Should I buy a house right now?

Should I buy a house right now?

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Should I Buy a House Right Now?

Your decision to buy a home should be based on your financial well-being, not the housing market.
Deciding if you should rent or buy can be determined in part by your commitment to an area—you could have legitimate concerns about job relocation or you may wonder if the space you can afford now will be flexible enough that you won’t grow out of it just a few years down the road. And on an economic level, perhaps you’re not sure you can afford all the costs that a down payment, mortgage, and home maintenance entail. Here are some questions to consider.

1) Should you buy now before home prices climb?

In most parts of the U.S., home prices have been rising over the years. Do not worry about the current prices because they may rise even higher. Not necessarily. You need to do what’s right for you. If you’re planning to stay in one spot for a decade or more, short-term fluctuations in the house’s underlying value shouldn’t make a difference. After all, the primary purpose of a home is to provide a place to live, coupled with an opportunity to grow equity over time. Don’t overanalyze the market when deciding to buy a house. If the time is right for you, there’s no reason to wait.

2) Do you have a 20 percent down payment?

Many lenders require a 20 percent down payment before they’ll grant you a mortgage. If you can’t come up with such a hefty down payment, it’s possible to secure a loan, but you’ll probably have to pay private mortgage insurance, or PMI, to make up the difference.
PMI rates vary from lender to lender but generally cost 0.05 percent to 1 percent of the total loan amount. At 0.05 percent, you’ll pay $41.50 per month for every $100,000 worth of loan that you carry. If you’re holding an FHA-insured loan, you pay two different mortgage insurance premiums. The upfront premium is 1.75 percent of your loan size, and it will be added to your borrowed amount (thus increasing your monthly costs). You’ll also pay a second premium, which is assessed annually and billed monthly. This second fee, often known as monthly mortgage insurance, will cost 1.3 percent annually if you carry a 30-year mortgage and put down at least 5 percent.
The bottom line? If you borrow $200,000, for example, and you’re charged 1% PMI, you’ll hand over $166 per month — not an insignificant sum.

3) Can you budget for recurring monthly expenses?

A mortgage is made up of 4 parts, the Principle, Interest, Insurance and Taxes (PITI). .) If you have a fixed-rate mortgage, your principal and interest will remain a flat monthly fee, regardless of what’s happening in the overall economy. Your Taxes can change depending on the county evaluation of the value of your property or changes in the taxes on your property. You might decide to buy a home in a community that’s governed by a homeowners’ association, or HOA. This HOA can assess mandatory “dues” and put a lien on your house if you don’t pay the bill. You need to evaluate whether you can handle changes in the taxes or HOA fees before you purchase a house.

4) Do you have savings for maintenance and repairs?

Your mortgage isn’t the only housing expense you’ll need to meet in your budget. When you move from a rental to a home, you have new responsibilities (and the related costs), such as cleaning the gutters, replacing or repairing the roof, fixing and maintaining the HVAC, refinishing the floors, hiring a plumber, installing a new dishwasher, and repairing a broken garbage disposal.

As a very broad rule of thumb, you should budget 1 percent of the home’s purchase price annually for repairs and maintenance.

5) How long will you stay in your home?

Buying and selling a home incurs thousands in closing costs—including inspections, title insurance, transfer tax, attorney fees, and real estate commissions. If you plan on staying in the house for many years this can be absorbed into the cost of the home ownership.

When you have answered these questions you will have a better understanding if now is the right time for you to buy a house. contact for help with any questions you have.

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