While owning a home of your own is probably a dream of most people, knowing the right time to buy a home is the true key to a successful home purchase. Buying a home when you are ready and can afford the mortgage and upkeep is the best plan versus rushing into a mortgage and commitment you are not quite ready for.
Is now the right time for you to buy a home? If you are considering a home purchase in the near future, check out these 5 things to consider before you sign the mortgage papers.
Top 5 Things for Potential Homebuyers to Consider
- State of the Markets – The housing market and the credit market both play huge roles in the timing of buying a home. Things like current interest rates as well as area property values come in to play, too. Buying when interest rates are low is a good move, as is holding off on buying a home when property values are declining.
- Your Current Finances – If you have money saved especially for a down payment on a home, and you can afford the mortgage, your current finances indicate you are definitely headed in the right direction to buy a home, especially now, when home rental prices are skyrocketing.
- Establishing Roots – Since buying a home includes a variety of upfront costs including a down payment and closing fees, it takes a few years to recoup the money spent. If you plan to sell in the near future, it may be almost impossible to see a return on your investment. Staying in the home for three to five years is recommended. If this does not sound like a commitment you can live with, now may not be the time for you to buy.
- Your Financial Future – When it comes to buying a home, your future finances are important since you will likely have a 30-year mortgage. If you have just made a career move or are expecting a salary change, waiting until you have been with your new employer for at least a year may be required by the lender. Waiting until you have a more stable work history and income may be a smart move.
- Your Credit History – Your credit history is a crucial factor when deciding if you are ready to buy a home. A higher credit score means you are likely to get approved for a loan…and at a lower interest rate. Those with a credit history of scores above 700 will get the best loans and rates.
Consideration should be given to all of these factors when you are trying to decide if now is the right time for you to purchase a home. Weighing all of these aspects to determine if you are ready for this important purchase is good financial advice that just makes sense and will allow you a bright financial future.