Blog courtesy of the Missoula Organization of Realtors.
While we know that technically the US is no longer in a recession, we’ve yet to see any dramatic advancement that will get us back to where we were, especially in housing. We’ve heard the phrase, “It’s a good time to buy,” but what does that really mean? With interest rates under 4%, it’s important that consumers consider the COST of a home and not just the Price. Low interest rates can dramatically affect your ability to get into the market or how much house you can get for the dollar. That being said, it still might not be the right time to buy…for you. A few small tips to help you when you’re ready to make that leap;
Don’t Try to Time the Market
Don’t obsess with trying to time the market and figure out when is the best time to buy. Trying to anticipate the housing market is impossible. The best time to buy is when you find your perfect house and you can afford it. Real estate is cyclical, it goes up and it goes down and it goes back up again. So, if you try to wait for the perfect time, you’re probably going to miss out.
Don’t Forget Sleeper Costs
The difference between renting and home ownership is the sleeper costs. Most people just focus on their mortgage payment, but they also need to be aware of the other expenses such as property taxes, utilities and homeowner-association dues. New homeowners also need to be prepared to pay for repairs, maintenance and potential property-tax increases. Make sure you budget for sleeper costs so you’ll be covered and won’t risk losing your house.
Keep Your Money Where It Is
It’s not wise to make any huge purchases or move your money around three to six months before buying a new home. You don’t want to take any big chances with your credit profile. Lenders need to see that you’re reliable and they want a complete paper trail so that they can get you the best loan possible. If you open new credit cards, amass too much debt or buy a lot of big-ticket items, you’re going to have a hard time getting a loan.
Get Pre-Approved for Your Home Loan
Loan approval in today’s market is more difficult than it used to be. There’s a big difference between a buyer being pre-qualified and a buyer who has a pre-approved mortgage. Anybody can get pre-qualified for a loan. Getting pre-approved means a lender has looked at all of your financial information and they’ve let you know how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy so you are not running around looking at houses you can’t afford. It also gives you the opportunity to shop around for the best deal and the best interest rates. Do your research: Learn about junk fees, processing fees or points and make sure there aren’t any hidden costs in the loan.
Give Your House a Physical
Would you buy a car without checking under the hood? Of course you wouldn’t. Hire a home inspector. It’ll cost a little bit up front but could end up saving you thousands. A home inspector’s sole responsibility is to provide you with information so that you can make a decision as to whether or not to buy. It’s really the only way to get an unbiased third-party opinion. If the inspector does find any issues with the home, you can use it as a bargaining tool for lowering the price of the home. It’s better to spend the money up front on an inspector than to find out later you have to spend a fortune.
You’re Buying a House – Not Dating It
Buying a house based on emotions is just going to break your heart. If you fall in love with something, you might end up making some pretty bad financial decisions. There’s a big difference between your emotions and your instincts. Going with your instincts means that you recognize that you’re getting a great house for a good value. Going with your emotions is being obsessed with the paint color or the backyard. It’s an investment, so stay calm and be wise.
Homeownership is only a benefit to you and the community when it’s made for the right reasons. It is a large investment, both terms of financial cost and a building a future. Potential buyers should look beyond the generic “it’s the right time to buy”, and really take stalk of their own personal situations. If you are able to qualify, afford the mortgage and other costs, and feel that it would benefit you your family and then community, than now is truly a great time to take that plunge!