Home & Real Estate Top Stories

When Should I Buy a House?

Jude Roberts

While housing inventory may be low, the demand for houses is high. A lot of homebuyers are in bidding wars for mortgage rates, sometimes even with all-cash offers.

According to housing experts who spoke with us, that means that homes in the most competitive market are selling for a lot more than what they cost. They state that 2020 has been a strong seller’s market. 2021 is also likely to be a strong seller’s market.

Perhaps you have been considering buying a property. But, you may be wondering if it is better to wait until the market becomes more favorable. Experts disagree on the ideal time to buy property. They say that there is no one right time.

But the price isn’t all that is important, especially when the U.S. economic recovery from the coronavirus outbreak is still ongoing.

Adriana Buenrostro of Prosper Real Estate Santa Rosa says low-interest rates are tempting many people. She said, “That’s great! If you have the downpayment and steady income, and the reserve.” “If you don’t make enough money or your job becomes unstable, this can lead to a lot of problems.”

This is what you need to know if you are deciding to buy or wait to purchase a house.

When should you buy a house?
It has been long considered an essential part of the American Dream to own a home. If you wait to buy a home, you could end up in a mess. Here are five signs that it’s time to buy a house.

You have a stable income
It is crucial to feeling financially secure before purchasing a home. If you’ve been earning a steady income for at minimum a few years, it’s a good indication that you are ready for the leap to homeownership.

Lenders need to see a history of steady employment to make sure they have enough income to cover the cost of a mortgage. A majority of lenders require your W-2s from the past two years. Others will request pay stubs as well, up to the closing.

You have control over your debt
Next is your debt/income ratio (DTI). It measures your likelihood of being able to afford your monthly mortgage payment based on your income and current debt.

DTI generally includes bills such as student loans, car payments, and credit card debt. However, living expenses like food gas, electricity, and utility costs are not included. Although maximum DTI levels may vary by lender and mortgage type (the Consumer Financial Protection Bureau) most lenders want a DTI below or equal to 43%.

The lower the DTI, the better. If you have a higher DTI, it is a good idea to pay down your debt first before entering the real estate market.

You have enough savings
Your lender will also ask you to prove that you have enough savings for the upfront cost of purchasing a home.

In particular, it is important to have enough savings to cover the down payment as well as closing costs.

Depending upon the type of mortgage, the down payment can range from 3.5% up to 20% of the home’s purchase price. Closing expenses are typically 2% to5% more than the purchase price.

Lenders like to see enough funds in your account to cover future mortgage payments, and for any emergency expenses.

Your Credit Score is Good
Lenders use credit scoring models that they create to assess how risky a borrower is. Before the pandemic credit was high 600s or low 700s. Dan Moralez is a mortgage lender and regional Vice President at Northpointe Bank. He claims that it has moved up to the middle-700s and even higher.

Before beginning the homebuying process, make sure to review both your credit reports and credit scores. Your credit report can be checked by all three major credit agencies every year and every week up until April 2021. A free website can help you check your credit score. You may also be able to access it through your online credit card account.

Lenders are now more cautious about lending due to the pandemic. Be sure to examine your credit reports for any discrepancies that could impact your creditworthiness.

You’re ready to settle down
The cost of buying a house is high. It will cost you thousands of dollars to buy a house.

If you commit to staying at one place for a prolonged period of time, you should purchase.

Moralez says that it’s important to look at your long-term plans. “Often, first-time buyers are just starting in their careers. If they are looking to buy a home, are they going to be staying local, or are they looking for a job that can take them further?

Also, remember that the sale of your home may be complicated in the future and can be costly due to the commission paid by a real estate agent.