The real estate market is a bit complicated given the current climate and if you’re not financially prepared for the process, it can be a hassle. Surprisingly, home sales are at their highest right now and have risen by 23% compared to last year.
However, prices are sky high and it’s safe to say that there are a lot of people ready to pay any offer laid on the table. Even though prices are rising, it’s still important to consider all the factors before deciding that it’s a good time to buy the house.
Let’s first take a look at what advantages buyers can expect in the current real estate market.
Mortgage and Down Payment
Estimates by industry experts indicate that mortgage rates are likely going to remain low. However, the also claim that, even though the interest rate remains low, homeowners should not try to save on the down payment.
It can be very tempting to try and put down a minimal down payment while relying on the interest payments. However, by putting 10% down, paying the interest payments becomes a lot more manageable.
Here are some of the challenges that buyers face under the current market conditions
While the conditions may seem favorable for buying a house, banks are being extra cautious in this moment at time. Their cautious nature means that they’re becoming a lot more stringent with mortgage approvals.
It can be a tough time for people wanting to buy a house with smaller down payment as most buyers are coming in with ready cash. Banks will also tend to favor clients that are making a larger down payment as it’s a risk averse strategy.
High Competition and Prices
Not only are banks being stingier, the current market is one where the demand for homes remains high and the supply is low. That essentially means that the market currently favors seller.
The difference in demand and supply, also mean that the price of the homes goes up significantly. Not only are there very few houses on the market, the ones that are for sale will cost quite a significant sum!
What to Consider Before Buying a Home
It’s important to take into consideration your own financial situation before making the leap and buying a home. There are three key questions that every homeowner needs to ask themselves before investing in a house.
Are You Ready To Put Down Your Roots?
Buying a house essentially means that you’re going to settle down and live in the place for a live. Take into consideration your current lifestyle, relationships, and goals before moving into a new location. The ideal situation is you’ll live in a house long enough for the value to increase and offset the costs of buying and selling.
How’s Your Current Financial Situation?
Before making the major move, it’s essential that you asses your current financial situation. That means taking a look at your savings, credit score, and debt. Find ways to generate extra income. If they’re all in a healthy position, then you’re in the right position to buy a house.
Is Your Job Secure?
Lastly, once your mortgage application is approved there’s no going back. You’re going to need to make the monthly payments otherwise you’d default. That’s why it’s crucial to assess your job security before making any attempt at investing in a house. If you can see yourself working comfortable for the next couple of years, only then it’s a good idea to buy a house!
Buying a house during this time isn’t impossible or a big deal if you plan smartly and organize your finances in a proper way. You shouldn’t only look at the market but analyze your own financial situation objectively before trying to buy a home.
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