This ARTICLE On The Best Time To Purchase A Home For First Time Home Buyers Was PUBLISHED On September 17th, 2019
Many homebuyers ask the question when the Best Time To Purchase A Home. The decision on when the Best Time To Purchase A Home is equally as important as the overall home buying process. Frequently asked questions by buyers are the following:
- When is the Best Time To Purchase A Home?
- Where should I purchase my home?
- How difficult is it to qualify for a mortgage?
- Are mortgage rates low?
- Should I wait until rates drop?
- Are we headed towards another Recession?
- Why is the Best Time To Purchase A Home important?
Timing can be very important when buying a home. The housing market has been hot for the past several years. There is more demand than inventory. Home prices have been increasing the past 36-months.
In this article, we will cover the Best Time To Purchase A Home for home buyers.
Timing On The Best Time To Purchase A Home
Landing your dream home at the right price, interest rate, and budget is key.
- If you have children, you may need to time your home purchase with the start of the new school
- Children can transfer during the school year but if homebuyers can time the time of the year so they can start the new school with the home purchase, it would be ideal
The buyer’s cash and financial situation can also play a role in the timing of the home purchase.
Factors Affecting The Best Time To Purchase A Home
Timing can be everything when buying a home. The first home you see may be the dream home for you. However, equally as important is to make sure that you have the proper finances in order:
- Do you have the down payment and closing costs?
- If not, how are you going to get the down payment and closing costs?
- Gifted funds?
- Borrow it against your 401k?
- Sell something?
- Can you afford the new housing payment on your new home?
- What type of payment shock will you have?
Also important is how much can you qualify for? Take into consideration how much you can afford versus qualify? You do not want too much house where your lifestyle will be affected.
Alex Carlucci, a Senior Vice President of Gustan Cho Associates and housing market analyst and expert said the following:
The reality also dictates when to buy a new home. For instance, your employer has relocated you cross-country and you start your new post in two weeks. In that scenario, the time to buy really is right now, or you may not have a place to call home for a while. Let’s take a good look at the “when to buy a home” issue, and break down the elements that dictate the “timing” factor in signing on the home mortgage dotted line.
Time Of Year For Best Time To Purchase A Home
Below are the factors home buyers should consider when thinking about the best time to purchase a home:
Time of the year:
- Home prices are often less during the end of the year
- This holds true during Thanksgiving and Christmas season and when the weather is colder
- Sellers who list their homes during the winter are often more willing to negotiate their home prices
- Many companies transfer employees to another state during the slow winter months
- This means that sellers need to sell their home fast due to relocation needs
- Many homeowners are desperate of cash and need to sell prior to the spring busy housing season so buyers can get better deals
- Many homeowners need to sell their homes during the winter which means lower prices and better negotiation
- This means a better deal for the home buyer
What Experts Say
According to Massimo Ressa, the Chief Executive Officer at Gustan Cho Associates, the national consumer direct division at Loan Cabin Inc., he issued the following statement:
Waiting until January or February can work in the home buyer’s favor, as well. Recent data by Gustan Cho Associates News Division shows that U.S. home prices cost about 8.4% less in the first two months of the year than they do in July and August, in the midst of the busy summer selling season. That scenario also falls in the “have to sell” as opposed to “want to sell” home seller equation. In the past few years, the Federal Reserve has sustained policy of raising interest rates to keep inflation low, and the economy stable. In early 2019, 30-year fixed mortgage interest rates rose to between 4.5% and 5.0%, depending on the lending institution. Only two years ago, when interest rates were much lower, homebuyers could grab a 30-year fixed-rate mortgage for under 4%. That disparity is important and here’s why. Consider a $300,000 home, purchased with a $60,000 down payment, at an interest rate of 5.0% (generally where mortgage rates are in early 2019.) With a $240,000 mortgage loan, the average monthly payment on the property would be $1,288.37, while the total of 360 monthly payments amounts to $463,813.88. More to the point, total interest paid over the entire course of the loan would be $223,813.88. But what if you can get the same mortgage loan at an interest rate of 4.0%, as many buyers got two or three years ago when rates were lower? In that event, the monthly mortgage payment would amount to $1,145.80, while the total mortgage principal and interest payment over 360 months would amount to $412,486.82. Total interest paid over the course of the loan would be $172,486.82 – representing a total savings of over $50,000 on your mortgage interest payments. That’s why it’s important to keep a sharp eye on interest rates. All things being equal, and with good credit, a savvy home buyer strikes when rates are lower, and can save a bundle on the deal.
Massimo Ressa feels that the Best Time To Purchase A Home is now when mortgage rates are at a three-year low. For more information about the contents of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.