When Is The Right Time To Buy A Home?

Timing a home purchase can feel overwhelming - it can feel there is too much to know and that can keep some on the sidelines. If buying a home is on your radar, here’s what to consider when deciding to take the next step:

Pay To Play

Most will need a mortgage loan to buy a home - so most of the purchase price will be wrapped into your loan and covered by the lender. However, you'll need to contribute the down payment. You'll want to have access funds that total at least 3% of the homes' purchase price, plus about $1,000 more or so to pad yourself for inspections and moving expenses.

So generally, if you can get together about $16,000 (savings, borrowing from your 401K, family help) you are ready to home shop up to a $500,000 price point.

What's Going On With Interest Rates?

Mortgage rates have been fluctuating, but one thing remains true: you don’t need to wait for rates to drop to buy a home. Here are three reasons why:

Rates change daily. By the time you wait for a “perfect” rate, the rate may change by the time you find the home you like and make your offer.

In our Portland metro area market, prices sometimes rise faster or slower, but over the last 15 years, they have only gone up. Home prices will almost certainly increase while you wait for rates to drop.

You can always refinance. If rates drop in the future, you may have the option to refinance for a lower rate. You'll want to check with a trusted Realtor and determine what you can comfortably afford now.

For example, if you’ve decided to wait until rates are a full percentage point lower than they are now, you could end up waiting an unknown amount of time—potentially missing out on homes you love or facing higher prices when rates finally drop. If you’re financially ready and find the right home now, you can buy at today’s rate and refinance later when rates reach your target level. That way, you could secure your home now and still get the benefit of a lower rate in the future.

Every month you wait is time you’re not building equity—and time you’re still paying rent instead of investing in your own home. If home prices continue to appreciate, delaying your purchase could mean paying more for the same home later—or missing out on the equity gains entirely.

What If You Already Own A Home?

Then you're ahead of the game! Demand for available homes is sky-high right now and you may get top dollar when you sell your current home. You can put your sale proceeds toward the down payment of your next home, and borrow less in your mortgage loan.

Just remember there is a cost to waiting. While your home is gaining value, the price of your next home is likely increasing too. The longer you wait, the more expensive upgrading could become.

So When Is The Right Time?

Everyone's situation is different, but if you have a reliable income source, waiting may not be the best financial move. Instead of trying to time the market, focus on arming yourself with info to understand the various scenarios available to reach your goals.

A good Realtor (like me!) can clarify your options and set an action plan with you for the best results.