Should you buy a home now or should you wait? That’s the question a lot of prospective homeowners are struggling with to answer in today’s crazy market. Many would be buyers are like leaning towards that wait side. In fact, 75% of prospective homeowners think that it’s actually a good time to wait. According to Fannie Mae’s home perspective Sentiment Index, a monthly survey gauging consumers thoughts on the real estate market. There is no question that the current market is a seller’s market, and that’s what we’ve seen for the last two years. But we’re seeing a little more of a shift in the market towards a normalized market, actually makes a little bit better for buyers. So stay tuned through this video. Deciding which opinion is best for you. Comes down to finances, actually.
Here are some key considerations to help you decide the best approach for you. Let’s talk about should I buy a house now? If you buy now, you can start building equity immediately. And that is the power of real estate. And that’s true no matter which way the real estate market is leaning at any point in time, it’s all about equity. I’m going to quote a real estate broker in New York City. Her name’s Stacey. Hi, Stacey. She says if a buyer finds a property that they would like to call home, they should not delay. You cannot time a market and a home should be a long term investment. A year from now, even if prices start slowing down and mortgage rates go up significantly higher in the end, that will cost a buyer more monthly.
If they are financing, end quote. And I’ll throw in my $0.02. Not to mention that you might be paying rent over that time while you’re waiting and just throwing away that money so rising rates can spell serious trouble for your monthly budget. Consider that math, please. Go talk to a good loan officer and figure out what is the right approach for you in today’s market as interest rates have gone up just a little bit. So if you find a home that you love, don’t delay. Now’s always a great time to buy a house that you fall in love with. In general, you can answer these three questions and if it’s a good time to buy. So let’s get started. Number one, do you have good credit? Any time you’re borrowing money start with reviewing your credit report and your credit score. That’s what banks are looking at. They’re looking at your debt to income ratio. And if you have a good credit score, they’re going to be more likely to give you the best rate that they can offer. Number two, have you saved enough money for your down payment? Now, if you’re a VA buyer, you don’t really have to worry about that. Or if you’re looking to use the first time homebuyer program, you don’t have to worry about down payment.
But in addition to paying your bills on time. Have you managed to save enough money for that down payment that you would want to get if you’re looking at getting an FHA or a conventional loan? Those are things that lenders are also going to take in consideration.
That means that you can afford to buy because you’ve been living beneath your actual means, which is a good thing and lenders like to see that. The higher the down payment you can put on your home is what lowers the debt on the home that you’re buying. So your debt to income ratio is a big deal when you’re speaking to a lender. Lenders feel a lot more comfortable loaning to people who have additional cash reserves and aren’t just eking by paycheck to paycheck, which let’s reality. A lot of us are doing that, especially as the cost of goods are going up. So I get it. But if you’re able to do some financial planning, having that nest egg or having that savings account that shows that you can save for your down payment is a big deal when you’re talking to a lender. Let’s go into number three.
How Long Will You Live There?
Are you planning to stay in the home for a while? In addition to the purchase price, buying a home comes with closing costs that can run between like about 3% of your final sales price. So you can justify the transaction costs if you’re going to be in your home for a reasonable amount of time. I really like to encourage people to be in their home like three years or more. Five, seven years. That’s like the sweet spot right there for building equity. But if you’re going to be in your home for at least three years, it is a really great idea to buy now. Let’s switch gears. Should you wait for the housing prices to come down before you buy a home? If you want to become a homeowner and you’re waiting for the prices to cool off a little bit.
Here is a challenge for you. Housing prices don’t tend to decrease, with the notable exception of what happened in 2008. But that was like a whole different ballgame from what we’re looking at right now in 2022. However, the good news is, is the housing prices can not skyrocket forever, you guys. So as a buyer, you’re not looking at having to overpay for a home anymore because we’re starting to eek our way into a more normalized market. Here are two instances in which it might make more sense to wait out the market. Number one, if inventory is slowing down where you’re looking for a home, it might be a good idea to just kind of wait it out a little bit. And that’s actually what we’ve seen over the last two years where inventory has been super low here in Hampton Roads and there haven’t been a lot to choose from, but there’s still been a lot of buyers out there and that’s why people were overpaying or paying over asking price for houses.
Now, if you’re actually seeing inventory increase and that’s actually what we need, we need more bold sellers right now, people that aren’t afraid to sell their home and go look for the next one. So if inventory is on increase, then that’s actually a great time to be a buyer because that means you’re tipping the scale a little bit. And sellers don’t have the advantage of low inventory. But waiting can be a losing game because you never know what’s going to happen. We don’t have a crystal ball when it comes to real estate, what houses are going to be on the market and what houses are going to be waiting? So inventory right now really has been at an all time low, but we’re starting to see a little bit of a change in the market, which is really good for you buyers out there because it means that you have a little bit more to choose from and there aren’t as many buyers out there because interest rates have made a shift.
Be A Savvy Financial Buyer
So I’m telling you to just be a savvy financial buyer, talk to a loan officer, figure out what is best for you when it comes to your goals and what you’re looking for in a home. Because your personal finances and having the right lender is going to empower you to make the best decisions as you partner with a real estate agent to help you find what you’re looking for.
I’m just going to end with this. Number two, I highly suggest talking to a loan officer and really making a plan if you know you have a raise coming down the pike or maybe an inheritance coming down the pike, or you’re like two or three months away from paying off your credit card debt, now’s the time to talk to that loan officer so that you can make a plan and what your buying power is. And then get with a good real estate agent in your area. If you’re looking at Hampton Roads, hopefully it’s me to help you partner together. Buying a home takes a team of people, takes an awesome real estate agent that’s looking out for you that understands your needs and your goals and the area that you’re looking at. And a really good loan officer to help you understand what the buying process is looks like, what kind of money is you need and what money reserves you need so that you are best prepared for that 30 day closing that every seller wants to see.
So that’s it. Those are kind of my tips there today. Working with an expert agent in today’s market is more important than ever, especially a real estate agent like us here at that fit team that have been around a while. We’ve seen the ups and downs of the market, the right broker privy to the inventory to the area and the market will absolutely help you make the best decision that you could possibly make for you and your home. Buying or selling goals. Trying to buy a house in a seller’s market is hard. Trying to sell your house in a buyer’s market is hard, but we’ve been there in both markets and we know how to do that well. So if you have any questions whether right now is a good time to buy or sell for you personally, let’s just set up a call.
It doesn’t cost you anything. A consultation with us is absolutely free where you are, whether you’re a buyer or seller. We would love to sit down with you or zoom with you or just have a phone conversation, figure out what the best thing is for you and your individual situation. We love to strategize with our clients to figure out what’s best for them and how to help them make actionable goals, smart goals. You guys, we love doing that here at That Fit Team, so that’s nice spiel for today. I can’t wait to hear from you whether you want to buy, sell, build or best for here for you, contact us. Give us a phone call, shoot us an email, comment below. We’d love to hear from you. We’d love to be your go to real estate team here in Hampton Roads.
I’m Rachel Beasley with That Fit Team. We’ll see you next time. We are professionals in real estate and passionate about people. Bye you guys!