It’s a very common question everybody asks at least once in their lifetime, is it a good time to buy a home?
Well. The question asked is incorrect.
Nobody has the appropriate answer to this question. No real estate agent can answer this or make assertive prediction, if he does, he is advising you for his own profit not yours or won’t have any certainty in the assistance.
Famous managing director of a real estate brokerage company says, “The reality is, no one has a crystal ball. We only know what the right time was to buy or sell by looking at history, hindsight being 20/20.”
So how do we know we got the correct answer to the question?
The correct question to ask is whether it is appropriate for the buyer to buy a property given his current financial situation. The correct question is not whether it is a good time to buy a property and earn profit in the coming year. This question gives a broader range of answer and based on various factors defines everyone’s specific situation.
3 important factors that matter are:
How long will you stay in that home?
One of the most crucial factors to take into account is how long do you plan to live or own the space. Calculate the time horizon before making any decisions. Your current living situation has a huge impact on this decision. Essentials such as job security, changing careers play vital role as well. Your living time frame really matters during buying and selling the real estate. Longer your stay is more opportunity to balance any transaction charges.
When it is to evaluate for a client, whether they want to buy or rent the space, they are being asked about their time frame. If their time frame to live there is less than 5 years, they are suggested to rent. But this also depends on the client situation and what makes more sense.
What is your monetary status?
Equally important question is whether you have sufficient upfront and current reserves and cash to pay for the place you desire to live in. Aside from the emergency funds, your upfront expenses include down payments and closing costs.
Your current reserves include whether your salary is enough to pay the loan, insurance and other fees and taxes. According to your financial advisers, your ongoing charges should be 30% less and debt should be 40% less than your net income.
A quick talk with your agent will give you a rough estimate if you have enough funds for a home. If in the current situation you lack some fund, you can contact you financial adviser and plan your future that targets your home.
Most financial advisers have acknowledged to keep home purchase plan a priority when they discussed financial planning with Gen Y.
What’s your financial position?
Having a strong financial position not only help qualify the best loan rates but also makes you appear more fit buyer for the sellers. While taking a loan for your home, financial institutes and sellers both will be attracted with factors such as you net worth, asset profile and credit score.
If you are in the early stage of your decision, you can call your bank and ask for an estimate. They will give you a quick and rough figure based on your financial status. This estimate will you make decision for both buying and taking up the loan.
If you make the decision to buy home, you can get a pre-approval with the bank. Your application is taken in consideration, personal information is verified with suitable documents and your credit score is verified.
It is better to be careful then sorry while evaluating the mortgage amount you are given. With loan pre-qualification, people estimate range of space to survey or go beyond their price range and go for maximum house amount they can afford rather than what they need.
Therefore, the solution to this is..
Decide the best time when you can buy and not the best time of real estate industry. As said, “We can’t time the market, but we can time our needs.”
Be sure to review your financial situation with your financial experts and see if you are well settled in terms of money to buy a home. Once you have all the funds required, look for the local market, talk to your real estate agent to get the best deals.