When is a good time to buy a home?

Real Estate is consistently a good investment.  Interest rates, however, will raise and lower as the economy cycles. This fluctuation can make buyers leery of locking in fixed rates during the high end of the cycle, especially after the all-time low rate market we sustained the last few years. It is important for home buyers to remember refinance is always an option for buyers who find themselves buying at the higher end of the cycle.  Home ownership when compared to renting is a good investment. Renting builds zero equity and the funds invested equate only to time allowed to live at the property.  Home ownership equates to equity. Equity is the value built into a home as you pay down the purchase price and own the asset outright. The equity accumulated can later be converted to profit when the home is sold or as available collateral to borrower against to receive cash on hand if needed.

That being said, it is always recommended for home buyers to be cautious and review their individual home buying strategies. Realtors and lenders should recommend buyers submit an application for pre-qualification review regarding what their new monthly payment will reflect when including annual taxes, home owners’ insurance and the estimated rate of interest, whether high or low.  They will also want to review how that payment will affect their overall debt to income ratio (credit debt vs income received) to make sure its affordable within their monthly budget.  The number of liquid reserves, also known as accessible savings, that a buyer has on hand is also something to consider as they determine their down payment. Down payment can affect the final loan amount and overall monthly payment. Reserve funds should also be considered relating to the fact that the home’s maintenance will now be the responsibility of the borrower/home owner.

It’s also worth noting that each year an annual analysis of the home owner’s insurance and real estate property taxes are reviewed if handled through an escrow account by the mortgage company. This review will typically adjust the payment. Escrow is the term used for funds collected along with your monthly payment to put into account to cover the annual tax and home owners insurance bills as they come due.  However, if not escrowed and on a fixed payment schedule, the payment will never change. Borrowers on a tighter budget should make sure their debt-to-income calculation can sustain that change as well. All of these items can be discussed with a lender during the pre-qualification process.

Call one of our experienced lenders today if you find that now may be the right time for you to buy!