Buy now, or wait? That’s the question prospective homeowners are struggling to answer in today’s hot housing market. Many would-be buyers have been leaning toward the “wait” side of that equation. In fact, approximately 75 percent of consumers believe that right now is a bad time to buy a home, according to Fannie Mae’s Home Purchase Sentiment Index, a monthly survey gauging consumer thoughts on the real estate market.
There’s no question that it is currently a seller’s market. But buying now may still turn out to be a wise decision in the long run. Deciding which option is best for you comes down to finances. Here are some key considerations to help you decide on the best approach.
Should I buy a house now?
If you buy now, you can start building equity immediately. That’s true no matter which way the real estate market is leaning at the time. A key point for today’s market, though, is that buying now means avoiding additional mortgage-rate increases later.
“If a buyer finds a property they would like to call home, they should not delay,” says Stacey Froelich, a broker with Compass in New York City. “You cannot time the market, and a home should be a long-term investment. A year from now, even if prices come down slightly, mortgage rates will most likely be significantly higher. In the end, that will cost a buyer more monthly if they are financing.”
Rising rates can spell serious trouble for your monthly budget. Consider this math from Heather Brown, an agent with RE/MAX Austin Skyline in Texas. “Based on a $450,000 loan amount, the difference between a 4 percent rate and a 5 percent rate is about a 13 percent higher payment,” she says. “Not only that, but the amount of interest paid during the life of the loan is higher too, so the payoff is in effect higher.”
In general, if you can answer yes to these three questions, now is the time to buy.
1. Do you have excellent credit?
Anytime you’re borrowing money, start by reviewing your credit report and your credit score. The best deals on mortgages will be available to those with credit scores of 740 and above. If you have demonstrated that you are a low-risk borrower with a history of on-time payments, you’ll be in line for the lowest mortgage rates that a lender offers.
2. Have you saved enough for a down payment?
In addition to paying your bills on time, have you managed to save a fair amount of money, too? If you are sitting on a sizable portion of cash that can make a big dent in …….
Source: https://www.bankrate.com/real-estate/should-i-buy-a-house-now-or-wait/