a good time to buy a home

A Good Time to Buy a Home

Realtors® always seem to think that right now is a good time to buy and they usually have good reasons why. But being a good time to buy doesn’t just rely on market conditions, loan rates or economic factors. It has more to do with individuals than anything else. Here are four factors to consider.

It is a good time to buy a home when you have good credit. Due to the housing crisis and the Great Recession, lenders are now required to make sure buyers have good credit. This will not only benefit the lenders but works for the borrowers too. No one wants you to buy something that you cannot afford and then lose it due to foreclosure. FHA has the most lenient FICO credit score of 580+.  VA requires a little higher at 620 while Fannie Mae guidelines on conventional mortgages require a 700 score.

It is a good time to buy a home when you have a good job. Having the income to qualify for a mortgage loan and the stability that you will have that job for years to come. Lenders consider when you have two years of steady employment in the same field with no large gaps a good thing.

To make a determination, lenders use qualifying ratios. Your total house payment that includes principal, interest, taxes, and insurance, should not exceed 28 percent of the borrower’s monthly gross income. Your total monthly debt with your house payment should not exceed 45 percent of the borrower’s monthly gross income. For the right circumstance, there is some flexibility in the ratios.

It is a good time to buy a home when you have a down payment. Having the funds available to make a down payment, pay closing costs and a bit of cushion for unexpected expenses is a good thing. The down payment is different depending on the mortgage product. VA loans are 0 percent, FHA is 3.5 percent and conventional is highest at 3 to 20 percent. Shopping around for the best mortgage rate is a suggestion.

Besides the down payment, there are closing costs that can range from 2 to 3.5 percent depending on the loan product. If negotiated in the sales contract, it may be possible for the seller to pick up the buyer’s closing costs. However, the lender’s underwriter will want you to have extra cash for unexpected expenses on the purchase and your normal monthly living expenses.

It is a good time to buy a home when you have stability. Stability means stable employment but it also means not moving, no changes in marital status, no children or any unanticipated expenses. Don’t make an offer on a home, get prequalified and then decide you need to buy a new car. Make the purchase after you close on the home. Current economic conditions can also affect your stability.

In conclusion, your answer to the question “is it a good time to buy a home” will really depend on your answers to the points above. If you can check them off in a positive way, then it might be your time. A good time to buy for one buyer may not be a good time to buy for another.

Using my guidelines, make a self-assessment, then I can refer you to a trusted mortgage professional that you can schedule an appointment with for a live interview. The mortgage professional will give you their opinion based on what they know about underwriting. Call me at (703) 303-4010 for a recommendation. Once you have your interview and determine it’s the time to buy, give me a call and let’s look at some homes! I would be excited to help you find the right home for you!

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