If you are considering buying a home for you and your family, it can be a scary process. Of course, everyone and their brother is going to start handing out advice like candy at Halloween. Despite their best intentions, chances are good that they are unaware of your budget and needs. Unless you have a realtor in the family, they probably don’t have much of an idea of what’s going on in the real estate market.
With this in mind, here are three questions you should be asking yourself to make sure this is the right time to invest in a home of your own.
1. Why Are You Buying a House?
This is definitely the first and most important question you need to ask yourself. Put the money part of the decision to the side and think very carefully about why you are buying a house in the first place. If you are like most people, money probably has very little to do with why you decided to buy. In a recent study conducted at Harvard University by the Joint Center for Housing Studies, these were the most common reasons given for buying instead of renting.
- Buying a home in a good neighborhood where there are good schools.
- Buying a home in a safe neighborhood.
- More room for everyone in the family.
- Ownership means having total control over your environment.
All things considered, you need to decide what buying a home means to you and your family. What will you gain from doing so? These are the most important questions, once you know why you are buying a house, then you can move on to the next question.
2. Are House Values Going Up or Down?
The prices in the housing market have been known to fluctuate over the years, but in a recent report issued by the Nation Association of Realtors, entitled Existing Home Sales Report, the median price of a house in the U.S. in February 2019 came in at $249,500. According to the report, this figure represents an increase of 3.6 percent. This increase makes it 84 months in a row that housing prices have increased in accordance to year-over-year gains.
When you look at past history and the current state of the market, you can expect prices to continue increase by as much as 4.6 percent by this time next year. So, if the house you are considering buying is listed at $250,000, but if you wait a year and prices continue to rise, you will be paying an extra $11,500. Can you afford to wait for another year?
3. Are Mortgage Rates Going Up or Down?
Interest rates hit historic low rates over the past years, which is something you should be concerned about. Why? Because the interest rate on your mortgage has a significant impact on the long-term cost of your home or in plain English, how much you will have paid for your house by the time you make the last payment. Even an increase of 0.1% can have a significant impact on the final payoff. According to Freddie Mae, Fannie Mac, the National Association of Realtors, and the Mortgage Brokers Association, interest rates are projected to continue rising for the foreseeable future. Here again, can you afford to wait?
Only you can know if this is the right time for you and your family to buy a house. The answers to these three questions should help you come to the right decision.