When is the perfect time to buy a home? The answer is “when you can afford”. But this affordability is not just a simple word. It means a lot – it means a bunch of lifestyle and financial considerations.
Let’s check out the 3 deciding factors that define your affordability.
- Personal finance – This is the most obvious and significant decisive factor that involves money. If you have enough money to buy a house for cash, you can surely afford to buy one right now. If you can’t afford to pay in cash, then also you can purchase a home provided you can afford to pay the monthly payment towards mortgage. However, it shouldn’t be more than 28% of your gross monthly income. Keep it in mind that you need to continue to make the payment every month for about next 30 years. Also you must consider the reliability of your main source of income. Your prospect for the future and possibility that your income will increase over time should also be considered.
- Real estate market – Your next consideration should be present real-estate market economics. A house is undoubtedly one of the biggest investments of your life. Having sufficient money to invest in a home is good, but you should think if the purchase makes sense in terms of financial perspective. See whether or not it is cheaper to buy a home than to rent. If buying a home seems to be less expensive than renting, you can go for purchasing. However, you should think about the long-term aspect of buying a home. For generations, buying a house was a sure way of making money. Your grandparent might have bought a home half a century ago for $25,000 and sold it for 5 to 10 times that amount after 30 years. But this can’t be said for the homeowners of a more recent vintage as most of them lost money when housing market crashed in 2006. Many of them now own a home which is worth far less than the cost it was bought 10 years back. So don’t buy a home on the belief that the value of the home will rise over time considering the cost of interests on the mortgage, renovations to the home and routine maintenance.
- Economic outlook – Real estate market fluctuates. If you have flats for rent in Vijayawada or anywhere else, you can understand that the real estate market doesn’t remain the same throughout the year. There are years when the prices are low and years when they soar. If the prices are low, you can surely make a good deal. You can consider this as a good time to buy a home. Buying a home at a depressed price increases the odds that the time would work in buyer’s favour and cause the property to appreciate down the lane. Interest rates on mortgage change with time. There are years when they are high and years when interest rates are very low. Obviously, the lower is desirable. Wait when the interest rate is falling, and as it falls further it allows you put less towards monthly payment. But when the rate is rising, don’t wait for further increase and make your purchase soon.
Seasons of the year also play important role. If you’re in search for the sellers who might be seeing less traffic that makes them be flexible about price – winter would be the best season for home-hunting.
Consider above-mentioned points to avoid committing costly mistakes. Nevertheless, the best time is of course, when you find the perfect home at the perfect venue and at perfect price.