Home prices have been soaring since the start of 2021 as limited inventory and low mortgage rates have driven an uptick in buyer demand. Recently, the S&P CoreLogic Case-Shiller Index reported that home prices were up 19.7% in July compared to the year prior. That’s a tremendous hike, and one that many buyers can’t afford.
While many buyers are getting priced out of the real estate market, that doesn’t mean it’s not feasible for you to buy a home this year. Here’s how to know if you’re in a good position to take that leap.
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1. You have a 20% down payment for a home
These days, it’s harder to come up with a 20% down payment on a home because doing so requires you to bring more money to the table than you would’ve in the past. But if you’ve researched home prices and know you have that down payment on hand, then you’re in a strong position to buy.
Of course, many mortgage lenders will accept a lower down payment for a conventional loan. But if you don’t put down at least 20% of your home’s purchase price at closing, you’ll be hit with private mortgage insurance, a costly premium you’d probably rather avoid.
2. You know what monthly mortgage payment you can afford
Having a lot of money in savings for a down payment is a good step toward being ready to buy a home. But it’s equally important to have crunched the numbers to make sure you can swing your monthly mortgage payments.
Remember, even if you’re bringing a large amount of money to your closing, home prices are up significantly this year. It’s important to do the math and make sure your mortgage payments won’t bust your budget.
3. Your credit score is in good shape
A big reason so many people want to buy a home this …….