We’ve been asked the question often, “When is the best time to purchase a new home?” The answer is always the same: it depends on your unique goals and circumstances. Everyone has different situations, and what works best for one person, might not work best for another. The only way to know if now is the best time is to talk to your local mortgage professional.
Attempting to forecast the rise and fall of interest rates and changing property values is futile, and these types of external variables are beyond your span of control. Mortgage interest rates vary continuously. Economic information, political events, and even natural disasters can have a significant impact on interest rates. Wall Street professionals spend lots of time researching, analyzing, and speculating the financial issues that affect things like buying a home. However, even they seldom get it right.
Set a Goal and Stay Focused
The best thing you can do to get the timing right is to set a specific home buying goal and stay focused on that goal. Try to avoid any distractions that will detour you from making your dream a reality. Then, focus on strengthening your credit, stabilizing your employment history, and saving for a down payment. These are some other things to keep in mind.
If you decide to buy a new home with less than 20% down so that you can take advantage of a drop in interest rates, you’ll probably be required to pay PMI or Private Mortgage Insurance. PMI allows you to buy a home with less than 20% down, but it comes at a price. For example, if you make a 15% down payment on a $350,000 home, PMI would add about $100 per month to your total monthly mortgage payment. Depending on the PMI provider, you usually have to continue paying PMI until such time you can show 20% equity and have the PMI requirement eliminated.
Your down payment goal is essential, but it’s not the only factor when deciding on when to purchase a primary residence. You must also be ready, mentally, and emotionally. It’s a big commitment. You’re not only choosing a home but a community. Much responsibility comes with being a homeowner, and you have to make sure you’re ready for that level of financial responsibility. Homes also require upkeep. Only you can decide if you’re truly prepared.
When you feel the time is right for you, both financially and emotionally, make an appointment with a lender to get pre-approved for a mortgage. Until then, hold off on looking at prospective homes. In the meantime, keep strengthening your credit, and start researching towns and neighborhoods that might fit your lifestyle and requirements. Before long, everything will come together, and eventually, you’ll find the right home at precisely the right time.
Note: Opinions expressed are solely my own and do not express the views of my employer.