Four Things to Consider When Deciding to Buy a House
Buying a house can be a complicated undertaking with many considerations. The process of finding a house in a desired location that both meets your standards and fits within your budget can be difficult. Amidst the many challenges, it can be easy to overlook other important factors that can have significant consequences on your finances and future.
While the price of houses in the market is a primary concern, interest rates can play a huge role in determining monthly rates and should not be overlooked. During times with high housing costs, expensive mortgage rates, or inflation, many people wonder if they should wait to buy a house until it becomes more of a buyer’s market, or if it’s safe to start looking for that dream home.
Continue reading to learn four important factors to consider before you decide to buy a house!
1. State of the Housing Market
The first thing to consider when buying a home is the state of the housing market. In May 2022 home prices had increased 20.2 percent since the year prior, and Mortgage Bankers Association and Fannie Mae predicted an additional home price growth of 3.3% for 2023.
Unfortunately, there can be no sure way of predicting when or if housing prices will go down, so you may not want to wait for prices to go down before you buy a home. Rising mortgage rates, low supply inventory, and a competitive market can add to the difficulty of the process when in the market for a new home.
While you may be inclined to wait for a more buyer-friendly market before purchasing a house, remember that if you do find a house you like you may need to act fast in order to secure it in a competitive market. Try to weigh the pros and cons of buying now or later and go with your gut!
2. Interest Rates
When you purchase a home with a mortgage loan, the interest rate will directly affect your monthly mortgage payment. Consequently, it’s a good idea to buy a house at a time when interest rates are low to avoid paying more.
Interest rates fluctuate over time and between different lenders, so if you are in the market for a home, you can help yourself out by researching interest rate trends and shopping around to see what is available to you.
3. Inflation Rate
Inflation is another factor that can cause more expensive housing prices. Inflation is a term that is used to describe the general increase in prices and fall in the purchasing value of money. Rising prices will often impact the cost of living, the cost of doing business, the cost of loans, mortgages, and every other component of the economy.
Purchasing a home is an investment, and in the process of purchasing a home you should consider whether the price is aligned with its actual worth. Over time a house can grow in value, decrease in value, or stay about the same.
4. Financial Capability
Your financial capability should be a determining factor when deciding when the right time is to buy a house. Buying a house is a costly commitment with several accompanying expenses, and you should not rush into any purchases if you are not in a financially secure place. Between closing costs, a down payment, and other expenses, buying a house is among the costliest purchases a person can make.
Waiting until you are in a financially secure place may make purchasing a house a more enjoyable experience. Having a good credit score, little debt, and some savings will give you a wider array of housing options and lenders. Click below to read more tips for first time homeowners!
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