Waiting for the Right Time to Buy? Maybe That Time Is Now
- 11 hours ago
- 3 min read
Many would-be homebuyers find themselves stuck in today’s market. Maybe they want to get into their first home, but down payment requirements are holding them back. Perhaps they’re ready to trade up from their starter home, but prices have spiked in their preferred location. Or maybe they’re ready to downsize, but they’re still clinging to ultra-low, pandemic-era rates.
Here are five things buyers may be waiting for … and what to do instead.
A drop in rates.
Many want a return to the historically low rates of 2020 and 2021, but the truth is, economists don’t expect it to happen. [1]
What to do instead: Structure a deal that will fit the monthly payment you can afford today. A seller-paid rate buydown or a hybrid adjustable-rate mortgage (ARM) could lower interest costs (and your monthly payment) in the loan’s first years. Seller concessions or low down payment programs might allow you to divert some of your cash to paying points that will lower your interest rate.
Saving enough cash.
Closing costs — the upfront cash you need when buying a home — typically total 2% to 5% of your loan amount. Fees might cover real estate transaction expenses, title insurance, lender services, pre-paid taxes and insurance, among other costs.
What to do instead: Rather than negotiating for a lower price on your home, ask the seller to provide credits toward your closing costs. Work with your Loan Officer to structure a deal that minimizes your upfront costs; you may be able to incorporate some fees into the loan itself.
A 20% down payment.
Many buyers believe they need a down payment of 20% to buy a home,[2] but that’s not always true.
What to do instead: Use a flexible down payment option, such as an FHA loan (as low as 3.5%) or a VA or USDA loan (as low as 0%). Even conventional loans can require just 3% down. You will usually end up paying for mortgage insurance (MI), which will increase your monthly payment. But once you reach 20% equity, you can request to have MI removed.
The perfect home.
For-sale inventory is growing, but it’s still low by historical standards. [3] For many, the “perfect home” simply isn’t on the market at their price point.
What to do instead: Create a list of your must-haves and nice-to-haves, and focus on the must-haves for now. Entering the market now will enable you to start earning equity, putting you in a better position to borrow funds for an upgrade or to purchase the home you really want in the future.
A better market.
Limited inventory, higher rates, and affordability challenges can make buyers feel like it’s not a great time to buy (or sell, for that matter).[4] But it’s impossible to time the market, and waiting for a “better” market could mean waiting a long time.
What to do instead: If your finances allow, go ahead and take the leap, with the plan to refinance, upgrade, or move again when conditions change. And if you’re not sure whether your finances are ready, start a conversation with your Loan Officer. Often, life changes — marriage, a baby, an empty nest, a job change — spur a move, no matter the market.
Over the last 50 years or so, home prices have grown an average of about 5% a year.[5] That’s why homeownership is considered a strong wealth builder. First-time buyers get the added benefit of shifting their rent payments (the landlord’s mortgage payment) to their own equity-building investment.
There are reasons not to buy in almost any market. But with the right strategies, you can purchase a home while still making a wise financial decision. Talk to your Loan Officer to learn more about the options available to you.
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