Deciding whether to buy a home is one of the biggest financial decisions you’ll ever make. This is not only a big financial decision, but also a very emotional one. Anyone who puts in an offer, goes through a bidding war and loses their home, or finally gets their dream home, agree that the process can have big ups and downs. I can.
The last few years have been more and more confusing potential home buyerCOVID has created major concerns over the future of the economy, initially prompting homebuyers to pause their purchases. Ultimately, lockdowns and remote working and learning have pushed many to seek additional space. soared.
now, Federal Reserve is raising interest rates, and the housing market is cooling. Bidding wars are dwindling and price cuts are progressing. You may ask yourself if now is the right time. The answer depends on your needs and current financial situation. Ask yourself these four questions to see if you’re ready.
Ready to settle down in one place?
Buying a home is a long-term commitment, so it’s a good idea to consider whether you plan to make any major life changes in the near future. If so, it’s best to wait to buy a home as your needs typically change when one of these major life events occurs. , sales agent fees, and preparation costs to sell your home, you need to stay long enough to offset the costs of the transaction. generally, it will take about 5 years (opens in new tab).
It’s not the end of the world, but you probably won’t find yourself having to move so soon after buying a home because you put your dream job elsewhere. The best time to take on a large asset, and potentially a large liability (hello, mortgage payments!), is when life feels stable and you’re ready to put down roots.
Have you reviewed your budget to see if you can afford it?
Not only are mortgages expensive, but so are all the other costs that come with owning a home. When calculating your budget and how much it will cost to own a home, forget property taxes, insurance, homeowners association dues, and additional maintenance costs (lawn care, pool upkeep, home repairs, etc.). Please add it without Also, if you move to a larger house, you’ll likely have additional utility bills. The costs of heating and cooling a large house, water for your garden and lawn will obviously be higher, so take those into consideration.
If you want to know how much of your budget you can devote to housing, try the following scale. Less than 28% of your monthly gross income (opens in new tab)Alternatively, consider discussing your purchase with a financial advisor. A financial advisor can help steer you in the right direction and make sure all the bases are covered.
Did you save for your down payment?
If you plan to take out a mortgage, you will need to donate some money towards the purchase price. The amount you have to put down depends on the type of loan you take out.Most lenders require at least 3%, but usually New homebuyers cut prices by 6% on average (opens in new tab).
You may hear the 20% scattered. This is because the down payment is required to avoid paying. mortgage insurance. Insurance that protects the lender in the event of a late payment. Either way, know that the more you rent a house, the less you need to rent and the less you will pay on your mortgage.
how’s your credit score?
have good credit score It has a significant impact on a lender’s ability to extend credit and the interest rates offered.a A credit score of 670 or higher (opens in new tab) In general, it is something that lenders look for in an acceptable borrower. A score between 740 and 799 is considered very good. A score of 800 or higher is excellent.
Your credit score is what you want to make sure you have in order Previous you apply for a mortgage.If the score is not what you want, the best way is improve your score Pay your credit card bills on time. Set up automatic payments to make sure your payments don’t go unnoticed when you’re busy.
Credit usage is also an important factor and measures the amount of credits used at any given time. Your credit usage is calculated by dividing the amount you owe on all your credit cards by your total credit limit.experts say you should Keep this ratio below 30% (opens in new tab)Also keep in mind that your credit history also has a big impact on your score. Don’t close cards that you’ve held for too long, as they can give you a positive credit score.
Ultimately, only you can know if now is the right time to buy a home. You can take a leap when you find a special place that you want to call home.
Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment advisor located in Long Beach, California. Enrollment does not imply a specific level of skill or training. Additional information about HH, including registration status, fees and services, is available at www.halberthargrove.com. This blog is provided for informational purposes only and should not be construed as individualized investment advice. It is not a solicitation of a personal securities trading offer or a solicitation of personal investment advice. The information provided does not constitute legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant.