When is The Right Time to Buy a Home?
Buying a house is one of the biggest decisions you will ever have to make in your life. For every person that says that you should buy a house, there are just as many conflicting opinions as to when is the right time to buy a home.
The obvious answer is that the right time to buy a home will be different for everyone. However, one question that always comes up is how soon is ‘too soon’ when it comes to buying a home. Are you supposed to buy a house before you turn 30? Should you wait for your first large salary increase? Maybe wait until you are married? Is there a checklist of things you should have accomplished before buying a home?
US News hints that more and more millennials may be considering buying a home this year. This is an indication that this dynamic housing market may soon change once more. A lot of real estate agents and property developers are tapping into this market by offering affordable housing, which means that the time to invest in a house may be sooner than you think.
That said, home ownership isn’t a decision to be taken lightly. Below are some pros and cons for buying a house early, taking into account your finances, career trajectory, and overall well being.
Why you should consider early home-buying
There are some skeptics that say buying a home early on can damage your credit score, but it can actually be beneficial as lenders then see you as someone who is responsible and trustworthy. In fact, we write an article about finding a mortgage without a two year work history. This would likely have a positive impact on young adults who are now working their first job out of college.
Here are a few reasons why buying sooner may be a good idea:
You Will Improve Your Spending Habits
There’s something to be said about forcing yourself into developing better habits. The Financial Diet points out that lifestyle inflation is a common phenomenon, where people adjust their spending as their income rises. Purchases such as buying coffee at expensive chains to signing up for numerous gym memberships will accumulate over time, pushing future investments further down your list of priorities.
While investing in a property early on might feel like a blow to your wallet, this also means that you will be reconsidering all future purchases in light of this new investment. You will also learn how to budget your expenses which is a skill that is crucial to cultivate early on.
You Career that is on the Right Path
This might seem like a tangential reason, but career trajectory is closely related to home ownership. Not only does buying a house limit your potential career trajectory, but your local market can affect home prices should you decide to sell it later on.
Buying a home is a sign that you’re ready to stay put for at least 5-10 years. If you’re someone who doesn’t like moving around or if you’ve landed a job that you envision yourself staying in, this may be the right time to buy a home.
Taking Advantage of an Optimal Real Estate Market
As with any market, the real estate market has its ups and downs. Understanding these peaks and valleys can boost your negotiating power during negotiations. House prices actually do change with the seasons, with specific trends differing per region.
For instance, Deseret News places winter as the prime time for Utahns to consider buying property, as you’ll find that most homeowners who sell during this time are looking to close a deal as soon as possible.
Meanwhile in San Francisco, it was recently reported by CNBC that home prices have fallen for the first time in seven years. These are all trends and news that you should take into consideration. So while you may be tempted to land the first house you find, use peak times to get a quick survey of all the available options.
You Want to Own and Customize Your Space
While moving to different cities and renting all kinds of spaces can be exciting, it can be exhausting to remember which landlord allows what kinds of customization. Whether it’s not having any pets in the building or not being allowed to drill holes into the wall, all these things add up to create a sense of not really belonging.
Of course, you want to reap the full benefits of being a homeowner. According to an article on Quartz, these perks go well beyond having a roof over your head. Home-ownership also means improved psychological health (stemming from feelings of community) that then leads to physical well being. One of the biggest benefits to settling down is that you have a space to truly call your own.
Why You Shouldn’t Buy a Home Too Early
The ultimate goal for most people is to become a homeowner as quickly as they can, as society has dictated that this is the correct course of action in order to progress in life. But of course, home-buying isn’t some sort of race. This leads to many buyers rushing into purchasing their first home when in fact they are not ready.
Investing in a home is a risky affair, as it can either lead to safety and security or financial ruin if not managed properly. Here are a few reasons why you shouldn’t buy a property too early:
You May Not be Able to Afford it Long Term
Do you already have a stable job that will allow you to pay for a mortgage? After all, buying a home isn’t a question of whether or not you should do it, but why you want to do it. It isn’t a hasty decision, and there are a lot of prerequisites you need to fulfill, like having a good credit score, a steady and reliable income, and a large amount of money in the bank for a down payment.
Purchasing too early, when you’re not financially ready, can easily lead to debt. It is not just about the mortgage payment but also the additional life expenses that may arise. This is why buying a home isn’t something to be taken lightly, and why people often consult with financial experts before making the big leap.
You Need to Think of the Future
Property is an investment, and one of the most effective and profitable ways to generate revenue is when you come to sell it. However, there is no guarantee that the value of the home will increase. This is something that needs to be taken into consideration. Yoreevo claims that the difference between buying versus renting is important to consider, arguing that potential homeowners need to factor in how long they intend to stay in the property before buying.
For New York City buyers, it will cost 10% to get in and get out. So if the value doesn’t increase, you may end up losing more money. This is why five years is suggested as the minimum time to stay in your home before selling. If you’re not ready for this time period, and are not financially stable to handle any loss through selling early, maybe it’s not yet time for you to buy a home.
Buying a Home May Not Be What is Best For You Now
Just because you qualify for a mortgage doesn’t mean you should pay for one. The Balance recommends paying off most of your debts first, if not all of your debts, before thinking of buying a house. It’s also important to ask yourself if buying a property is more advantageous than renting in your current situation.
If you’re thinking of switching careers or are still considering moving to a new city, it’s best to stick with renting a space. You could argue that even a little bit of uncertainty isn’t worth the risk, as investing in a home means you’ll need a stable source of income for the foreseeable future, especially if any unexpected circumstances come up.
At the end of this article, you should have a better gauge whether or not you’re ready to take the plunge, or at least a few more things to think about. If you’re confident, then go for it. Like we mentioned, the housing market changes very quickly, so rely on a local real estate expert to help guide you through your decision process.
While this list is nowhere near exhaustive, these are some important factors to consider when it comes to deciding when it’s time for you to buy a home. Getting professional help is always a good idea, but it’s also important to know that you’ll be the one signing the papers at the end of the day. Checking in with yourself will make whatever decision you make all the more meaningful, as you’ll know that it was the right one for you.
Whether you are someone who wants to buy as soon as possible or wait it out, what’s important is that you weigh all possible pros and cons before jumping into this huge decision. Good luck!
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Should You Buy a Home Before Having a Baby? – Young couples struggle with the decision as to whether they should wait until after they have their child to buy, or to purchase beforehand.