Buying a Home: When is the Right Time to Buy?
Posted: July 31, 2018 by Alan Tucker
When you’re ready to buy a home it’s important to consider a few things to determine whether or not it’s the right time to buy! Reviewing your personal finances is a crucial first step to buying a home—no matter if you’re a first-time buyer or an experienced homeowner! In addition, observing the market itself is another vital step in ensuring that you’re buying the right home at the right time.
Know your Finances
It may seem obvious, but before you decide to buy a home, you need to be sure that you have the financial capability to do so! There are many different kinds of financing options that may vary depending on the home you buy. That said, the amount you decide to put forth on your down payment will ultimately determine your mortgage balance—the more you pay up front, the less you’ll owe. The minimum down payment on a home is 20%, and any homebuyer that pays less than the 20% minimum is required to pay for private mortgage insurance (or PMI). Paying 20% on your down payment may not always be viable or possible, but knowing your finances and how much you’re able to pay is crucial information to understand as a homebuyer.
Observe the Market Before you Buy
When buying a home, you’re focused on finding a home that suits your needs and is affordable, but it’s also a sound idea to consider the future anytime you buy. For example, buying a home that will increase in value can be an excellent long-term investment, and knowing the housing market is key to making such purchases. Real estate agents can also help you determine the value of other homes in the area in which you’re looking, and utilizing your agent’s knowledge and expertise is always a good decision. You may not always look at home buying as a future investment, but the smart home buyer understands this and is always wary of potential value in the event of a sale.
Think about your Future
Buying a home is a big decision, and you should consider your future in your home—no matter what stage of life you’re in! The process of buying a home is an expensive one, but considering where you’ll be in the near future (say 3-5 years) after buying your home shouldn’t be overlooked. If you buy a home with the knowledge that you’ll be moving again in a year or two, then you should consider a cheaper home or one that is more certain to sell, as the process of selling a home can be very expensive as well.
Another thing to consider is other life events that may impact your finances. For example, if you are newly married then merging your finances with your new spouse is certainly something to settle prior to buying your first home together. Or, if you’re planning on having a child, consider getting a home that fits within the budget of a growing family. No matter what stage of life you’re in, understanding your current situation and where you see yourself in the near future is key to making the best home buying decision.