Do you really want to buy a house right now? You’re tired of paying rent and dealing with your neighbors. You want your own property, your own place to hang your hat. It’s a dream many have right now but unfortunately it’s not necessarily the best time to buy. Interest rates are up and that’s making houses far more expensive than before.
Two years ago, a $500,000 house was still affordable because interest rates were low. However, now borrowing the same amount for that property means you will be paying hundreds of dollars more a month. Does that seem like a good deal? Probably not and it’s going to push most properties out of your range of affordability. However, that doesn’t mean now is not a good time to buy a house.
Benefits Of Buying A Home Right Now
No, the market is not ideal, especially for buyers. However, investors and buyers are still looking for and finding great deals. In some cases, the current market has helped them, maybe not to save right now, but to at least improve their chances of getting the property they want.
- Inventory: With the rates going up, more houses are remaining on the market for a longer period of time. That means there’s more inventory for buyers to consider and they have time and leverage on their side. Rather than worrying about putting together a fast offer because another buyer may come in, now buyers have the upperhand, if they qualify.
- Values slightly down: Yes, even though values are staying strong, they still are going down as well. Figure that most properties are now valued at 10%-20% less than they were at their highest point. That does not include properties that have been recently remodeled.
- Lenders need your business: Mortgage brokers are not getting paid if you are not buying a house. That means there are going to be more companies who are willing to put in the time to assist you with the best information as well as any help they can provide. A big difference than the market two or three years ago.
- Assumable mortgages: Some homeowners, not all, have the opportunity to allow you to take over their mortgage and rate. That can cut down the cost of the money you are borrowing and give you a major advantage.
Buying a home is all about what advantages you have. Now may not be the perfect time to buy but if you have advantages you would not have otherwise, take that into consideration. If you see the house you want and can work out a deal that you can afford, why not?
What To Look For
What type of home is going to work for you? This is where you have to make your list of what you want and what you can afford. Remember, location is going to play a big role in this so start first with what your budget is and go from there. This way, if you are spending time looking at a property, you know that there’s a good chance you can afford it before you get going.
Improve Your Situation
While you are shopping around, there are things you can do that will improve your chances of qualifying for the loan and house you want. People think that it’s not worth trying to make these improvements if you only have a month or two, but that’s still time to make gains and improve your situation. Focus on your income, lowering your debt and your credit rating as well. If you can improve these three areas it will save you a lot of money and make it easier to get approved for the loan.
Important Tips From An Experienced Realtor
Local realtors recommend that you take a serious look at your qualifications before jumping into the market. By knowing what your options are, you can apply your situation to the current market and determine the best course of action.
- Never buy out of necessity: Trying to buy quickly usually means you overlook things like costs, issues with the property or something else. It’s better to take your time and know what you are committing to.
- Have a five year plan with the property: You may be holding onto this property for a while. If the market dips in a year, which could always happen, you may not be able to sell without taking a loss. Have a long-term plan, even if you do not think you will need one.
- Focus on local, not national markets: The information you get from local markets is more valuable. Why do you care about real estate prices in Connecticut if you live in Washington? Work with realtors who also specialize in local markets and the types of properties you are looking for.
- Be prepared to wait on lower rates: If you cannot make the numbers work you are not alone. If you are thinking you can buy and cover the costs a year or two until rates go down, have a backup plan. Some believe that based on the small impact the increased rates have had on the economy that rates will remain high for years. That eliminates refinancing as an option.
Understand what you’re buying and what it will cost you. That’s the best advice anyone can give you in real estate and knowing the local markets gives you a major advantage. There are markets that still maintain value and demand even during slips in the market. If you know where to buy it strengthens your position but waiting and building your finances can do the same.
