Is now the time to buy that perfect house in Palm Springs or wherever you are looking to be living?
The housing market in most of this country has been highly competitive for quite some time. There are way more people looking to buy a new home than those looking to sell. Many buyers and sellers find themselves in situations with multiple offers and homes selling for seemingly unbelievable prices. This has left many would-be homebuyers wondering if now is a good time to be buying a house. Keep reading for six questions to ask yourself before jumping into the real estate market.
Am I Willing to Live Here For At Least Five Years?
Are you willing and able to live in the house for at least five years? Extra credit if you can handle five years here. Having a house that meets your needs and is in a location you like will make owning a home much more palatable when inevitable home repairs come up or if house prices drop.
Under normal circumstances (we are not in a normal housing market at the moment), it will usually take a few years to recoup the cost of buying and selling a home. So, the longer your time frame, the greater your odds of making money if or when you decide to sell your home.
How much house do you really need? More importantly how much house can you afford?
Will My Cost of Housing Be Less Than 28% Of My Gross Income?
For most people, spending more than 28% of gross income on housing will leave you house poor. There are exceptions. For example, someone buying a duplex or multi-unit property or having a roommate could help make homeownership more affordable. Also, in many scenarios, the self-employed appear much poorer on a mortgage application than in real life.
Your mortgage broker can likely get you a mortgage at 43% of your gross income, but that won’t leave much money to enjoy life or even do things like eating after taxes.
Can You Afford a 20% Down Payment?
I’m not saying you have to put 20% down but having the ability to do so shows that you are likely in a position to afford to own a home. Side note, in the current market, the larger your down payment, the more competitive your offer will be (assuming many of you are buying a home with …….