Is it the Right Time to Buy a House?

Part of the American dream is becoming a homeowner. Not only does owning a home give you something to call your own, it often helps with financial security and building wealth. If you are giving consideration to purchasing a home there are a few things to contemplate such as researching the best time to buy a house, your overall financial situation, and the cost of being a homeowner.

Finding the Best Time of Year to Buy a Home

Purchasing a home will most likely be the biggest financial transaction of your life. Timing that purchase will get you the best possible deal. There are certain times of the year, right down to specific months and even days of the week that will regulate the amount of your mortgage and what you can afford to spend. Across the country, fall and winter are generally the best seasons to buy a house. Around the holidays most people are preoccupied with other things and so it isn’t uncommon for prices to drop with sellers desperately trying to sell. People living in cold areas often allow the weather to get the best of their emotions and, tired of living in the cold they list their homes hoping to move to a warmer climate. Typically, in January and February houses cost 8.45% less than in June and August according to NerdWallet. Often, sellers who were motivated to sell in the spring are becoming frustrated and are more willing to negotiate with buyers. 

Real estate markets vary regionally, so the best time in your area may not be the best time somewhere else. It’s imperative you hire a trustworthy agent who can help determine the best time for you to buy. For example, living in Arizona where the temperatures are consistent except the brutally hot summers, prices don’t vary so much through the year. However, living on the east coast your market will fluctuate more with seasonal trends.

Overall Financial Situation

In order to buy a home, your main concerns will be your credit and your income. You will want to assess interest rate offers, but to qualify for the lowest rates you will need at least a 720 FICO score; making when your credit is high the best time to buy. Pay down your debt and improve your credit in order to get the best interest rate. Everyone has heard that you need 20% of the purchase price for a down payment. That means buying a $200,000 home requires $40,000 on a 20% down payment. There are various ways to make this happen, but having cash on hand means you are truly ready to make your homeowner dream come true. While you are paying down your credit and improving your FICO score, make sure you are saving. You may be asking, what money you will have. Depending on your financial situation, you may not have much accessible cash. Keep in mind, making dreams come true isn’t typically easy. Don’t deplete your entire savings or liquidate your retirement for your down payment if that means you will have no money left for emergencies. Have a separate savings account just for your down payment. Keep in mind qualifying for an FHA loan means you may be required to only come up with 3.5% of your purchase price. However, putting 20% will keep your monthly mortgage payment more manageable. 

Cost of Being a Homeowner

Finding the best time of year and having a down payment are not long term concerns. Determining the cost of being a homeowner must be factored into the equation. Costs such as insurance, repair and maintenance, HOA fees, and property taxes will be with you through the life of your loan and beyond. Typically homeowner insurance will run you $75-$100 a month, increasing with the value of your home. Most insurance companies will bundle your auto and home insurance resulting in substantial savings. HOA fees vary considerably vary depending on the neighborhood and amenities. An HOA fee can be as little as $75 a year, while others can be hundreds a month. Just as HOA fees vary, so do property taxes. Taxes are based completely on the county’s assessed value of a property. Just as an estimate use 1.25% of the assessed value or you can easily access your county’s public records for tax rates. Using a mortgage calculator can help you determine what you can afford monthly.

Entering into homeownership is one of the biggest responsibilities in life. It is important to take your time and thoroughly understand what will be required of you.