You have been thinking about buying a home, everyone you talk to has advice for you, now what to do? There are a couple questions you can ask yourself to help you make that decision easier.
The first question is simply why am I buying a home? What is your reason for buying? There are many reasons to buy, money isn’t always one of them. Here are four reasons most people list when they think about why they want to buy a home:
- A good place to raise children and provide them with a good education
- A place where you and your family feel safe
- More space for you and your family
- Control of that space
For some people it is as simple as being able to garden, maybe paint your home without having to worry about a landlord complaining. Others it’s wanting somewhere safe for your family, being in a good school district.
Think about those things and why you want to buy – that can help you make a decision that is right for you.
The second question is where are home values headed? Here are some indicators based on the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in February (the latest data available) was $249,500. This is up 3.6% from last year. The increase also marks the 84th consecutive month with year-over-year gains.
Looking at home prices year over year, CoreLogic is expecting an increase of 4.6%. That means a home that costs you $250,000 today will cost you an additional $11,500 if you wait until next year to buy it.
These are both estimates but it gives you an idea of where home prices may be headed. It also means that if you wait, the home you want will probably cost you more money and it may mean a larger down payment.
The third question is where are mortgage interest rates headed? We expect interest rates to increase, but not like we thought they might at the end of last year. Last year everyone expected interest rates to be in the mid 5% range, however this year the rates dropped. The Federal Reserve is not expected to increase rates again this year – although that is always subject to change! Fannie Mae and Freddie Mac also expect rates to increase slightly by the end of 2019. Right now, both are expecting to see rates around 4.5-4.6% depending on credit score, down payment and loan amount.
As interest rates increase, your monthly payment increases and that affects how much you can afford. When you are looking at homes, think about what you can afford – what are you comfortable with in a house payment?
Once you answer these questions, it makes it easier to decide if you should buy now or wait. Think about your employment and if anything is going to change. Think about your family and if you need a bigger home or maybe a smaller home! If you are ready to buy, give us a call – we would love to help you!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website