If you’re waiting to buy a home, is it actually costing you money? To determine this as a buyer, there are eight factors you must consider:
1. Your current financial state. Can you afford a down payment? What about the cost of a mortgage?
2. Your credit score. You typically want it to be around 720.
3. Your financial stability.
4. Your commitment to staying in one place. So you like bouncing from state to state or city to city? If you buy a home, you have to be committed to staying there!
5. What is the market like?
6. Your commitment to being a homeowner. When you stop renting, you take on the responsibilities of homeownership.
7. Home price appreciation over time.
8. Interest rates. What goes into the money you’re going to borrow from a lender or bank?
These factors determine your cost of waiting, and they can all have a huge impact on you as a buyer. The Federal Reserve signaled that they will increase interest rates in 2017, and they already have.
In November of 2016, you could get an interest rate of about 3.6%, and recently, they’ve gone up to about 4.45%. There’s already been a big jump in just four or five months. Think of it this way—to make up for a 1% increase in interest rates, home prices would have to drop 10%. That’s a sharp decrease that we really don’t foresee happening in the market.
If you have any other questions about making the decision to buy a home, don’t hesitate to give me a call or send me an email. I’d be happy to help you.