When Is a Good Time to Buy a Home?
I’m asked this question frequently. My standard answer is “when you can afford to do it and you can qualify for financing.”
If you have concerns about your employment security or you think you won’t be in the area for long, perhaps delaying is prudent. If the real estate market is such that property values are declining, maybe waiting is a good idea…but that is rarely the case. Otherwise, it’s a great time to buy!
There are obstacles (real or perceived) that keep people from buying a home. Potential buyers will often say they want to save more money so they have a larger downpayment. The current interest rates are very low. Even if they go up some, they’ll still be great in the grand scheme of things. Consider that if the rates increase to where they were only last fall, you would have to put almost $20,000 more in downpayment to equal the same payment you could have today. That hardly seems worth the wait.
Many buyers believe that they need a 10 or 20% downpayment on a home. That would be a huge obstacle for most first-time buyers. The good news is that it is simply untrue. There are great loan programs available that require little or no downpayment. VA, USDA and the Virginia Housing Development Authority all have great loan programs with no downpayment. Conventional loans require only a 3% downpayment for first time buyers and FHA allows a 3.5% downpayment.
Sometimes credit can be a perceived obstacle. In this day and age, credit scores are very important. Obviously the higher your score, the better since your score can impact your interest rate. However, there are loan programs available that allow credit scores down to 580. So not having a perfect score can often be overcome.
What steps should you take if you want to buy a home? The first step is to get with a reputable, experienced, local loan officer to discuss your situation. Before you start driving around finding a home you love, you need to know how much you may qualify for, what the payments would be and how much money is needed. Even if you’re convinced that you won’t be trying to buy for several months or a year it is wise to have a consultation. A good loan officer can guide you and help you plan so that you’re in the best position when the time comes. In my experience, many buyers come to me thinking they must wait only to find out that can indeed buy now. Maybe there is a credit issue that requires some work. A good mortgage professional can help you do the right things to improve your situation. I have many stories of clients that come to me thinking they’ve been working on improving their credit the past year but in actuality, were harming it. Sometimes, employment has changed or their pay structure has changed, which may affect qualifying. They may be earning more money now but not realize they have negatively impacted their qualifying income. In many of these cases, if they had come to me a year ago when they were first thinking about buying, we could have implemented a plan and they’d be shopping for a home instead of not being able to qualify now.
So if you want to own a home, sit down with a loan officer and see what is the best program to suit your situation? After all, it’s a great time to buy!
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