Should I Wait To Buy A House Or Purchase Now?

Buying a home is one of the largest purchases you’ll make in your lifetime, so it makes sense to carefully consider the right time to make this move.

The truth is, there isn’t one definitive answer as to whether it’s a good time to buy a house. Rather, the best time is based on factors like your individual financial situation, family goals, and your comfort level with ever-changing mortgage rates.

Is It A Good Time To Buy A House?

There are several aspects to consider when thinking about whether you should wait to buy a house or go through the process now. While there are external factors like housing inventory, you also need to take a closer look at your financial situation. 

The Market

Mortgage rates, the availability of homes, and home prices tend to fluctuate over time. Understanding the type of housing market you’re facing will help you determine whether you should wait to buy a house.

Here are some ways to tell what type of real estate market you’re in:

• Buyer’s market: This is when there are more homes for sale than there are buyers. In other words, there is more supply than demand. Prices may decrease or buyers are more willing to negotiate on home buying concessions. Mortgage rates could also be more competitive overall.
• Seller’s market: This type of market is more favorable to home sellers because there is more demand than there are homes. Sellers may be less willing to negotiate on selling price, or there may be bidding wars, during home prices.

Your Financial Situation

No matter if it’s a buyer’s or seller’s market, if you can’t afford a home, then now is not the right time to buy a house. It’s important to take a careful look at your budget to see what you can reasonably afford and whether there are homes you want in your price range. Aside from the mortgage, you will also need to budget in other items like property taxes, insurance, and home maintenance expenses.

Consider whether you have job security or a steady income source for the foreseeable future. Plus, check how much you can afford to save for a down payment and other measurements like your debt-to-income ratio when figuring out how much you can afford.

Questions To Consider Before Buying A House

Taking the time to ask yourself the following questions can help you make an informed decision about whether it’s a good time for you to buy a house.

Do You Need To Move?

It seems like an obvious question but it’s worth exploring where you are in life and the types of responsibilities you’re ready for. Say you’re ready to start a family and want to put down roots closer to your family. Or you have what it takes to take care of a home or save up enough funds for both planned and expected repairs. If there is a compelling reason why it makes sense for you to buy a house, then homeownership may be the path for you.

Can You Afford A Mortgage?

Being able to afford a home is a major factor in whether you’re ready to buy one. Some of the details to consider include whether you can save the minimum or desired down payment amount, how much debt you currently have, and your income. There are many home affordability calculators available to help you decide whether you have the financial means to buy a home.

Can You Get A Good Interest Rate?

Think about how long you want to live in the home. While high interest rates may be a determining factor in terms of affordability, if you plan on staying in the home for at least 5 years or more, it may be worth it. That’s because you may be able to refinance your mortgage to a lower rate, helping you save money in the long run.

Signs You Should Wait To Buy A House

Waiting to buy a house can have its benefits. For instance, you may find lower interest rates and more homes available if you wait for a buyer’s market, or when there are more homes on the market.

Here are some signs that you should probably wait to buy a house:

• You can’t afford a mortgage: If you can’t comfortably afford to pay for a home, then you’re better off waiting. You wouldn’t want to be in a situation where you’re struggling to make payments.
• You can’t get a good interest rate: Although out of your control, high interest rates can be a major deterrent to homeownership. However, if you can comfortably afford the payment from current rates and you find a home you really want, you can always refinance later when mortgage rates drop. Then you’ll already own your home and have built up equity by the time you can enjoy lower rates and lower monthly payments.
• You don’t have the funds to cover the closing costs: Aside from the down payment, you’ll also be responsible for closing costs, which is typically a percentage of the home’s purchase price.
• You have other financial goals you want to meet: Buying a home is a major financial commitment, and there may be other goals you want to achieve. If that’s the case, consider which one takes priority.

What To Do When The Market Is Unfavorable For Buyers

When you’re in the middle of a seller’s market or when facing higher interest rates, it’s still possible to buy a home. You can continue to save (for closing costs or a down payment), maintain a good credit score and keep a low DTI so you’re ready to work with lenders at any time. It’s also fine to wait out the higher demand in the real estate market while keeping an eye on homes in your desired area.

FAQs About The Right Time To Buy A Home

Here are some frequently asked questions about buying a home.

Should I wait for interest rates to drop before buying a house?

If you can reasonably afford a home now, consider becoming a homeowner sooner, and refinancing your mortgage in a few years or when interest rates go down.

Is it harder to buy a house in the spring?

It depends. Many sellers tend to list their homes in the spring hoping to attract buyers. But the best time of year to buy a house will depend on your local market conditions.

Should I wait to buy a house if I have debt?

If you have a lot of debt, you want to carefully think about whether a large financial purchase like a house is a good move. Plus, lenders look at the amount of debt you have compared to your income when deciding whether to approve you for a loan.

The Bottom Line

When you should buy a house is a personal decision based on your lifestyle and financial situation. If, after assessing your situation, you’re ready to buy a home soon, consider using tools like the Rocket Money^SM app to get a full picture of your finances.