Skip to main content

A Good Time to Buy a Home



You may have noticed that REALTORS® seem to always think now is a good time to buy and they can usually justify it with solid reasoning.  While it can be true in general, a good time to buy has more to do with the individual than anything else.  There are four things to consider.

It is a good time to buy a home when you have good credit.  Since the Great Recession and the housing crisis, lenders have been required to be sure that the borrowers have good credit.  This actually benefits not only the lenders but the borrowers because no one wants to buy something that they cannot afford and run the risk of losing it to foreclosure.  FHA has the most lenient FICO credit score of 580+.  VA requires a little higher at 620 while Fannie Mae guidelines on conventional mortgages require a 700 score.

It is a good time to buy a home when you have a good job that gives you the income to qualify for the mortgage and the likelihood that you'll continue to be employed in the future.  Two years of steady employment in the same industry with no significant gaps is a measure that lenders consider.

Lenders use qualifying ratios to make a determination.  The total house payment, principal, interest, taxes and insurance, should not exceed 28% of the borrower's monthly gross income.  Their total monthly debt including the house payment should not exceed 45% of monthly gross income.  There is some flexibility in the ratios for the right circumstances.

It is a good time to buy a home when you have the available funds for the down payment and closing costs plus a little cushion for the unexpected.  The down payments can range from 0% for VA loans to 3.5% for FHA and 3% to 20% for conventional.

In addition to the down payment, borrowers will have closing costs that can range from 2 to 3.5% depending on the loan type.  It is possible for the seller to pay the buyer's closing costs but it needs to be negotiated in the sales contract.  The lender's underwriter wants borrowers to have cash available for unexpected expenses related to the house and their normal living expenses.

It is a good time to buy a home when you have stability ... In addition to employment, stability applies to not moving soon, marital status, children and unanticipated expenses.  Market or economic conditions could also affect stability.

So, the answer to the question "is it a good time to buy a home" depends on several things that are relative to the buyer.  While it might be a great time to buy for one buyer, it may not be the best time for another buyer.

Make a self-assessment to the best of your knowledge on these issues and then, schedule an appointment for a live interview with a trusted mortgage professional to get their opinion based on what underwriting will look at.  Call me at (315) 761-5058 if you'd like a recommendation.  After you determine it is a good time to buy a home, it is time to meet with your real estate professional.

Comments

Post a Comment

Popular posts from this blog

When do you lock your mortgage rate?

Locking your interest rate protects you from increases due to market conditions.   Locking early safeguards your budgeted payment.   By locking the rate, if the market goes up, you get the lower rate; if it goes down after the lock, you may be able to pay a fee and lower the rate. Knowing when to take the lock is determined by which direction you think the market is going.   If you think rates are going up, lock in early.   If you think rates are going down, ride the rate to within a few days of closing. Some lenders may allow a borrower to lock a rate after pre-approval but is more common to not offer a lock until there is a signed contract on a home.   Even with a pre-approval, it could easily take 30 days or more to close a transaction and the rates can move a lot in that period. There may be a fee charged to lock a rate which is determined by the lender.  Generally, the longer the time for the rate lock, the higher the fee. There is ...
Post a Comment
Read more

Make Your Home Offer the Most Appealing

Sales in February 2023 were up 14.5% month over month and still down 22.6% year over year according to the NAR Housing Snapshot.   The median sales price dipped 0.2% to $363,000 and there are 2.6 months supply of homes on the market compared to 1.7 months a year ago. "Inventory levels are still at historic lows, and consequently, multiple offers are returning on a good number of properties." According to Lawrence Yun, Chief Economist for the National Association of REALTORS�. It is still important to have a strategy for potentially competing with other buyers on the house you want to buy.   The plan should include several available provisions and options, so that at the time of drafting the sales offer, you can consider exactly what to include based on the situation. Unless a person is paying cash, you need to be pre-approved by a trusted mortgage professional long before you start looking at homes.   Include the written pre-approval letter along ...
Post a Comment
Read more

Getting Comfortable with the New Normal Mortgage Rates

The biggest shock to homebuyers is the soaring mortgage rates of 2022 that doubled in one year resulting in approximately 15 million mortgage ready buyers displaced from the market due to affordability issues. As of February 23, 2023, the 30-year fixed rate mortgage was at 6.5%.   While that is twice as high as it was on January 6, 2022, it is still lower than the 7.75% average rate since April 2, 1971, according to the Freddie Mac Primary Mortgage Market Survey. When rates increase at a rapid pace like this, it takes time for the public to adjust and begin to accept it as the new normal. Prior to the housing bust that led to the Great Recession, the normal for mortgage rates was in the 6% range and existing home sales were over 6.5 million for three years.   From 2007 to 2014, home sales were closer to 5 million with 2008-2011 at just above 4 million annually. From January 17, 2008 to March 5, 2020, mortgage rates averaged 4.32%.   In this 12-year period...
Post a Comment
Read more