Is now a good time to buy a house?
Definitely check out the mortgage rates here. If you look at the rates and the home-price trends, then it is a good indicator that is a good time to buy a house. As of July 2020, the rates are hovering around 3%, which is pretty good. Home prices are increasing, so if you wait too long to buy, you might get priced out in neighborhoods that are more popular.
Here’s are 6 steps to do before buying your first home:
- Figure out why you are buying a home in the first place.
List our your financial and personal goals. Did you save enough for a down payment for a house? Are you looking to not rent anymore? There are so many benefits to buying a home. Figure out your goals first, then sleep on it. Buying a home is one of the largest purchases in your life, so do some hard thinking.
- Create a realistic budget for how much you are going to afford for your first home.
The price you see in the listing may not be the price you’re going to pay. There will be closing costs that you have to factor in as well. Looking long term, costs like (homeowner association) fees when you’re buying a condo is something to think about. Figure out the maximum loan that you’re going to qualify for. Then see if the monthly costs you’re going to be paying for your mortgage is reasonable. You definitely don’t want to drain your bank account.
- Save for your down payment
Did you know that you need to save 20% in order to private mortgage insurance? PMI costs a few hundred dollars a month, so if you want to avoid paying for it, save 20% for your down payment. If you don’t have 20% saved for the down payment, then consider loans backed by the federal government. Loans like FHA are insured by the Federal Housing Administration, require just 3.5 percent down. VA loans and USDA loans require no down payment.
- Getting pre-approved for a mortgage shows real-estate agents that you’re serious about buying a house.
Did you know that there are real estate agents that won’t show you houses if you’re not pre-approved? Getting pre-approved for a mortgage shows how much house you can afford and definitely shows that you’re serious in buying a home.
Shop around for a mortgage and definitely applying to 2-3 lenders in order to get the best rates. Some lenders can even match a lower rate, so definitely negotiate. A warning for pre-approval is that a hard inquiry will show up on your credit score. So if you apply to 2-3 lenders at the same time within a 4-month range, then it will just count as 1 hard inquiry.
- Get a real estate agent
Did you know that the seller pays your real estate agent at closing? So theoretically, the agent is working for you when you’re buying a home. Definitely ask your friends and family for real estate agent recommendations. Most of the clients that the agents work with are from referrals. Definitely get an experienced agent that is knowledgeable about the area you’re buying in. Having an agent with knowledge in the area can tell if your budget is realistic. If you’re thinking of buying a $100,000 home in Manhattan, then you need to do more research.
- Don’t be afraid to ask questions.
There are no silly questions to ask when you’re thinking about buying a home. If you know someone that recently bought their first home, ask them what their lender is and what interest rate they got. Take note of what home inspection company they used and ask them questions about the whole home buying process. Closing a home could take 30-45 days, so definitely ask everything question in the playbook.