When's the Best Time to Buy a Home? Consider These 4 Factors
Buying a home is a big responsibility, especially if it's your very first one. According to Rocket Mortgage, millennials currently make up 43% of total home buyers. Even more are trying to find ways to find ideal mortgaging! If you're checking out the market to buy a home on your own or with your spouse, you may be wondering when is the best time to do so. While there is no one perfect time to seek out mortgaging a home, this guide can provide some insights on the various ideal times you should consider and what factors are at play in the housing market.
1. Seasonal Considerations
It may not come as a shock that the time of year, in terms of seasons, can play a big role in whether it's the perfect time to buy a house. According to ConsumerAffairs, the best season to buy a house is spring. When the weather warms up and so does the real estate market. The temperature may also play a role. Since people are coming out of being locked down in the chilly wintertime, they may be ready to start making home visits to prospective new homes. Plus, spring is a good time to avoid the inevitable summer rush that always happens when it comes to moving.
Summer is a peak season for buying a home. Once summer hits, the weather is warm and there's just more opportunity for people to freely move around, whether that be across the country or across the street. Kids are out of school and young adults are out of college. The summer months, particularly June, are also the most popular time for weddings, according to WeddingWire. Therefore, you may have plenty of newlyweds that want to move into their first home around this time. Since summer is an ideal time for families to be together thanks to vacations from work and school, it's also the optimal time for everyone to pack up and move without it affecting everyone's schedule.
Since summer and spring are the peak months for buying homes, you may want to work around that to your advantage. Sure, that time of year provides more listings to choose from and there's more activity going on when you move into a new neighborhood, so it can be easier to settle in. However, because it's such a competitive time, you're also way more likely to experience higher prices and you may need to look for a more expensive mortgage. With so much competition out there, you also may be less likely to get the home you want unless you act early.
With all of this in mind, you may want to get the ball rolling and make an offer by the winter or fall, even if you can't physically move right then. At least at that time, you're more likely to get a better deal and have fewer people vying for the same home.
2. The Current Listing Period
Unless you're able to participate in a private sale where you know the person who is selling the home, you'll have to rely upon real estate listings. According to Zillow, most listings tend to hit between April and June. While you can certainly search for a home in December and January, that time of the year has half as many listings as May in June. You'll find the highest amount of inventory available during the month of May, according to TheStreet. Since the months of November through January mark the American holiday season, when people are busy with holiday festivities, wrapping up the year, and planning for the new one, it's the worst time for listings.
3. Your Financial Situation
When it comes to understanding the best time to buy a home, you shouldn't just be considering outside factors. Start with your personal and financial situation before you can even consider looking at mortgaging or other ways of funding a new home. Buying a home is a long-term commitment and you must plan for things beyond the house itself. After all, once you get into the home, even if it's relatively new, you'll more than likely need some repairs or updates sooner than you may expect. Don't forget about utilities, furniture, and moving costs.
For example, did you just graduate from college? Do you have a ton of student loan debt to worry about? Or did you just get married and are still trying to figure out how you're going to combine incomes? Before you take on the responsibility of owning a home, you should assess your existing debt-to-income ratio before you add on a mortgage. In other words, you may want to wait until you get settled in a new job and start repaying other necessities, such as your student loans, before you take on home ownership. The last thing you want to do is end up in foreclosure, as that can stay on your record for as long as seven years.
Whether you're buying a home as a single or married person, you must assess your credit rating. There are many low-interest mortgaging loans and programs out there. Regardless of what programs you qualify for, do what you can to get your credit rating as high as possible. The first step to doing that is by pulling your credit report and making sure there isn't any wrong information that is bringing down your credit score. So, why does your credit score matter so much with mortgaging? Your credit rating can affect the amount of interest you'll pay. In other words, you may pay as high as 7% or as low as 3% based on whether you have a 550 credit score versus an 801. In addition to your credit score, do what you can to pay down any lingering debt, such as credit cards, student loans, and anything else that stacks against your credit-to-income ratio.
4. Your Lifestyle
Does your lifestyle currently involve not being in the same city for a long amount of time? While it's great to own a home as a base, if it's going to be too hard for you to afford it when you're not there, you may want to wait until you can comfortably afford the expense of maintaining a home in one city while constantly being in other places. Sure, some people can offset these costs by renting out their home or a room in their home to help out with mortgaging. However, while that can be a great source of additional income, it may not be the best way to rely on paying for a home. Remember, renters can come and go at any time.
Buying a home takes a lot of work and research. However, once you can finally get a home of your own, there's nothing like it. It's a great feeling to have a home that you can renovate any way that you like, whether that be planting a garden, installing a pool, you name it. You can make those dreams come true, but make sure you do proper planning beforehand. The best way to do that is a combination of paying attention to the seasons that have the best listings, understanding your lifestyle, and being realistic about how much you can afford. After all, for most people, the home is the biggest investment they'll ever make, and you want to ensure you do it right the first time and any other time that you decide to make such a purchase. If you have any questions about local mortgaging, we're here to help! Talk to our financial experts at Capital Bank today.