When Is the Best Time to Buy Your First House?

Posted by Laine Smith on 4/12/17 8:00 AM

Topics: Home Buying

Buying your first home used to fall in line with a sequence of other big life events. You got a job, you got married and you bought a home. Many of today’s first-time homebuyers have broken away from that series – getting married later, having kids later and settling into homeownership later. So that begs the question: when is the best time to buy your first house?

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iStockPhoto/MattKay

Your Finances

While homeownership is a symbol of stability and pride, it’s not something to jump into unprepared. You need to make sure multiple areas of your finances are in a good shape beforehand.

Your Credit Score

While you don’t need a perfect credit score to get a mortgage, your lender uses your score to determine the likelihood you’ll make your mortgage payments. Depending on the loan type, a higher credit score can result in a lower mortgage rate, which can amount to big savings in interest.

Your Savings Account

Even if you’re eligible to finance with a zero-down payment mortgage option, you’ll need to account for closing costs and the necessary purchases that follow buying a new home. See which mortgage programs have a low down payment option here.

Feeling Comfortable With the Costs of Owning

Multiple factors like debt and interest rates help determine how much a lender will approve you for, but you’ll also need to determine how much you are comfortable spending per month. Though homebuying is cheaper overall than renting, remember to incorporate the other costs of homeownership into your budget like utilities, home improvements and routine home maintenance.

Your Personal Preferences

The decision to buy a home weighs heavily on it making financial sense, but personal living preferences should also be a consideration.

How Long Do You Plan to Stay Put?

While your first home won’t likely be your forever home, the longer you stay put, the better. Many of the financial benefits of homeownership, like equity, are built over time and if you are quick to turn around and sell your home, you’ll likely eat the upfront costs of buying. The rule of thumb is that buying is a good investment when you think you can stay put for at least five years.

Are You Ready for More Responsibility?

How do you feel about weekends spent doing upkeep your lawn, replacing a faucet, or DIY projects? When you own a home, the perks of a landlord taking care of maintenance and repairs go away.

Housing Market Conditions

The recovery of the housing market has been well on its way for the last few years, but timing the market can prove to be tricky. You’ll want to consider:

Mortgage Rates

Though historically mortgage rates are low, they have been inching higher over the last six months, offering extra incentive for those sitting on the fence between renting and buying.

Local Home Inventory

Housing markets with limited inventory and plenty of homebuyer traffic can make buying your first home a competitive experience. If you know you’re ready to buy in an area deemed a “seller’s market”, use these tips to prepare yourself.

The Time of Year

We’re currently in what is considered the biggest buying (and selling) season of the year. Spring and summer are peak real estate months because of school breaks, more inventory on the market, and better weather, of course, but just because it’s a popular time to buy, doesn’t mean it’s the best time to buy.

Fall and winter buyers generally see less buyer competition and more sellers apt to make price negotiations – in fact, buyers see the biggest price concessions October – December, according to a RealtyTrac study.

Regardless, buying your first home is a big decision, so meeting with a mortgage banker should be your first step in making sure it’s the right choice for you.

Want to learn more about the homebuying and home financing process? Download our free Mortgage 101 Handbook for everything you need to know about credit scores, loan options, mortgage terminology and more!

Download: Mortgage 101 Handbook

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