buyers 

As time goes on, many individuals take the next best step in their life and pursue a grand investment, real estate. When preparing, every individual must take the time to fully understand their financial standing and their long-term plans involving the property. With the ever-changing world of mortgage rates, property values and the current real estate market, some often ask, “When is the right time to buy a home?”

 

One may not be able to easily answer that question without first asking themselves a few questions:

 

  • Can I deposit 20% of the value of this property?

  • Will I be renting out this property?

  • Can I see myself living in this property for a long time?

  • Will I be financially stable in the future?

  • Can I really commit to making monthly mortgage payments?

  • Am I ready for all the extra housekeeping fees and costs?

The right time to buy a house not only depends on the market’s current standing, but your financial situation as well. Keep in mind that buying a property involves a financial commitment to make all of the property’s necessary payments in a timely fashion. Without proper understanding of the process, there will be risks involved. In order to have a better understanding of the costs associated with your next investment, first ensure your funds are stable and can afford the following:

 

  • Down Payment: Conventional Mortgage Loans often require that you place a down payment of at least 20% of the property’s initial value.
    If you aren’t able to meet the 20% requirement, some loans (much like FHA mortgages) may offer loans based on as little as 3.5% down payment. Although, the loan’s interest rate may differ and rank higher than others. 

 

  • Private Mortgage Insurance: This is only essential when borrowing more than 20% of the home’s initial worth. In this scenario, you’re required to provide monthly mortgage payments along with mortgage insurance. This helps provide security to lenders of the property’s title in case the borrower ever fails to make continuous mortgage payments. Once the mortgage payments amount to 20% of the home’s value, the private mortgage insurance can then be removed.

 

  • Inspection Fees: Along with passing the pre-evaluation of the borrower’s mortgage, the consumer is required to pay for an inspection of the property. The evaluation will give the borrower a full understanding of the home’s condition and prepare for what needs to be done to keep the property up to par. This is incredibly beneficial in the long run since it can help provide better renter opportunities and can even spark renovation and decorating ideas.

 

  • Maintenance: Along with the monthly mortgage fees and (possible) monthly insurance fees, the homeowner must readily prepare themselves for any upcoming maintenance repairs. 

 

  • Property Taxes: An annual tax on the property is decided based on the area. All county property owners pay 1% general property tax, along with special or direct assessments levied by their municipalities. The countywide average of all tax rates is 1.16%, or $11.60 for every $1,000 of assessed value.

 

Much like the stock market, the housing market can reach ultimate highs and lows. For example, you probably hear the term “Buyer’s Market,” and “Seller’s Market.” The difference between the two is:

 

1. The Buyer’s Market: When there are more homes available than there are actual buyers. This is especially recommended for those looking to buy a home. By doing so, consumers may be able to obtain a better price than they would if they were buying during the time of a seller’s market. 

 

2. The Seller’s Market: is the complete opposite of the Buyer’s market. There are more buyers than there are homes. In this scenario, buyers compete with each other in purchasing a property from a small inventory. Given this factor, prices may be higher than what would be seen during a Buyer’s market. 

 

In the end, there’s no definitive answer that can accurately detail when is the “right” time to buy a home. Even though mortgage interest rates can change daily, other elements like economic data, political events and your financial capability, alter whether the time is truly right for you to invest in a home. Before committing to the investment, be sure to take careful steps and use as much guidance as you can with your transaction. Speak with a knowledgeable and experienced Realtor®, like Jesamine. 

Jesamine De Guzman

DRE 02066320

Berkshire Hathaway
Home Services Southern California

540 South Lake Avenue,

Pasadena, CA 91101

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Call: (213) 817-2111

Email: jesamine@realtorjes.com

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©2020 Berkshire Hathaway HomeServices California Properties (BHHSCP) is a member of the franchise system of BHH Affiliates LLC. BHH Affiliates LLC and BHHSCP do not guarantee accuracy of all data including measurements, conditions, and features of property. Information is obtained from various sources and will not be verified by broker or MLS. Buyer is advised to independently verify the accuracy of that information.