Is it better to rent young or purchase a home as fast as possible?
Does buying a home as fast as possible make sense for the long term even if it means spending more money early in one's life?
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Answers ( 1 )
If you are wondering whether it is a suitable time to buy a house, ask this instead: Is it a suitable time in my life to buy a house?
Current economic indicators and the state of your local housing market give important context for your decision. But whether this is a suitable time for you to buy a house also depends on your financial situation, life goals and readiness to become a homeowner.
Ask yourself these questions to explore whether you are ready to buy a home.
1. Are you prepared to be settled?
Think about your life goals, relationships, and interests. How long can you see yourself living in this location? Ideally, you would want to remain in the home long enough for rising property values and your equity to exceed the costs of buying and selling, including real estate commissions and mortgage closing costs. That will typically take several years. You could also be subject to capital gains taxes if the home appreciates in value, and you sell it after less than two years.
2. How is your job security?
A mortgage is a big commitment and can become a stressful burden after a job loss, so it is not a suitable time to buy a home if you think you will get laid off. Wait until your employment is stable before thinking about buying a house.
3. Are you financially prepared?
You will need money for a down payment and mortgage closing costs, and for moving and other expenses after you buy the home. The down payment requirements vary by the type of mortgage and the lender. The more you put down, the lower your monthly mortgage payment. Lenders offer the best mortgage rates and terms to borrowers with credit scores of 740 and above. They look at your debt-to-income ratio, or DTI, to help determine whether you qualify for a mortgage. Your DTI is the percentage of your monthly gross income that goes toward monthly debt payments, including housing costs, as well as car, student loan, credit card and other debt obligations. Lenders like to see a DTI of 36% or below. The lower your DTI, the better your chances of qualifying for a mortgage.
https://www.nerdwallet.com/article/mortgages/is-it-a-good-time-to-buy-a-house