Questions to Ask Yourself Before Buying a Home
If you are considering buying a home, you are probably getting a lot of advice. Though friends and family may have your best interest at heart, they may not be fully aware of what you want and what is currently happening in the real estate market.
Answering these questions will help determine if now is actually a good time for you to buy in today’s market.
1. Why do I want to buy a home?
This is truly the most important question. Forget finances for a moment. Why did you even begin to start thinking about buying a home? For example, a recent survey by Braun showed over 75% of parents say “their child’s education is an important part of the search for a new home.”
A study by the Joint Center for Housing Studies at Harvard University revealed the 4 major reasons people buy a home have nothing to do with money:
- A good place to raise children and to get a good education
- A place where you and your family feel safe
- More space for you and your family
- Control of that space
What non-financial benefits will you and your family gain from owning a home? The answer to this question should be the biggest reason in your decision to buy a house.
2. Where are home values headed?
According to the latest Home Price Index from CoreLogic, home values are projected to increase by 5.3% over the next 12 months. Simply put, if you are planning to buy a home that costs $250,000 today, that same home will cost you an additional $13,250 if you wait until next year. Additionally, your down payment will need to be higher as it is based on a percentage of the purchase price.
3. Where are mortgage interest rates headed?
The ‘long term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.
The Mortgage Bankers Association (MBA), the National Association of Realtors, Fannie Mae and Freddie Mac have all projected mortgage interest rates will increase over the next 12 months:
Only you will know if now is the right time to buy a home. Hopefully the answers to these questions will help you make that decision.