Is now a good time to buy a house?

As you’ve undoubtedly heard, mortgage loan rates have been at historic lows. That reason alone shouldn’t be the only reason you decide to buy a house though. Judging by how busy our mortgage team has been these past few weeks, many of our members have indeed decided that this is the right time to buy. Those members have probably gone through a laundry list of considerations, beyond simply the rate being low.

Buying a house is an enormous investment. If you are considering making a home purchase, we recommend you ask yourself these three questions:

1. Do I plan on staying in the house for a long period of time?
If you move around frequently, buying a house may not be your best option. Yes, you can build up equity through home ownership, but that takes time and/or extra payments. When you purchase a home, there are closing costs and fees charged that can eat away your equity, so frequent sales and purchases erode the equity that you build up.

2. Am I ready to take on the additional costs of home ownership not included in the mortgage payment?
This one hit me like a ton of bricks when the air conditioner went out in our first home. No simple call to the apartment maintenance department was going to take care of this issue. No, it required my own money to fix the problem. Furthermore, there are a number of other expenses and time required that come along with maintaining a home, such as the yard and minor repairs.

3. How much house can I afford?
A common rule of thumb is the 28/36 rule. According to this rule, your mortgage payment (including escrow) shouldn’t be more than 28% of your before tax income. In addition, your total debt, including mortgage, auto loans, personal loans, credit cards, and student loans, shouldn’t be more than 36% of your before tax income. So to answer the question, you can do simple math or use an online mortgage calculator such as the one on our website.

A big part of buying a house is getting a mortgage.
Your rate will be based in part on your credit score, so you’ll need to know what your score is so that there aren’t any surprises. In addition to your score, take a look at your credit report for any potential roadblocks. The credit union makes this information available to you at no charge via our partnership with SavvyMoney.. Once you are armed with that information, you can start the mortgage process. At the credit union, you can work with a member of our mortgage team online or in person and they will help guide you through the process.

So depending on how you answer those questions, now may be a very good time to buy a house. If you are actively searching, we wish you happy house hunting.







Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.