Is Now the Right Time to Buy a Home?


For many who are currently seeking to buy their first home, the housing market crash was a harsh warning. There have always been risks associated with home ownership, but the mortgage crisis taught us that some of those factors are beyond our control.

Homebuyers wonder if this is a smart time to buy. Can I get the best deal now? Will I save more if I wait? Is another crash right around the corner?

For real estate investors, these are critical questions. But for most prospective home buyers, building equity is a fringe benefit to the real driving force behind real estate purchases -- everyone needs a place to live!

When you're considering buying a home for the independence, space and comfort it offers, the most important questions are about your needs and your financial situation -- not the market.

Making Moves

There's more to buying a home than replacing your monthly rent with a mortgage payment. There are additional fees involved in the sale like closing costs, taxes and agent fees.

It's important to consider how long you expect to stay in any home you're thinking about buying. Many real estate agents agree that five years is the bare minimum anticipated residency for a home purchase to make financial sense. The longer you can stay, the better.

Timing your move is especially important if you're currently renting. It's extremely difficult (and takes a lot of luck) to go from browsing to moving in less than a month, so don't wait until your lease is almost up to begin. However, if you start too early, you could end up owing your first mortgage payment before your last rent payment is due.

Raiding the Piggy Bank

Buying a home isn't a purely pay-as-you-go proposition; it takes a lot of saving to amass a down payment, so your readiness for home ownership depends on the size of your nest egg.

Ideally, you'll have saved 20 percent of the purchase price for your down payment. With good credit, this can be as low as 10 percent, but you'll need to purchase mortgage insurance for the first few months or years.

The costs go on. There are all the transactional fees mentioned above, but if you're accustomed to renting, you'll discover many new expenses now fall to you. If a pipe bursts or an appliance breaks down, there's no landlord to call &endash; you're responsible for the total cost. It's a good idea to set up an emergency fund to pay for unexpected home repairs. And if your landlord was providing maintenance like lawn service and gutter cleaning? You'll need to buy a mower and a ladder -- or start paying someone to do it for you.

Ready to Begin?

If you think you're ready to buy after considering your needs and savings, it's time to connect with the professionals who can help you take the next steps. Shop around locally for reputable real estate professionals and lenders who offer pre-qualification for home loans, which will give you a better understanding of how much home you can afford.

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