Is It a Good Idea to “Time the Market” When Buying a Home?

Have you been thinking about buying a home lately? If you’re wondering whether it’s a good time to buy a house, ask yourself this instead: Is it a good time in my life to buy a house? Many people “time the market” when buying a home, which may not always be advisable. In today’s blog, we will be going over whether it’s a good idea to “time the market” when buying a home.

Is It a Good Idea to “Time the Market” When Buying a Home?

People make predictions about the housing market all the time. Things we frequently hear include:

• “Home prices will drop pretty soon…”
• “Interest rates are predicted to drop dramatically…”
• “The market is going to crash…”

While there may be some research behind some predictions, at the end of the day, we’ll never know what will truly happen. That’s why you shouldn’t “time the market” to buy a home according to predictions you hear. Many people postpone their plans for buying a home for the next year, expecting a drop in home prices, only to find it remains the same or goes up instead. Rather than asking yourself, “when is the right time to buy a home?” Ask yourself, “is it a good time in my life for me to buy a house?” Current economic indicators and the state of your local housing market give vital context to your decision. But whether it’s a good time for you to buy a home depends on your:

• Financial situation
• Life goals
• Readiness to become a homeowner

Am I Ready to Buy a Home?

Determining whether you’re prepared to buy a home requires a thorough self-analysis. Questions you should ask yourself to explore whether you’re ready to buy a home includes:

Am I Prepared to Put Down Roots?

Think about your life goals, interests, and relationships. How long can you picture yourself living there? Ideally, you want to remain in your new home long enough for the rising property value and your equity to exceed the costs of buying and selling (including mortgage closing costs and real estate commission). This will usually take a couple of years.

How’s My Job Security? 

A mortgage payment is a huge commitment and can become a stressful burden if you lose your job. If you believe you might be laid off, it may not be the best time to buy a home. It would be best to wait until your employment is more stable.

Am I Financially Prepared?

Before buying a home, you must ensure you’re financially prepared for this commitment. You’ll have to take a look at three major things:

• • Your savings – you’ll need money for a down payment and mortgage closing costs. Take a look at your savings and determine whether you have enough for these types of expenses.
  • Credit – Lenders usually offer the best mortgage rates and terms to borrowers with credit scores higher than 740—even though you can qualify for a mortgage in the 600s. Your options are even slimmer with a score in the 500s.
  • Debt – Lenders will look at your debt-to-income ratio (DTI) to determine whether you qualify for a mortgage or not. DTI is basically the percentage of your monthly gross income that goes towards monthly debt payments, such as:
    • Car loan
    • Student loan
    • Credit card loan

The lower your DTI, the better!

Is it a Good Time to Buy a House?

It is everyone’s dream to buy a home. If you’ve analyzed your situation, finances, and goals and determined that you’re ready to buy a home, it’s a good idea to start taking action. But of course, you don’t have to do it alone. At Community Mortgage, we’ll help you look at both the external factors and your personal situation to see if it’s the right time to take the big step of buying a home. Give us a call at (619) 692-3630 or click here to schedule a FREE consultation.