For those that have a near-term goal of buying a home, choosing whether to buy in 2020 or 2021 is a big decision. There are a variety of factors to consider when determining whether now is the right time to buy or if you should wait a year.
The Direction of Interest Rates
One factor that you should think about when choosing when to buy a home is the direction of interest rates. At the start of 2020, mortgage rates were near their all-time low point.
At the same time, there is plenty of reason to believe that they could increase in the future. Those that wait into 2021 to buy a home may have to take on a loan with a higher interest rate. This can have a dramatic impact on your affordability and long-term interest costs.
Access to Down Payment
When you are trying to determine whether you should wait to buy a home or buy one now, you should think about whether or not you have access to a down payment.
Those that do not have a full 20% down payment will have to pay private mortgage insurance and the further you are from the full amount, the higher your PMI will be.
If you do not have a down payment today, but think that you will in the next year, it may be advisable to wait to avoid this cost in the future.
Housing Supply
Once you choose a home to buy, you will be making a big decision that will impact your life for a long time. Because of this, it makes sense to wait to buy a home until you find one that you can afford and what you truly love.
For example, if you are looking for a home in Arizona, a real estate agent in Scottsdale AZ could help you to find a home that works for you and meets all of your needs.
Credit Repairs
Finally, you should pull your credit report to determine whether you are in a good financial position to buy a home. If you have a clean credit report and history, you likely have an attractive score.
If you have some late payments, inaccurate information on your report, or high credit report balances, your score will be quite a bit lower.
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If you are willing to wait a year to buy your home, you will have time to improve your score. This will then allow you to qualify for a better overall interest rate, which will help you to save money.
Buying a home is always a big decision and one that should come with a lot of thought. When you are trying to buy now or later, it is important to carefully consider all the important factors. This could help you to organize your thoughts and make the best decision for your situation.
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