The Right Time to Buy a Home May Not Be In A Down Market
It’s all dependent upon the interpretation of the term, “The Right Time to Buy.”
For a pushy sales person, the right time for you to buy a home may be RIGHT NOW! TODAY! Don’t WAIT…can’t you smell the steak on this grill? But the truth of the matter is, the right time for you to buy a home is when you are able to, financially. There aren’t any programs, tax credits, special incentives, or “great deals” that should make you feel as though you’re losing out if you don’t buy, especially when you’re not ready to handle the responsibilities associated with owning a home.
That includes when the market is down. In fact, I would submit that the fluctuation in the market is going to affect only a few things for the buyer who is ready, and those things are location, location, location. True, a down market (or a market where real estate is on sale, like it is now) it would be the best time to buy for someone who is ready to buy. But, it may not be until the market has climbed a bit before you’re prepared.
Your finances should be in order before you consider such a commitment. You should have 6 months of reserves based on the prospective home’s costs to survive if you experience an emergency. You need health insurance. You need to be generating income. You need to budget and plan your retirement and your children’s college funds. AND you need to be in the mindset that you won’t enter into a purchase contract on a home until you can put 20% down and take out no more than a 15-Year fixed rate mortgage that carries no more of a payment than 25% of your net take-home pay. You need to have all of your debt paid off, have no car payments, no credit card balances, and no student loans. If you’re about to get married, wait until you’ve been married for a year before buying, even if you’re financially ready.
Sound like an unreasonable proposition? It’s very possible, provided you’ve made some good decisions along the way. If you haven’t, and you’ve gotten yourself deeply in debt, don’t buy a house yet. Wait. I don’t care how “good of a deal” it is, and how “down” the market is. You may not be ready to buy that house until the market is up, in which case, you’ll buy something a bit smaller, perhaps in a different location, but with the goal of owning the home free and clear as fast as possible so that you can pursue the next venture.
The right time to buy a home is when you have a plan that will lead you to not having payments on it.