Buying a house is part art, part economic sense. There are many factors involved, and it makes economic savvy to become fully informed of the different elements at play.
First, have your ducks lined up
Before mentioning the buy signals for buying a house, the first thing to mention is to hold off until your home buying elements are in play. What is your credit like? What are your major debts? Do you have a significant down payment? What kind of a home loan can you qualify for?
Until you can answer these questions, honestly and completely, you really have no business trying to buy a home. These are essentials, and you really need to consult with your banker or credit union to obtain the answers before you seriously start looking to buy a home.
The best literal time to buy a home?
In terms of actual calendar months, the best time to buy a home may be in the winter.
Not only are home prices lower toward November, December and January, but by the time January rolls around, many homes have been sitting unsold on the market for several months, and the seller may be motivated to offer deep discounts.
On the other hand, when spring and summer rolls around, there tends to be a buying frenzy among homebuyers, anxious to get the family settled in school by the time school opens in late August or early September. Consequently, despite the fact the home inventories are greatly expanded in spring and summer months, chances are you will be competing with many motivated buyers, and it may take an offer of ten, twenty, or even thirty thousand dollars more than you want to spend to lock in a house, and discounted house offers are generally rejected out of hand.
Other market factors that may be in play
One factor that can take play are expected rises in interest rates? If traditional home interest rates are at 5 percent, and they stay that way for an entire two years, chances are, interest rates are going to rise on mortgages in the future.
Again, consult your banker, but if the Fed is expected to raise interest rates in the near future.
Your mortgage interest rate can play a substantial difference in the amount of home you can afford, as well as how much you pay overall.
For example, if you buy a $300,000 home and put a down payment of $60,000, you will pay approximately $1288 per month on a 30 year fixed mortgage, and pay a little over $460,000 for the life of the mortgage. However, if a home mortgage rate shoots up a mere half a percentage point, you will pay $1363 a month or an extra $27,000 for the life of the mortgage. And of course, it gets much worse if interest goes up an entire percentage point.
You can calculate mortgage payment very easily on the internet by simply doing an internet search for a mortgage calculator, and it, together with your banker's advice, can save you a lot of money. If a mortgage rate rise is imminent, you may want to accelerate your search for a home.
Another buying signal is a rapid expansion in new homes being built. When new homes are being built, it has a definite effect on relieving the inventory of homes, and whether you yourself are interested in a new home or a used one, increased new home construction is also a good indicator of time to accelerate your buying schedule.
Consider recent changes in your personal situation
Have you recently received a promotion which entails you being transferred across the country? Well then, naturally, regardless of the time of the year, you may be looking for a new home.
Other changes include:
- You've finished off paying your student loans and now have more free money available
- You've just snagged a promotion and a bonus
- You recently became married and are now a two-earner couple
- You've successfully gotten your kids through college and now have more money for a house
- You've sold out your existing home and are flush with cash.
Once you are in any of those conditions, its time to find the best realtor in your area. Look for a proactive client-orientated agent with experience and who knows the local market, as well as one who will listen and ascertain your needs.
With the right timing and advice, you can soon be in the home of your dreams for less.
