When thinking about purchasing a new home, your friends and family will have your best interest at heart; however, they may not be fully aware of your needs and what is currently happening in the real estate market.
Ask these 3 questions to determine if now is a good time for you to buy in today’s market.
1. Why am I buying a home in the first place?
Forget about the finances for a moment. What initially made you consider purchasing a home? Usually the reason has nothing to do with money.
75% of parents say “their child’s education is an important part of the search for a new home” according to a survey by Braun.
The top four reasons Americans buy a home have nothing to do with money. (Joint Center for Housing Studies at Harvard University )
- A good place to raise children and for them to get a good education
- A place where you and your family feel safe
- More space for you and your family
- Control of that space
What benefits (non-financial) will you and your family gain from owning a home? The answer to this question should be the biggest reason you make the decision to purchase or decide against it.
2. Where are home values headed?
The latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in December 2016 was $232,200 (up 4.0% from last year). This increase marks the 58th consecutive month with year-over-year gains.
Looking at the numbers year over year, CoreLogic forecasted a rise of 4.7% from December 2016 to December 2017. On a home that costs $250,000 today, that same home is predicted to cost an added $11,750 next year.
In more simple terms, monthly price increases, are likely to cost you more if you wait until next year to buy. In order to account for the higher price of the home you wish to buy your downpayment would also need to increase.
3. Where are mortgage interest rates headed?
As a buyer, you should be concerned about more than just the home price. The ‘long-term cost’ of a home can be largely impacted by even a small increase in mortgage rates.
The Mortgage Bankers Association (MBA), NAR, and Fannie Mae have all projected mortgage interest rates to increase during the next twelve months, as illustrated below:
Only you and your family can determine when is the right time for you to buy. These 3 questions can help you on your road to home ownership.