Should I Buy a House Now? How to Know It's the Right Time
Is It a Good Time to Buy a House Right Now?
It is a known fact that the housing market is in a state of recovery, with homes selling quickly at much higher prices than in previous years. But no matter what’s going on with the housing market, you should consider the following factors when buying a house: location, size, and condition.
- You must get a good deal: When you buy a house, make sure that the total cost of ownership is less than what you would have paid if you rented one.
- You should have a good credit score: A better credit score means you will qualify for a reasonable loan rate and a larger mortgage amount.
- Renting is still expensive.
- You must finance the purchase of the home with low-interest rates.
Should I Buy a House Now or Save More for a Down Payment?
The simple answer to this question is that if you do not have enough money for a down payment, it will be better to save first before buying your dream home. How much of a down payment do you need?
Although some loans, such as FHA mortgage loans, require as little as 3.5% of the purchase price as a down payment, it’s better to make a down payment of 20% if you can. That way, you’re more likely to be approved for a mortgage loan at a lower interest rate, and you won’t be required to pay private mortgage insurance – which can really drive up the cost of your monthly mortgage payments.
What Are the Benefits of Buying a House in 2022?
If you are thinking of buying a house now, here are some reasons why it might be a very good idea:
Low Interest Rates
The interest rates on mortgages are lower than they have been in years. What this means for homebuyers is that even if they buy a home for a higher price than they would once home prices begin falling, the lower interest rate means that they will still save money overall. This is good to know if you’ve been waiting for home prices to fall from their current highs!
Mortgage Insurance Is More Affordable
Though private mortgage insurance is undesirable, the cost of mortgage insurance is also lower than it has been in a while. The current mortgage rates are also expected to remain low throughout the next few years.
Less Demand for New Homes
While the demand for houses is high and buyers are battling over the available housing inventory, new home construction has been lower than usual because supply chain problems have made material costs much higher than usual. Lumber has been in short supply, with lumber prices skyrocketing as a result, and the prices of copper and steel are also high.
The demand for housing units is high even though there are fewer new home construction projects, and the rising cost of building new homes means that there is even more competition for existing homes.
High Demand for Rentals
There is a high demand for rentals due to the low homeownership rate. The price of rent is expected to rise while the number of rental properties remains at the same level. What that means for you is that if you are looking forward to purchasing a home to use as a rental property, this is indeed a good time.
Who Should Buy a House in 2022, and Who Should Wait?
The following factors can help you decide whether to invest in a house now or wait.
1. If You Are Thinking of Selling Your House Soon
If you are looking forward to selling your home, either for more space or to downsize to a smaller home, this is indeed a good time because the demand for existing houses is so high. That means that it will be easier for you to sell your house within a shorter period, probably for much more than you paid for it, and you can expect to recover the costs incurred in buying your new home.
3. If You Have a Bad Credit Score
Got a bad credit score? You might think the best move is to take your time and work on improving your credit before entering the housing market, but this still might be a good time to buy a house. Some mortgage programs, such as government-backed FHA loans, are designed especially for people with a lower FICO score. That makes it possible for even those with bad or fair credit to become homeowners. And with mortgage interest rates as low as they are, you could still save money by buying your home now.
4. If You Need Low Monthly Payments
If you are looking forward to significantly reducing your monthly payment, now is the right time for you. The mortgage rates are low, so you can reduce your monthly payments without having to pay a higher rate of interest. This means that your total cost of ownership will also be reduced, which will help you save a lot of money in the long run.
5. If You Are Looking Forward to Investing in a Rental Home
The value of homes is expected to rise steadily in the next few years, which means that you can buy a house at an extremely affordable mortgage rate and sell it later at a higher price. Even though there aren’t enough homes for sale for all the interested buyers, this may be the right time for you if you are looking forward to being a homeowner and expect to make a profit.
If you are looking forward to buying a second home as a rental property, this is also a good time to buy. There is currently such a high demand for rental homes that you can make your mortgage payment and a nice profit besides.
Will Home Prices Drop in 2022?
People are concerned that the housing market might experience a decline in 2022. However, many experts have predicted that the real estate market will remain steady for the next few years and probably even increase, and that it will take time for new home construction and the housing supply to get to pre-pandemic levels.
Even in a competitive market like we currently have, it’s a good time to take advantage of historically low mortgage interest rates. Contact Team Linda Simmons if you’re interested in buying a home in Enterprise, AL.