot.
- Do you have a good credit score? You will need a solid credit score to get approved for and take advantage of home loans with the lowest mortgage rates. The higher the score, the better the mortgage rate offer. Financial advisors recommend potential homebuyers to have a score of at least 620 to qualify for a conventional home loan. If your score is a little lower, you might want to work at raising it first before applying for a loan.
Buy When You’re Still Single
For most people, the major catalyst in purchasing a property is getting married and starting a family. The sooner you buy a home, the sooner you build equity. Washington Post reported in 2017 that 18% of homes sold were bought by single women. This includes the widowed and divorced women as well as young single ladies looking to make real estate investments.
Buy During Winter
Most folks would say the best time to buy a house is in the spring. However, analysts say it is not always a best practice. With the demand for homes spiking during spring, the supply dwindles around April to August. The number of available houses goes up by 7% around October and November. Census shows that August to November brings a median-range decrease of 12% in the U.S. Waiting until winter to purchase a house will save you more of your hard-earned money.
Consider, but Don’t be Dictated by Fluctuating Mortgage Rates
Holden Lewis, a mortgage analyst for Nerdwallet, says mortgage rates have remained low for the past 15 years, despite predictions that they will increase. He recommends resisting the pressure of rushing or delaying a home purchase based solely on mortgage rate predictions.
Check for Creative Financing Options
Find out if you qualify for other types of loans. There are several other home financing options than you know. States like Pennsylvania and California offer financing aid. If your state does not have any special programs, you might still qualify for an FHA loan. The VA also offers loan assistance to those actively serving the military, the vets, and surviving spouses of deceased servicemen. Take time to research whatever options are available to you.
Before diving in headfirst, consider talking to a mortgage analyst first and doing the math together. Make an honest evaluation of your financial standing and capability.