When Should You Buy a House?
If you have impeccable credit and enough income to qualify for a mortgage loan, friends and family might urge you to buy a home. But just because you meet a mortgage program’s income, credit, and down payment requirements doesn’t mean it’s the right time to purchase a house.
A home purchase is a major milestone and one of the biggest decisions you’ll make. You shouldn’t let fear or anxiety keep you completely sidelined. But at the same time, you shouldn’t buy until you’re actually ready.
Aside from meeting the minimum credit and income requirements for a loan, here are signs that now’s an ideal time to buy a house.
1. You’re ready to commit to an area
Before making the leap into homeownership, consider how long you’ll live in a particular area.
Of course, buying a home doesn’t suggest staying in one city or state forever. Realize, however, that if you buy a home in an area you don’t like, moving is a bit more complicated since you’ll have to sell or rent out the home. And if you sell too soon after buying a house, you could lose money.
Selling a home involves paying a realtor commission, which averages about 6% of the sale price. So if you buy a home and then sell the property a year later, the commission paid to your realtor might be more than what you’ve gained in equity.
To avoid this hassle, hold off on purchasing a home until you know that you’ll live in an area for the foreseeable future.
2. You’re stable in your career
A mortgage is a long-term commitment—at least 15 or 30 years. So make sure that your income is consistent and reliable, or else you could fall behind on your payments. This isn’t only devastating from a pride standpoint, defaulting on your mortgage damages your credit score and puts you at risk for foreclosure.
3. You’re ready for the responsibility
Some people prematurely jump into a home mortgage because they’re tired of renting and wasting money every month.
Yes, homeownership can be cheaper than renting, but it’s also a major financial responsibility. You’ll encounter a variety of expenses for repairs and maintenance. If you’re not mentally or financially ready for the cost of ownership, home maintenance can fall by the wayside, affecting the overall condition of your property. If the condition of your home decreases, so does your equity.
4. You're ready to take advantage of favorable rates and home prices
A low mortgage rate often translates into a cheaper mortgage payment. Therefore, you might look into buying when mortgage rates and home prices drop, in an attempt to purchase before the cost of ownership exceeds your range of affordability.
While a low-rate climate is an excellent time to buy, don’t let the economy pressure you into ownership before you’re ready.
If you don’t think you’re prepared to handle a mortgage or the responsibility of maintaining a property, don’t move forward with a purchase. And don’t worry too much about missing out on a cheap rate. Fortunately, mortgage rates fluctuate frequently. If you can’t take advantage of a low interest rate today, rates are likely to decrease again in the future.
The Bottom Line
Only you can decide when it’s time to move from renter to buyer. This is a major decision and we know you have questions. The loan experts at Cherry Creek Mortgage are happy to assist and provide the mortgage information you need. Whether you’re looking for an FHA loan, a conventional loan, or another home loan product, give us a call and learn how to start your application.