This topic is comin in HOT! It seems like real estate is in a frenzy right now. People are working from home and tired of cramped living space, realizing their job isn’t tied to a location, or realizing they want to sell their house and start a new adventure. According to the National Association of Realtors, new home sales are hitting 6.7 million in January, up 23% from last year. Between lack of new construction homes and all time low interest rates, you might be asking yourself—is this the time to buy a house?
Now this is a loaded question because everyone’s situation is unique. However, there are five questions you can ask yourself to determine if buying a house right now is the right move for you:
1. Do I Have to Buy Right NOW?
Is there a pressing matter that cannot wait? You have mold in your current place, you need to relocate. These issues can’t wait, meaning yes, it is time for you to move. Even though that’s the case, would you still be able to continue to comfortably rent in your new location? The need to move is important, but if your credit, savings, or financial goals aren’t ready for a home purchase, even low interest rates won’t make buying a house worth it.
2. Do I have enough money saved?
Many first time home buyers rely on a Federal Housing Administration (FHA) loan. These loans allow people to buy their first home with as little as 3.5% downpayment. In this current market, these kinds of loans are not competitive with someone offering 20% downpayment or cash. These loans also take a bit more time to process, meaning sellers could be wary of accepting an offer of an FHA loan. Calculate how much you will need to put down 10-20% as a downpayment. You can use this mortgage calculator to see if you have enough money saved.
3. Where am I looking to buy?
Location, location, location. It always makes a difference in price and availability, but now more than ever. If you want to buy a home now, consider areas that are on the outskirts of a major city, or look for places that are more affordable and have more inventory of houses.
4. How is my credit?
Most mortgage lenders are for a conventional (Non FHA) loan are looking for a minimum credit score of 620. This doesn’t mean if your credit score is in the 600s you will still get a dream interest rate. Some of the main information lenders look for are late payments, how many lines of credit you have, and your debt to income ratio. They want to make sure you pay on time and aren’t already maxed out on debt. Pull up your credit report and see how you measure up. It’s not only about the score but the details on your report.
5. Am I prepared for bidding wars?
Most properties are receiving multiple offers creating bidding wars. This drives up the cost of a property. So if buying in this market, be prepared to pay above list price. If you must buy a home, make sure your budget has padding and wiggle room.
These are tough questions. But buying a home is a big deal and worth taking the time to do right. So should you buy a home now? If the answers to these questions are yes, then YES! Buy that property! If you see your savings aren’t where you need them to be, or you’re not willing to go above list price, maybe now isn’t the time for you despite low interest rates. The best thing you can do is get free advice from a professional who can assess your unique situation. Click the link below to schedule a free consultation with a mortgage professional today!
