If you’re a potential homeowner, you must have been patiently waiting and saving for your new home. The housing market is very hot now and there’s been an increase of about 25% in the median sale price of houses since last year. It’s not surprising that you’ll be asking yourself, should I buy a house now or wait for the recession?
There are lots of reasons why you might want to keep postponing the home purchase, but you might be surprised if I tell you that now is the best time to own a property. Are you considering buying a house now, here’s all you need to know:
There’s an Increase in Rent
We all know home prices are increasing daily in some markets, and you can wait for them to come down but rent prices aren’t low either! There has been an increase in rent prices recently, therefore choosing to rent rather than buy a house is like paying someone’s mortgage.
According to statistics, rental prices in most of the country’s metro areas have drastically increased since after the pandemic. This means the whole housing market is squeezed right now, so neither buying nor renting is an escape from high prices.
It’s still better to buy a house than rent since if you collect a loan to buy a house, the payment will always be the same. While if you’re renting, your landlord can decide to add up to $100 if they want.
You Can’t Predict the Housing Market
While deciding whether to buy a house now or wait, you’ve to understand that the trajectory of the housing market can’t be correctly predicted.
Many experts predicted that the housing market would be good in 2021, and we all see how it turned out! While it’s good to wait for prices to fall so that you’ll save some pennies, the downside is that mortgage rates can rise at any time.
Presently, mortgage rates are reasonably low. Therefore, you’ll be able to save money if you collect a loan now if you can’t afford a house by paying fully in cash.
Local Markets are Different
If the high price of a house has made you think twice about the question “should you buy a house now”, then know that most local markets don’t usually follow national trends.
Some house sellers have heard that the housing market is hot and run to auction their houses, just for them to be disappointed at the under-asking!
This highlights that local markets can be very different. For example, during COVID-19, there was an increase in the price of houses In the suburbs since many were moving away from crowded cities.
Keep in mind that every local market has its trend and what your friends or neighbors experience when buying a house might be very different from yours.
House Market Is Unlikely to Crash
Another important thing to know when deciding whether to buy a house or wait is that the prices of houses are unlikely to drop anytime from now.
This means if you’re to wait, it’s going to be a long wait. Lenders are giving out loans to individuals with low credit ratings allowing more people to purchase houses thereby causing an increase in the price.
Right now, many people want to buy a house, mortgage rates are low, but there are few properties up for sale!
You might be wondering if now is the right time to buy a house. Yes, we all agree that owning a house is very essential, however, there’s the right time for everything, and buying a house isn’t an exception.
The following are signs you’re ready to buy a house if you have been asking “should I buy a house now?”:
● When You Have a Stable Income
Should you buy a house now? Yes, you can if you have a good income source.
You’ve to be financially stable before thinking of buying a house. If you’ve had a steady source of income for years, then consider taking a conventional mortgage loans here to start processing your house ownership.
Your lenders will look at your employment history to be sure you have a source of income that will be able to cover the cost of your mortgage. Most lenders will ask for your pay stubs and other necessary information before pre-approving.
If you’re self-employed, your lender will ask for your task return in a year or two. If you’ve received 1099s within that time, you’re expected to let your lender know.
While your lenders can’t predict how financially stable you’ll be in the future, they’ll have to see any evidence that you’ve had a stable source of income in the past.
● Your Debt to Income Ratio
If you can handle your debt, then you’re likely going to be able to afford your monthly mortgage since your debt to income ratio is good.
Your debt income ratio includes your credit card debt, student loans, and car payment. It excludes bills like utility bills, food, and fees. According to the Consumer Financial Protection Bureau, the maximum level of DTI levels required by lenders is usually less than or equal to 43.
The lower your debt to income ratio is, the more likely you’re to secure that mortgage. Therefore if you’re having a high DTI, consider paying off some of your debts.
● Have a Good Credit Score
Most lenders have a credit score model that they use to determine how risky it is to give you a mortgage.
Before deciding that you’re ready to buy a house, consider checking your credit rating and your credit score. You can easily check your credit score via your online credit card or on a credit score website.
There are many lenders out there, so ensure you check your report thoroughly for any mistakes that might affect your creditworthiness.
It’s not easy to own a house. You’ll have to pay lots of money to get your dream house including other costs like a down payment.
The condition of the market plays a great role in determining how much you’ll buy your house. However, be prepared for competition when getting approved for a mortgage and choosing your dream house.