BLOG POST | MAY 2020
5 Things to Consider Before Buying a Home
Determining the right time to buy a home may seem tricky, since there are many variables involved. It often boils down to your individual goals and finances, but it’s also a good idea to keep the current market trends in mind when making your decision. Since buying a home is one of the largest investments you’ll make, it’s important to ensure you consider every angle before making the leap to homeownership. Below, we’ll share five common considerations every potential homebuyer should make before buying a house.
1. Interest Rates
When you apply for a mortgage, your interest rate will be based on several factors, including your personal credit score and financial history. Mortgage interest rates may also vary depending on market conditions. If you’re considering buying a home, doing so when rates are low can lead to significant savings on your overall mortgage cost but contact your C&F local industry expert to help guide you through the process.
2. The Real Estate Market
In addition to interest rates, it’s also important to consider the current real estate market. Real estate often ebbs and flows between a buyer’s and a seller’s market - and buying a home when it’s in your favor has its perks. If the supply is high and the demand is low, you’re in a buyer’s market and it gives you the upper hand to negotiate when buying a home. On the contrary, if supply is low but demand is high, it’s often considered a seller’s market, which gives the seller the upper hand. Right now, inventory is low and buyers are having to swiftly make an offer if they fall in love with a home. In this type of market, it’s a good idea to become pre-qualified before starting to look at houses. This will give you strong negotiation power with sellers, since you did the hard work upfront and time is on your side.
3. Comparing Renting vs. Buying
Before buying a house, you’ll want to consider how long you intend to live in the home. When you first buy a house, you’ll most likely put down some cash - whether it’s just for closing costs or a down payment as well - so it’s important to ensure you stay there long enough to make that initial investment worthwhile. If you plan to live in the house long term, you’ll likely find that buying is the better option, as you’ll accrue equity each time you pay your monthly mortgage payment.
4. The Time of Year
You can realistically buy a house anytime, but there is still a certain time of year when most people list their home for sale: springtime. Buying a home during this time generally provides you with more inventory to choose from, but keep in mind that it also comes with increased competition, which can lead to bidding wars. A lot of buyers prefer to look at houses in the spring because that allows them to move during the summer and prevent uprooting their families during the academic year. If you’re buying in the off-season, you may have less inventory to choose from, but you may also have less competition when it comes to landing the ideal home for your lifestyle.
5. Your Finances
Getting your finances in order before buying a home is essential, as you’ll need to be prepared for the expenses related to homeownership, including insurance, home repairs, utilities and potential homeowner’s association (HOA) fees. If you’re planning ahead, focus on building your savings account so you’ll have cash for a down payment and other costs of homeownership. It’s worth noting that there are several mortgage options that require low to no down payment:
• FHA - This type of mortgage is common amongst first-time homebuyers and requires as little as 3.5% down.
• USDA - This type of mortgage is available in rural areas, as defined by the USDA. Among the benefits are 0% down payment and reduced mortgage insurance premiums.
• VA - This type of mortgage is available to service members, veterans and their eligible spouses and provides buyers with the benefit of a 0% down payment.
• State Housing Finance Agencies and Grant Programs – There are state housing agencies that offer low to no down payment options. Grant programs are also available to help assist with down payments.
Buying a home is a decision that requires careful consideration but can lead to a big reward in the end. If you’re considering purchasing a home, one of our C&F local industry experts can help you decide if it’s the right time to buy and guide you through the process from start to finish. Contact us today!
The information contained herein (including but not limited to any description of C&F Mortgage Corporation and its lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. Restrictions apply. This is an advertisement and not a commitment to lend. C&F Mortgage Corporation NMLS# 147312 Equal Housing Lender.