If you’re thinking about buying a home, but aren’t sure if it’s a good time to buy, you’ve come to the right place!
Whether it’s your first or your fifth home, buying a home is a big decision and a huge undertaking. That’s why it’s important to consider a number of factors before you start the buying process. While home values and mortgage rates are certainly part of the equation, they’re not the only factors to consider.
In this blog, we’ll go over some of the things to keep in mind when deciding if now is the right time for you to buy. Let’s dig in!
You Can Afford It
While there are a number of important factors to consider when you buy a home, ultimately the best time to buy is when you can afford it. If your finances are in good order and you have stable employment and not too much debt, it could be a good time to buy.
But keep in mind that a home’s purchase price is only the tip of the iceberg when we talk about affordability.
For example, there’s the down payment to consider, which is one of the biggest hurdles for home ownership for many people. Most conventional loans require 20% down. But even if you can’t afford to put down that much, it doesn’t necessarily mean you’re out of luck. There are other loan options that allow you to put down as little as 10, 5, or even 3.5%. Plus, there are many down payment assistance programs available to help lower income buyers get into a home.
In addition to the down payment, closing costs generally run around 2-5% of the home’s sale price. There’s also the cost of homeowner’s insurance, property taxes, moving costs, ongoing maintenance, emergency repairs, and (in some cases) homeowner’s association fees to consider.
So when you think about whether your finances allow for a home purchase, make sure to keep these costs in mind. If you’re not ready to take on these costs, it might be best to continue saving and look at buying later on. But if all of these costs fall within your estimated budget, now might be a great time for you to buy a home.
You Have a Solid Credit Score
Low credit scores are a common reason why many potential homeowners struggle to qualify for a home loan. Most conventional loans require a credit score of 620 or higher. And while there are loans that allow for a credit score as low as 500, they often require a larger down payment and have higher interest rates.
Ultimately, the higher your credit score is, the better the interest rate and loan terms you’ll be able to get…and the easier it will be to get approved. Lenders see a good credit score as a sign that you’re more likely to pay your debt and you’re at low risk of default.
Your credit score is affected by several factors, including debt and credit history. Consistently making on-time payments and paying down your debt can help improve your credit score.
Check your credit report (you can typically get a copy for free) to see what factors are most affecting your credit score and focus on improving in those areas. Or consider taking part in a credit counseling program to help lift your score.
And if you have more questions about credit or other elements of getting a mortgage loan, talk with a lender.
Your Current Home No Longer Fits Your Life
Another reason to buy is that your current living situation simply doesn’t fit your lifestyle.
Maybe rent has been going up year after year and you need something more stable. Maybe you’re getting married or having kids, and need more space to grow your family. Or, on the other end of the spectrum, maybe the kids have all moved out and it’s time to downsize.
Whatever the reason, when you go through big life changes, what you need from your home changes as well. Even if your life change is something relatively minor like adopting a dog, that can change what you need in a home.
Whether you need more room or to downsize, need space for a home office or a yard for the kids or dog to play in — if your needs have changed, it might be time to consider buying.
You Know What You Want in a Home
Before you start looking for a home, it’s important to know what you need and want in a home.
Do you need a certain number of bedrooms or bathrooms?
Are you looking for your dream kitchen or a big garage?
How about a finished basement? A fireplace? One-level living?
What neighborhoods would you like to live in?
Do you want to be within a certain school district or closer to work?
Write out your wish list, including both needs and wants. Make special note of deal-breakers: things you absolutely can’t stand or can’t live without.
It’s also important to know that you want to live in the area for the longer term. This doesn’t have to mean forever, but if you’re planning to move away in a couple of years, it might not be the best time to buy. However, if you intend to be around for at least 3-5 years, buying might be a good fit for you right now.
You Want More Stability, Privacy, or Control Over Your Living Space
For many people, home ownership means greater stability: no more rent increases or worrying about having to move again at the end of the lease period. For others, it means more privacy: not having neighbors upstairs or down. And for some, it means being able to decorate or remodel their home to their preferences, or being able to have that pet they’ve wanted but that rentals didn’t allow.
If you can relate to these feelings, it’s a good sign that owning a home might be a better fit for you than renting. A couple of caveats though:
While you’ll no longer have to worry about rent going up, property taxes might. Plus, there are ongoing maintenance costs and emergency fixes to consider.
And while in most cases you can do what you want with your home once you buy it, if you buy in a neighborhood with an HOA (Homeowner’s Association), you could be more limited. HOA rules can dictate paint colors, what trees or bushes you plant in your yard, or other similar restrictions. So if control over your living space is important to you, be careful about buying a home in an area with an HOA.
You’re Ready for the Responsibilities of Homeownership
Owning a home offers so many opportunities. But along with greater flexibility, privacy, and pride of ownership come a set of new responsibilities you don’t have to worry about when you rent.
When you own a home, it’s harder to pick up and move — the process of selling your home can take months. It also means spending more time and money on your living space than you would in an apartment. From yard work and snow removal to home maintenance and emergency repairs, owning a home is a big investment in more ways than one.
Yes, owning a home is a big responsibility. If you’re looking for a more carefree lifestyle right now, buying a home might not be for you.
But if you’re up for the challenge, you might be ready to become a homeowner!
Are you ready to find your next home? Whether you’re a first-time buyer or practically a pro, the team at Centric Homes would love to help you navigate the home buying process. Contact us to get started!
