It seems like a distant memory when home prices were affordable, mortgage interest rates were at historic lows, and there were many homes for your clients to choose from. Yes, those were the good old days. 

But does that mean buying a home right now is a bad idea? Should they wait until prices and interest rates drop? 

Some of your clients may be asking that question. They aren’t alone. 

According to September’s Fannie Mae Home Purchase Sentiment Index, 73 percent of consumers think now is a bad time to buy a home. 

But is there ever a wrong time to buy a house?  

Is there a bad time to purchase Google or Microsoft stock?  

Is there a bad time to invest in your health?  

The answer to all of these is “No.” All are considered to be sound investments that generally trend upward. And many real estate experts would agree that there’s no wrong time to invest in a home. 

But, even though interest rates seem high right now in comparison to recent years, they’re still quite low by long-term historical averages. Substantially lower.  

You can help by suggesting that they consider three questions that will give them a sense of whether buying a home now is the right decision for their current situation. Their responses to these questions should give them a better idea of whether to start house hunting now or hold off just a little longer.  

Do you have excellent credit? 

When borrowing money, a good credit standing is critical. The higher the credit score, the better loan terms they’ll get. So, before even starting to look at homes, your clients need to check their credit reports and score.  

The best mortgage deals will be obtainable by your clients who have credit scores of 740 and above. If your client has a history of making bill payments on time, they’ll have a shot at the lowest mortgage rates a lender offers. 

Have you saved for a down payment? 

While having a home down payment isn’t always a must, it can benefit your clients. They’ll be able to borrow less money, pay off their loan sooner, lower their monthly payment and build equity from the start. 

If you have clients with a sizable portion of cash that can be used for a down payment, then now may be a good time to buy a home. But lenders would prefer that your client not use all their cash for the down payment but also hold some back for an emergency fund or other unexpected expense.  

Are you planning to stay in the home for a bit? 

Buying a home is  expensive. Down payments, monthly mortgage payments (principal and interest), private mortgage insurance (PMI), and property taxes are all part of the deal.  

But closing costs on the loan can also add up quickly – between 2 and 6 percent. These one-time transaction fees are worth it if your client plans to stay in the home for a reasonable time.  

If they’re confident they won’t move again soon, buying a home now could be wise. At the minimum, it would make paying the closing costs worth it. 

In addition, planning to stay in the home for the foreseeable future will allow your client to potentially refinance the loan for better terms when the interest rates that are soaring now eventually drop.  

 

NMLS #110139
Equal Housing Lender
A division of Amerifirst Financial Corporation

Not intended as legal or financial advice. Consult your own professional. 

RESOURCES 

McMillin, D. (n.d.). Should I buy a house now or wait? Bankrate. Retrieved November 28, 2022, from https://www.bankrate.com/real-estate/should-i-buy-a-house-now-or-wait/