When to buy a house? RIGHT NOW.
The new market is different. More than ever we have consumers who are going out and doing their homework, looking at homes and using tools like mortgage calculators that are available to them online. That’s awesome, I love when people empower themselves- but it can lead to a false sense of authority on the subject they are studying. I believe this is the case with real estate. Here are the top three assumptions that can lead you into trouble.
1) The price is the most important factor in buying a house– Yeah, it’s a factor, but the mortgage rate is EVEN MORE IMPORTANT. If the Property drops 4%, but the Mortgage Rate rises from 4.0 to 5.5, you are actually paying an additional 5.1% for your new home! Don’t wait until home prices bottom out to buy your house, take advantage of low interest rates, and save big.
2) A mortgage calculator will tell you your monthly payment– Sometimes it will, some of them offer the option of adding property tax and insurance, but some of them don’t even mention it. Property tax and insurance are really important factors, especially if you are taking out a loan. If an institution is providing capital for your purchase they are going to require that you purchase Private Mortgage Insurance, that you pay Home Owner’s Insurance and, more than likely, will require that you pay your Property Taxes monthly, instead of yearly. Make an informed decision when deciding how large of a loan you can handle- and how much of a monthly payment that translates into.
3) Houses are just going to keep getting cheaper– According to CNN Money, the rich are buying right now. Warren Buffet recently predicted recovery to begin in a year or so and the NAR is reporting an unusually high number of cash sales. These things are good indicators that people are starting to regain confidence- and those who are able are buying. That spells the slow decline of the buyer’s market.
What does this mean to you? The time to buy is now. It’s going to take time to find a home, time to put in an offer, and time to get approved for your loan- and time is slowly starting to work against you.