Buying a home is a life-changing move that should never be taken lightly. There are numerous things to consider, including your finances, your needs, your lifestyle, and the right timing.
Just as in any major undertaking, timing is paramount to succeeding in your home buying venture. How do you know when it’s the right time to buy a home? Consider these tips:
- During an economic upswing
The recession of 2008 taught us a lesson on how the housing market can be brutalized by a poor economy. Conversely, a healthy economy has far-reaching positive effects on real estate, which ultimately makes home buying more favorable.
Some of the economic indicators to consider include:
- New housing starts – More new construction means more housing options, and with the added inventory generally comes more affordable real estate prices
- Employment – Low unemployment often comes with higher pay, which gives you time to save up, improve your credit, and qualify for mortgages that put you in a better position for repayment
- Interest rate – Low interest rates typically translate to lower mortgage payments
Fortunately, since the recession, things have turned around in most parts of the country, including in Minnesota. In Stevens County, unemployment rate as of April, 2019 is 2.6%, lower than the national average of 3.6%. Housing values have also gone up considerably since 2009, but have been tapering down in the last few months. The US interest rate is between 2.25% to 2.5%, which is quite favorable for consumers seeking home loans.
Given the robust real estate market, you might find plenty of competition for a new home in Stevens County, so it’s important to work with an experienced local Realtor who can help you navigate your way around the market and get the home you want.
- During the spring and summer
Real estate activities always pick up in the warmer spring and summer months. Not only is the weather perfect for home shopping, there’s bound to be more homes for sale, too. Home inventories are usually highest in May, followed by April and June. This means more choices for you and more opportunities to find your dream house.
- At the end or start of the year
Conversely, late fall and winter offer some great prospects, too. Some homes available in the winter might have failed to sell earlier. Or, perhaps, the sellers need to move out soon or simply want to sell as quickly as possible. All these play in your favor, as this often means the seller is highly motivated to unload the property, giving you plenty of room for negotiation. There’s also less competition during the winter, which you can leverage when negotiating with the seller.
- When your credit rating is high
The first step in buying a home is securing a mortgage. Even if you have the money on hand, a loan will allow you to make smaller payments over time while reinvesting in the value of your home. Your credit rating impacts almost every type of loan you apply for, including a mortgage. If your credit score is low, it may prevent you from getting a loan entirely as lenders will see you as a credit risk.
As your rating grows into the excellent range (700+), you’ll find better mortgage options and more favorable terms, such as smaller monthly payments, lower APR rates, and a longer loan life. Get a copy of your credit report and identify issues that could be pulling your credit score down, then work on improving these.
- When your other debts are paid off
Taking on a mortgage means making regular monthly payments. But even a low mortgage payment can turn into a headache if it’s buried beneath a pile of other recurring payments. As badly as you may want to move, it really should wait until your other financial obligations are met. That includes student loans, credit cards, and medical bills. Unless you’ve got a really great deal, these can all grow over time through their interest rates. It doesn’t take long for unpaid debts to spiral out of control, so square as many of them as you can away before buying a home.
- When you’re in a good financial position
Perhaps you have just received a raise or a bonus, or a family inheritance. Or perhaps, you’ve finally paid off your student loan, or a kid recently finished college, freeing some of your funds. With enough cash for a down payment, this might be a good time to buy the home you’ve always wanted.
- When you’re settling down
If you’re starting a family, you will likely need more room for your future needs. You might also want to move into a neighborhood that’s ideal for raising kids, with schools and open places nearby. Getting married can improve your financial situation if your spouse is also earning an income. Your pooled earnings may be enough for a down payment, and your combined incomes might comfortably cover your mortgage payments.
Moving is an exciting time, but it’s important to bide your time and make a move at the right point. An experienced real estate professional can help you determine the optimal time to strike. We at Riley Realty, LLC will be happy to provide the guidance you need. Call us at 320.589.2159 or get in touch with us here.