The housing industry is starting to grow again. The recent reports show that sales of existing homes rose to their highest level in eight years. New home construction is also at about a seven year high. The average sales price is also up.
Does this mean it's time to buy a new home? There are some things to consider before jumping in to the housing market. It wasn't that long ago that we had a nightmare housing crisis. If you are thinking about buying, it can be a terrific time due to home costs and interest rates. Here are some things to consider before jumping into the housing market.
-Your home is your home, it's where you live. Don't consider it a trading investment. Home prices can go up, but we just went through a period where home prices dropped. You want to make sure you can afford the home you are buying and know that you can make the payments on it.
-Your home is not a liquid asset. If you know you are going to move in a couple years, you may want to think before buying. Sounds strange coming from a lender, but there are costs to sell a home and you don't want to be upside down. Maybe it will be a home you can rent out but consider your options if you know you are going to move from the area soon.
-Talk to your lender and get a mortgage pre-approval. You want to get a breakdown of the costs and what your payment will be. This gives you an idea of what you would be spending and it's also a good time to compare mortgage costs. Maybe there are some credit issues you need to take care of before you buy a new home. Maybe you need to save more money. Talk to your lender and see if there is anything you need to do before you buy a new home.
-Check insurance costs. You will have homeowners insurance, but you may also have private mortgage insurance. If you have less than 20% down on a conventional mortgage, you will need mortgage insurance. The rates for mortgage insurance will vary based on your credit score – your homeowners insurance may also vary based on homeowners insurance. This is another reason to keep your credit scores as high as possible.
-Don't get caught in the middle – meaning you want to sell your home before you buy a new home. Most homeowners don't want to have two homes. Some may qualify for both homes, but it really helps if you can sell your home before you buy a new one.
Looking for a new home is usually a lot of fun! It can be very exciting to go out shopping and find the home of your dreams! Make sure the home works financially – you don't want your new home to cost you more than you were expecting. If you are thinking about remodeling a home or updating a home, find out what the costs are before you buy the home. Remodeling usually ends up costing more than you expected, especially if you find issues after you start a project!
Your home can be a wonderful investment, just make sure you are comfortable with the payment and leave yourself some money after closing as a cushion – just in case something comes up that you need to fix! Home prices are great, interest rates are great! It can be a great time to purchase a new home, just make sure it's a great decision for you!