Are you thinking about buying a home this year? You want to get the best price in the neighborhood of your choice. So if you’re planning to buy a house in 2019, you might wonder – when is the best time to buy a house?
While there’s no “perfect” time to buy, there are a few things to keep in mind. Some months of the year can mean lower prices. And, with mortgage interest rates on the rise, the timing of a home purchase could make or break your budget.
Buying a home is one of the biggest financial decisions you’ll ever make. The most important consideration when you buy a house is making sure you buy at the best time for you.
Is there a “best” time of the year to buy a house?
While Christmas and Easter have been touted as the best days of the year to buy a home, I’d venture to say it won’t work out that you buy a house on one of those two days.
Still, in the Midwest, the fall and winter months (October – March) are less appealing times to move. This means fewer buyers – and fewer sellers.
With fewer buyers out there to compete with, sellers are more likely to lower their price to make the sale.
Late spring and early summer are peak times to buy and sell houses. With the school year ending and the warmer temperatures, it’s a more convenient time for people to move. There is more competition for homes, but there are also more homes to choose from.
What about rising mortgage interest rates in 2019?
In 2018, mortgage rates were at their highest since 2011. At the beginning of 2019, those rates have dropped slightly, but are still higher than we’ve seen in the recent past.
Some buyers are more reluctant to buy since rising rates impact affordability. As little as a 1% hike in an interest rate can raise your house payment more than you might think. For example, on a $200,000 loan, a 1% difference changes the payment by well over $100 each month. It goes without saying that higher interest rates influence how much homebuyers can pay for a home.
Higher interest rates also affect the number of current homeowners willing to sell their home. Current homeowners are more likely to stay put – especially those who were able to secure a lower interest rate in recent years.
Yet when you consider historical mortgage rates, current rates are still relatively low.
While no one can predict the future of mortgage interest rates, now is still a decent time to secure a decent interest rate.
What about the possibility of a recession?
Some buyers worry about a recession, but it’s impossible to predict what will happen to the economy or the housing market. Headlines will always scream for your attention – but that doesn’t change the fact that the “experts” still can’t predict the future.
If you’re concerned about a recession soon, buying an affordable house in a place you plan to live for several years should be your priority.
So what is the best time to buy a house in 2019?
When you’re ready!
You can try to time interest rates and the real estate market to get a lower price. But when it comes right down to it, you should buy a house when it’s the best time for you.
If you have your finances in order, have a steady income, and know where you want to live, that’s a good sign that it’s time for you to buy a house.
Prepare your finances
Save a down payment. Of course, the more you have saved for a down payment, the better. But if you don’t have 20% saved for a down payment, it doesn’t mean you won’t qualify for a mortgage. There are loan programs available that allow buyers to put as little as 3% down on a home.
Mind your credit score. A credit score is a 3 digit number that tells lenders how likely you are to repay your debt. The higher the number, the better. Your credit score determines the mortgage loan programs you qualify for and your interest rate.
You might be surprised how little things you do can raise your credit score. Paying off small debts, catching up on payments, or updating the information on your credit report can make a difference. (A mortgage lender can provide you with the credit information you need to qualify for a loan.)
Income and Budget. Many experts recommend that your mortgage payment not exceed 30% of your income (some say it should be as little as 25% or less of your take-home pay). This includes your principal, interest, property taxes, and insurance.
When thinking about how much house you can afford, it’s important to figure all expenses related to owning a home. Not only does that include property taxes and insurance, but also maintenance and repair costs that will come up (even when you don’t think they will!).
Get pre-approved for a mortgage
Getting pre-approved for a mortgage loan is the first step toward homeownership. Pre-approval means a lender has confirmed your financial situation and has determined you’re eligible for a mortgage loan up to a specified loan amount.
For pre-approval, you’ll have to fill out a loan application and provide the lender with documentation (proof) of your financial situation. You will provide information such as pay stubs and bank statements, as well as details on other debt, such as car payments or student loans. The lender will also check your credit score.
The information gathered will determine how much the bank will loan you, and any other conditions and requirements to get the loan.
Find a knowledgeable real estate agent
Finding an excellent real estate agent is a must when buying a house. A great agent will answer all your questions and guide you step-by-step through the home buying process.
Real estate agents have extensive knowledge of your local real estate market. They can help you make the most informed decision when it comes to price and quality. Your agent is on your side throughout the whole process – from shopping for the perfect home, through the negotiations, and right up to the day of closing.
If you think now is the best time for you to buy a house, contact us! Though the process can feel intimidating and overwhelming, it doesn’t have to. At Coluzzi Real Estate, we answer all your questions and simplify the process. We’re here for you every step of the way. Please don’t hesitate to contact us today!