Over the last couple of years and the unfortunate reality of rising inflation, deciding to buy a house can be quite perplexing. With rising costs the real estate market becomes super hot and you tend to want to get in and buy quickly before home becomes either unavailable or unaffordable; however this can lead to irrational and poor home buying decisions. On the flip side if you’re a growing family stuffed into a tiny apartment or your in-laws basement then staying put may not be an option either. The market can be hotter at times than others but over the last several years a steady rise in home prices has been a continual trend and this doesn’t seem to be changing anytime soon. Planning for buying a house is the easiest way to know if now is the right time to get into the real estate market. So what goes into a home buying plan? 

Are you ready to settle down?

When purchasing a home you are making a life changing commitment. You’re committing at least the next decade of your life to the community, the neighborhood, school system and more. It’s crucial to know what your life goals are, how your relationships are going and where you are in your career. If you’re planning to have children or already have children then finding a great place they can grow up and thrive is incredibly important to their development and a great reason to buy a home. Are your relationships on solid footing? Whether we’re talking about your marital situation or family status, are you where you want to be when it comes to proximity of family or friends? Where are you in your career? It’s important to have a good steady income prior to purchasing a home but it's just as important to know the long term outlook of your career as well. Has there been any hints of relocating? Are you thinking of making a career change? You should have a solid answer to this question prior to purchasing a home. Although none of these have anything to do with the actual price of a home or the housing market it might be the most crucial questions to answer prior to taking the plunge.

Are you financially ready?

You should already have a written monthly budget and you should know what your monthly living expenses are, a good rule of thumb is all living costs such as mortgage, taxes and utilities should NOT exceed more than 25% of your monthly income. Another big part of the home buying process is your credit score. Most lenders want to see a good credit score of at least 600 and higher and the higher your score the better your interest rate will be. Although it’s important to have a great credit score it’s not the end all be all when it comes to buying a home despite what all the banks and lending institutions want you to believe. You can still find banks and lenders who still do what’s called “manual underwriting” which is when they verify a time frame of employment and you MUST have a down payment usually somewhere in at least the 20% range, yes, even if you have NO credit. That goes into the next important step which is savings! Having a large down payment can not only reduce your monthly mortgage payments but also give you a much lower interest rate, loan term and can eliminate costly monthly expenses like PMI or “private mortgage insurance”. To know whether or not it’s a good time to buy a home it’s important to be financially prepared before you start looking for homes.

So, is this the right time for you to buy a home?

With rising costs and high competition in the real estate market it can be paralyzing to know whether it’s the right time to buy a home. Rising values or even the fierce bidding wars should not be at the top of your priorities in making this decision. This is a long term life commitment for you, your entire family and career. Your decision should be based on your need, long term goals and current financial situation. You can always refinance your home if the market changes to be more favorable but an irrational, poor decision could cost you dearly for years to come. So as long as your priorities are in order and your financial situation is where it needs to be then it is always a good time to buy a house.