When you finally make the decision to buy a home, excitement sets in but you may hesitate, wondering if this is the best time to buy. Check out these 5 reasons why you should buy a home today, then talk to your real estate agent about the market in your area.
1. Buyer's Market
A "buyer's market" is when the market is in favor of home buyers because there is a lot of housing inventory and demand is low. When there are a lot of homes on the market but few buyers, sellers are typically more willing to lower their prices to get their homes sold. In addition, sellers often offer concessions where they agree to pay for closing costs, title insurance, inspection, among others. This could end up saving a buyer thousands of dollars. In a buyer's market, your chances of finding a home for a good price is much higher than in a seller's market (lots of buyers, little inventory).
2. Low Mortgage Rates
When you're looking to buy a home, look closely at mortgage rates. Are they holding at a low rate or steadily increasing? If mortgage rates are low, it's a good time to buy, all things considered. If rates are climbing, it still might be a good time to buy -- find a home quickly before rates get too high and purchasing a home is out of reach. A 1% drop or increase in mortgage may not sound like a lot but it can add up to thousands of dollars over the course of your loan. Talk to a lender about mortgage rates, then get pre-approved for a loan.
3. Favorable Financial Situation
A favorable financial situation is defined as: having a good credit score, being able to qualify for a loan, and having money saved for a down payment. In addition, you have enough savings to cover extras like property taxes, upkeep, replacing appliances, etc. When you've got all of these areas covered, you're in a good position to talk to a lender to get pre-approved for a loan and begin a serious home search.
- Credit score of 580+ to 640, depending on the type of loan
- Money saved for down payment
- Additional savings
4. 'Tis the Season
More houses hit the market in the spring and summer, especially in areas that experience a deep freeze. This can bring about more competitive pricing and a better deal for buyers. On the other hand, busy seasons can become even more competitive because of the high demand from buyers, pushing prices up and out of reach for many. The earlier you can purchase, the better.
Buying during the winter can be favorable too. In colder months there are fewer homes for sale and less people looking for homes, due to unfavorable weather and the holidays. Due to low demand, houses sit on the market for longer periods of time making it more likely for sellers to lower their asking prices. If a house has been on the market for 3 months during the winter, that seller is going to be more apt to negotiate a lower price.
TIP: Believe it or not, Easter Sunday and Christmas are good times to buy a home. There's very little competition during the holidays and seller's may be in a festive mood and more inclined to be generous.
5. Prices Will Climb
As you begin looking for a home, especially during prime seasons, recognize that prices will continue to climb as the season gets into full swing. This can depend on how competitive the market is in your area. If there are few people looking to buy in your area, prices may not swing upward as quickly due to low demand. If you're in an area of the country that has a highly competitive market, you may find yourself in a bidding war and paying far more than market value. Regardless, as the prime season progresses, prices tend to climb and you might be better off closing a deal early or late in the season.
Renters vs. Home Owners
Renters. As a renter, you may be hesitant to take on a mortgage, but did you know you're already paying one? Indirectly, but yes, you're paying your landlord's mortgage. Wouldn't you rather earn the equity that you're landlord's earning off of you? If you've got your finances in order, now might be a good time to consider purchasing a home instead of renting.
If you already own a home and need to sell it before purchasing another, spring and early summer are favorable times to get the ball rolling. You will have the advantage of selling when a lot of buyers are on the hunt but, on the other hand, you'll also be house hunting along with a big wave of buyers. Talk to your real estate agent to strategize about the best time to sell your house and look for another one.
There are many reasons to buy a home, but take time to examine your finances and the market in your area before considering a home purchase. Maybe you want to buy a larger home as your family grows, want to get away from renting, or maybe you want to move out of your parent's house. Whatever the reason, only you can decide if it's worth buying a home now or waiting. Talk to a real estate agent to get more information on the state of the housing market, trends, and mortgage rates so you can make an informed decision when the time comes to buy a home.
Learn more about home buying in our extensive guide: