Buying a Home in Today’s Market
Deciding to purchase a home in today’s market is a big decision! It means analyzing your current situation, not just financially, but assessing the lifestyle you desire at this point in your life. There are many factors to consider: current mortgage rates, home prices, and the limited supply of homes for sale—just to name a few. But while housing market conditions will definitely impact your decision, your own life and your finances may have even more influence. It is important to review your life goals and your readiness to become a first time homeowner or to change homes.
Instead of trying to time the market, it may help to focus on what you can control. Ask yourself the questions below to help gain clarity on whether now is the right time for you to buy a home.
- Do you have a stable job?
One thing to consider is how stable your employment/income is. Buying a home is a big purchase, and you are going to sign a home loan stating that you are going to pay that loan back. This is a significant obligation. Knowing that you have a reliable job and income coming in can help put your mind at ease.
- Have you determined how much you can afford?
To make sure you have a good idea of what you will need to save and what you can expect to spend on your monthly payment, talk to a trusted lender. They will be able to tell you about the pre-approval process, what you can borrow, current mortgage rates, approximate monthly payments, what closing costs to anticipate, and what percent of the purchase price of the home you will need for a down payment. Only with a clear picture of what you can actually afford can you decide if making a move makes sense.
- How long do you plan to live in the home?
Another important consideration is how long you plan to stay in your next home. It generally takes time to build equity in your home through paying down your loan and home price appreciation. If you plan to move too soon, you may not recoup your investment. For example, if you are looking to sell and move again in a year, it might not make sense to buy right now. As a recent article from CNET says:
“Buying a home is a good idea if you’re planning to stay put for at least three years. Home values typically increase between 2% and 5% annually, so you could end up paying more in closing costs than you’d earn in proceeds if you sell after only a year or two.”
Take time to contemplate your future. For example, if you plan to transfer to a new city with the upcoming promotion you are working toward or you anticipate that loved ones will need you to move closer to take care of them, these are considerations to factor in. Perhaps you are growing your family and you anticipate needing more space. Or conversely, the kids are off to college and it is time to downsize. Looking ahead can help you make the right choices today.
To get started on the assessment process, put together a team. Include your trusted real estate agent and, unless you are paying cash, a lender. If possible, start as early in the buying process as possible so you can line up finances, determine your housing needs, and have time to find your next dream home!
Debbie Austin is a realtor associate with Keller Williams, Roseville and has been helping clients buy and sell property in the area for 19 years. If you have a specific real estate question you wish to see addressed, contact Debbie at (916) 223-8144 or visit debbieaustinrealty.com.
