...if you are ready and can afford it. The answer was the same a year ago, is the same now, 6 months from now, and 2 years from now. I get asked a version of this question all the time. Do I buy now while interest rates are low? Should I wait because house prices might drop? Have I missed the best time to buy? Is now the best time to buy? You could drive yourself mad trying to time your purchase with interest rates and property prices. By buying a property that you love and can comfortably afford and stay in, you won't be sensitive to fluctuations in either value or interest rates.
Are You Ready to Buy?
- Do you plan to stay in the property for 5 or more years?
Buying and selling comes with transaction costs (ex. realtor fees, mortgage insurance premiums) so short term purchase horizons can cost you a lot.You want to enter into a purchase with plans to stay put for a while.
- Do you have extra saved?
In addition to down payment, you should have additional money to protect you from unexpected costs. You do not want to be late on your mortgage payments!Even one late payment could leave you hunting for a new mortgage lender at renewal, and two or three can put you on the path to a foreclosure.Call it what you will, but an "emergency fund" or just additional savings or investments can protect you from unexpected homeowner expenses or life events such as job loss or income reduction.
- Do you have breathing room?
One way to protect yourself and your family is by buying less than your maximum qualification amount.This gives you extra room to save for retirement, pay down your mortgage faster, and still manage if your income is reduced or interest rates increase.
- Is your debt under control?
You want to go into your purchase with the right foot forward.Purchase once you have any high interest debt (ex. credit cards) paid off and make sure you can easily manage any remaining loan payments.
- Have you done a budget?
All lenders determine your maximum purchase price based on what percentage of your income is being used to carry your mortgage and other housing costs, and what percentage of your income is being used to carry housing costs and any debt or other property costs.Mortgage lenders do not factor in your family visits overseas or your childcare costs.The only way to figure out if you can afford your mortgage with your lifestyle is to do your own budget. Here's a link to one:
- Is your work stable?
You want to have been at your job for a while and expect your income to remain the same.If talk around the water cooler suggests cutbacks are coming, hold off.And don't buy a house based on future income.
Finding the right time to purchase a home is a lot less about what is happening in the market and a lot more about what is happening with you. Speak to me early to come up with a purchase plan and decide for yourself when YOU are ready to become a homeowner.