When is the Right Time to Purchase a Home? Insights from Home Loan Expert Dan

Hello, everybody. Today, the topic we'll be discussing is when is the right time to purchase a home? It's a question I get all the time from clients, and the answer is going to be different for everybody. I figured it was a good idea to share my thoughts on it, where we'll dive into personal factors that you want to consider, talk about the market and what to watch for in the market, and discuss the pros and cons of waiting to purchase a home. Understanding these aspects can significantly impact your decision-making process, helping you to make a more informed choice. Let's delve into these considerations to ensure you're well-prepared for this major financial commitment.

Personal Factors to Consider

I think this conversation is going to start off best by focusing on things that are within our control. Personal factors such as have you seen your credit score lately? Do you know where your middle credit score is? Do you know how much monthly debt you have and what's all reporting on your credit bureau? Do you have any savings set aside? Do you know how much you need to have for a down payment? Do you know which programs are available to you? These are critical questions that can influence your readiness to purchase a home. Regularly monitoring your financial health can provide clarity and direction as you plan for homeownership.

To help answer these questions, I always encourage my clients to fill out a mortgage application early. Even if you're not ready to purchase a house right now, there's no harm in filling out a mortgage application, talking with a loan advisor, and reviewing your options to see what programs are available to you in your area. Do you qualify for any down payment assistance programs or grants? Are you a first-time home buyer? Could you get access to any first-time home buyer benefits as well? Understanding these options can better position you for a successful home purchase when the time is right. Knowledge is power, and being informed can alleviate much of the stress associated with buying a home.

In many cases, if you're worried about having a hard credit inquiry by filling out a mortgage application, I get that. Although I will say that many lenders can do what's called a soft credit pull, which will not have any negative impact on your credit score. Having that conversation with the mortgage lender will enable them to look at the best loan programs available to you and give you advice on what to work towards, whether it's focusing on something with credit, focusing on your savings, or paying down some debt to put you in the best position possible for when you're ready to move forward. This proactive approach can help you avoid surprises and ensure you're financially prepared for your new home.

Employment and Income Considerations

Looking at your current income and employment situation is another important consideration when looking to purchase a home. Do you see yourself staying in the same area with the same employer for the next two, three, four plus years? Do you have any room for advancements? Have you been considering other fields or opportunities? These are questions you want to consider when deciding whether to purchase a home or not. Stability in your job and income can provide a solid foundation for managing a mortgage effectively.

There's not an exact rule that says you have to be within a certain location for three, four, or five plus years. However, if there's a good chance that you might move to a different location within the next two or three years, maybe it's not the best time to look to purchase a house. Understanding where you're at and also understanding where those mortgage payments would be with your current income levels is crucial. Make sure that you're comfortable with making those payments for the mortgage, so it doesn't tie you down in a way that makes you uncomfortable because some clients can get approved for more than what they're comfortable with. This foresight can help you avoid financial strain and ensure your home purchase aligns with your long-term goals.

Market Conditions and Timing

Now, once you've gone through the exercise of looking at your own situation and finances to see when you're ready to move forward, the next questions you'll be asking are based on market conditions. So, what are home values doing? Are prices generally going up or down in the areas that you're looking at? Is there a lot of inventory out there right now, and how much competition is there? Are you going to be competing with a lot of other buyers? These market dynamics can significantly influence the timing of your purchase and the overall cost of your new home.

Some of these questions will vary depending on the state that you're in and even your local market, as well as the time of year. Getting connected with an experienced realtor is another thing you're going to want to do, especially once you're pre-approved. Start asking them some of those questions. Realtors have their fingers on the pulse of the market and can provide valuable insights that are not always visible to the average buyer. Their expertise can be instrumental in finding the right home at the right price.

In general, home values have continued just to go up and up, even as mortgage rates went up, inventory came down, and home values have either been maintaining or, in most areas, still going up. This has been a reason people waited in the past. But my personal opinion is that once you've answered those questions for yourself, got your finances in line, and gotten pre-approved, you're comfortable with what the payments would look like, especially for the home value range you'd look to apply for. There could be reasons within your local market that will cause you to wait maybe a little bit of time. However, delaying your purchase could also mean missing out on current opportunities and potentially facing higher costs in the future.

Pros and Cons of Waiting

As we get to the end here, I'd like to review the pros and cons of waiting to purchase a home. Let's start with reasons why it might be an okay idea to wait. We talked about personal finances: getting yourself in a better position financially, maybe increasing your credit score a little bit, paying down some debts, or saving up a little bit more money for that down payment. Waiting and having a plan moving forward could be an okay reason to wait. Taking this time to strengthen your financial standing can make you a more attractive candidate for favorable loan terms.

Another reason might be specific pockets in the housing market that are more beneficial. If you've game-planned with a realtor and there's a certain time within your local market that's advantageous to you, you might wait for that time of year. However, this strategy requires careful monitoring of market trends and close collaboration with your realtor to capitalize on the best opportunities. Additionally, a well-timed purchase can sometimes lead to better deals and less competition.

However, the longer you wait to purchase, the longer you wait to build equity. Owning a home is one of the main ways people build wealth in America. Building equity in a home only happens once you purchase a house. The sooner you do, the sooner you start building equity, especially if home values continue to increase. This equity can serve as a financial safety net and open up future opportunities for refinancing or leveraging home value for other investments.

Final Thoughts

As I wrap up this video, I'll once again encourage you all to do a thorough analysis of your own financial situation and connect with a local mortgage professional like myself and a local real estate professional. Have them go through some of these answers and questions together with you so that you can be as prepared as possible for when you're ready to take that leap into owning your own home. A well-prepared buyer is more likely to enjoy a smoother, less stressful home buying experience.

I hope this video was helpful for you all. If you have a chance, please leave a like on this video and subscribe to the channel. I enjoy doing these, and I'll be back with another video again real soon. Thank you all so much for stopping by and all the support. I hope you all have a great day. Your engagement and feedback mean a lot, and I'm here to assist you on your home buying journey.