When is the right time to buy a house? It might be now or next year – or never! While that response may be frustrating, the reality is that there is no one right answer. It depends on the person asking the question and their own unique circumstances.
When Is the Right Time to Buy a House?
According to CityLab, roughly 1.8 million people purchased their first home in 2016. When is the right time to buy a house? If you’re trying to determine if now is your moment, take a deep breath, get comfortable, and break out your thinking cap. There’s a mix of financial, practical, and personal factors that you’ll want to weigh in your quest for your right answer.
Buying a home is a great way to begin building wealth, and buying while you’re younger can help you start strengthening your financial foundations sooner. However, you have to have your finances in order first. After all, borrowers with better credit are generally offered better terms, and better terms can reduce the total cost of borrowing and potentially save you a massive amount of money over the course of your mortgage. The Motley Fool suggests thinking about the following financial factors when trying to decide if you’re financially ready to buy a home:
- Your Credit Score: A higher credit score can help you score a lower interest rate, which means that you’ll pay less for your loan.
- Your Income: Mortgage lenders generally like to see at least two years of steady income. Your income also determines your purchasing power. Experts suggest that your housing costs should be no more than 30 percent of your income.
- Your Debts: When deciding whether or not to approve a loan, lenders look at your debt-to-income ratio. Try to ensure that yours is below 43 percent.
- Your Savings: While it’s a myth that you need a 20-percent down payment to buy a house, it’s handy to have some savings ready when buying a house. Loans are available with little or no down payment, but making a good down payment can make you seem like a better bet to a lender and help you avoid the added expense of private mortgage insurance. You’ll also need money for closing costs, moving, and outfitting your new home as you settle in.
- Your Goals: What do you want to achieve with your life and your finances? If you hope to build wealth, buying a home can help you move toward that goal. After all, you build equity slowly and steadily as you pay your mortgage off. Buying a home is also a good idea if you dream of renovating a fixer-upper into your perfect home or if you’re excited by the prospect of owning property and no longer relying on a landlord.
How would being a homeowner fit with your lifestyle? As Trulia points out, owning a home offers stability and a chance to sink roots in a community. For many people, that’s incredibly appealing. However, if you’re eager to relocate for work or pleasure, buying a house can make that more difficult. There’s also the responsibility involved. With no landlord to call when things go wrong, you must be ready to handle both routine maintenance and surprise repairs. That takes time, energy, and resources, but it also offers a great deal of freedom. Since you are in control of your space, you can shape it to suit your preferences.
The Personal Touch
When all the numbers and facts are tallied, there’s still one incredibly important consideration: Do you want to be a homeowner? That answer is personal, and it’s subject to change depending on your circumstances. As Business Insider notes, life events often spur people to make the switch from renter to homeowner. A desire for a space that is truly yours makes it easier to appreciate the benefits of homeownership and helps to offset the potential opportunity costs.
When is the right time to buy a house? If you can afford a home, feel like homeownerships makes sense for your lifestyle, and want to own your own home, then now may be the perfect time. At PrimeLending of Springfield, Missouri, we know that everyone’s housing goals are unique. That’s why we listen carefully and offer personalized service that is tailored to your needs. How can we help you achieve your housing dreams? Contact us today to find out.