Welcome to my “Should I…” series! In this series, I will answer questions that I hear frequently from my clients. I would love to answer your questions too. So leave any questions you may have in the comments below and I will answer them in a future “Should I…” post.
Should I buy a house now? I have a down payment saved up but I know home prices are high right now. Should I wait and hope they fall?
You know what they say about trying to time the market, right? Well, the same can be true for real estate. As a buyer, you are obviously looking for the best house your money can buy you, and right now, houses are expensive. But don’t let that deter you from purchasing a home…if you are ready. Instead of focusing as much on the perceived “hotness” of the housing market right now and what you think it may or may not do in the future, turn your attention to the other factors that matter just as much.
First, get pre-approved for a loan before you even start to look. Even better, after you’ve been pre-approved, look at your budget to determine what you can actually afford, not just what the bank will lend you. Where do you fall within the Housing Expense Ratio and Debt-to-Income Ratio? In addition to a down payment, will you need additional capital up front to update anything before you move in? There are ALWAYS unexpected expenses that come with owning a new home.
Second, find a reputable realtor that will help you with your buying process. Most often, the seller pays real estate commissions for both sides of the transaction, so there is no cost to you in having a good realtor. It could, however, be costly if you don’t.
Third, determine where you want to be. You may envision yourself in a specific neighborhood or part of town because it fits your life right now. But have you considered the schools in that area (even if you don’t have kids)? Have you checked out the property taxes there? How about traffic and your commute, growth of the city and surrounding areas, parks and community resources, or other variables? These may not necessarily matter to you now, but they may in the future and can also affect re-sale down the road.
Buying a home should not be done solely based on the purchase price. It is one of the biggest purchases one will make in their lifetime. Be pro-active, and when the time is right for you, you will find a great place to call home.