Monica Mastroianni - REALTOR©

Is now a good time to buy a home?

When do you know it’s the right time to buy a home?

There’s no one answer to this question, as the decision of when to buy a home depends on a variety of individual factors. However, there are some general guidelines you can follow to help you make the right choice for you.

One consideration is your budget. How much can you afford to spend on a home? Keep in mind that a portion of your monthly income should go toward a mortgage payment, even if you won’t be able to spend that money on housing. Beyond meeting basic needs like food and clothing, this is one of those “good problems” everyone wishes they had: too much money for your home.

If you can afford more than the minimum amount required by a lender, it’s worth doing some research to see whether you would benefit from committing more money to your mortgage. Generally speaking, this can be a very low-risk, high-reward decision for many homeowners.

Once you have determined the amount of money that makes sense for you personally, try using a mortgage calculator to figure out how much you can afford to spend on a home.

Then, consider the following:

1. Do some research before taking out a mortgage or applying for a loan. You should know what your credit score is and how it will impact the amount of money you are offered in interest if your lender decides to extend financing to you based on your credit score.

2. How long do you plan on living in the home? If you think you might move within the next five years, it may not be worth buying a home just yet. However, if you plan to stay for 10 or more years, buying could be a good idea – especially if you think your income is likely to increase over time.

3. Do you have the time and patience to maintain a home? Owning your own home is wonderful, but it can also be a ton of work. Before jumping in headfirst, think about whether you are ready for this commitment. It’s much easier to take care of property when you don’t have to worry about paying rent on top of everything else.

4. Are you prepared to deal with potential home repairs? Along the same lines, think about whether you are ready to take on some of the responsibilities that come with homeownership, like fixing a leaky roof or dealing with a broken furnace in the middle of winter.

5. How stable is your job? If you are in a field with a high turnover rate, it may not be the best time to buy. You don’t want to find yourself in a situation where you have to sell your home quickly – and at a loss – because you lost your job.

6. Are interest rates low? One of the biggest benefits of buying a home is that you can lock in a low interest rate. However, if interest rates rise while you are still paying off your mortgage, it could end up costing you more in the long run.

7. How much can you afford to pay in monthly mortgage payments? This is one of the most important questions to ask yourself when you are thinking about buying a home. If the monthly payments on a certain property would stretch your budget, look for a cheaper place or wait until your income is higher.

8. Will buying a home increase your chances of getting approved for additional loans? This is especially important if you have been turned down in the past because of poor credit.

9. Are you ready to be a homeowner? Owning a home comes with a lot of responsibilities, from mowing the lawn to fixing the plumbing. If you’re not sure you’re ready for all that, renting may be a better option for you.

10. How much can you afford to spend on housing each month? including your mortgage payment, property taxes, homeowners insurance, and any monthly maintenance costs. This number should be no more than 30% of your monthly income.

Purchasing a home is a huge decision that should not be taken lightly. If you can answer these questions honestly and objectively, you will be in a much better position to know if you can take on the responsibility of homeownership.

Once you finally make the big decision to buy a home and crunch all the numbers, there’s another very important step: putting together your personal financial plan. This is not something you want to put off because it will affect how much money you can afford for your down payment and monthly mortgage payments.

Your personal financial plan should include your:

1. Monthly income and expenses

2. Credit score

3. Debt-to-income ratio

4. Savings goals

5. Investment goals

6. Retirement goals

7. Estate planning goals

buying a home is a huge decision that should not be taken lightly.

Contact me today to learn more.

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