Knowing when the time is right to buy your own home is crucial today if you want to get the best from your purchase. It is a fact that the number of people who rent instead of buying is at its highest point since 1965 (CNBC). Millennials are driving this trend, according to The Washington Post. However, it is no less true that owning a house gives you a tangible asset.
That people understand this is clearly demonstrated by the steady increase in home sales over the past decade (Statista). The question is the timing, and the right moment to buy a home would appear to be when you are settled in your current position, have sufficient savings, and the market situation is favorable.
In This Post:
3 Indicators That It’s the Right Time for You to Buy a House
1. You are settled
Being a homeowner will to some extent tie you down to one place. Therefore it makes no sense to buy a property unless you plan to settle in one location for the next few years at least.
On the other hand, buying a home doesn’t mean that you have to stay there for good. There is nothing to stop you moving out and letting it if a better job opportunity or something else comes along – in fact this can be a good ‘side business’. The rent will pay your mortgage, so you’ll be technically buying a home while making more money elsewhere and thus expanding your options.
2. You have enough savings for the down payment
Mortgage and rent payments are broadly comparable, so it’s not the monthly expense of buying a home that is the primary impediment. Rather it is more often the matter of the down payment and all the other relevant fees which can be the deciding factor. Therefore, if you plan on buying a home at all, you will need to set up an account to save up money for these initial outgoings. Needless to say you should start looking for good deals once you have saved the necessary amount to set the process in motion.
However, it is important to remember that not all home buying loans require a down payment. You can get a VA loan with zero money upfront – but only if you are eligible. There is also the USDA Guaranteed Loans program which allows you to buy a home in the country with no money down, as explained at USDALoan.com. These loans are more widely available, so it won’t matter if you are a veteran or related to one – it’s the property’s eligibility which is relevant for the purposes of this particular financing option.
Take note that setting up a savings account early into the process is a good idea regardless of whether you use a loan with or without a down payment. You can always use the money to get a better interest rate as a result of having made a large initial payment. In the case of the zero money down loan, the timing won’t matter much as you can buy the house regardless of how much you have saved.
3. The housing market is stable and buying makes sense
It is essential to undertake some in-depth research into the housing market over the last five years and make predictions for its development. You need to do this in order to minimize the risks involved. Bear in mind that while you are at it, you also need to take a look at any changes in rent payments in the area. Once you have done this, calculate your approximate mortgage payments and analyze all the data.
Generally speaking the best time to buy a home is when the housing market is on the up and rent and mortgage payments are close to being equal. In such a case your buying will make sense because you will actually get something out of it instead of frittering away your money on rent payments and never seeing it again.
On the other hand, if the economy is on the cusp of recession the interest rates and prices on the housing market can change quickly and unfavorably. In this instance it will probably be best to wait and see how the situation develops. Be sure to sign up for information from authoritative news sources in the industry so that you can watch the situation. Possibly it will turn out good for you in the long run as the prices might dip suddenly, and if that happens you will need to make a move fairly quickly. Be sure to keep a close eye on interest rates if this happens.
Overall, determining when the time is right to buy a home is all about gathering information and money. Make your move whenever you are best prepared.