Is now a good time to buy a house? Depending on who you ask, you may hear a few different answers. Here are our thoughts
Now is a Good Time to Buy a House: Mortgage Rates are Low
As you would already know, mortgage rates are incredibly low right now. This essentially means that any home you purchase is on sale.
For example, let’s say you’re thinking about buying a $300,000 house. You’ve been saving up for a long time and already have the 20% down payment you need. If you’d bought a few years ago, maybe you would’ve received an interest rate of around 4.5%. At that rate, your $240,000 mortgage would cost you about $1,216* per month.
But what if you bought a home now and got an interest rate of 3.5%? Now your monthly payment is about $1,078*. That means you’re saving $138 per month, or about 11.3% on your monthly payment. Who doesn’t like saving money?
You have a lot of options on what you can do with that money:
- Put it into an emergency savings account
- Pay off your mortgage principal faster
- Invest into a retirement account
- Use for a great vacation
This is why we recommend now as a great time to buy.
*Excludes monthly Property Tax and Insurance Payments
Now is a Good Time to Buy Due to Job Insecurity
That title may sound weird, but we promise it makes sense.
Imagine someone, maybe they had a small business in the corporate event industry, that is really struggling right now. Their industry has tanked due to COVID-19. People aren’t having big corporate events or parties, so they are out of work.
What have they been doing for the last 6 months? Probably living off savings or credit cards. They can’t do that forever, so they’ll need to find a way to either make money, lower expenses or both.
Selling their house is a way for them to do both.
This is something they need to do at this point. They feel like they’re at the end of their rope and need to get out from under their mortgage. So they put their home up for sale.
Here’s where you come in. You’re able to get a great deal on the house because they need to sell. They’re willing to negotiate with you because they know they need to sell.
You get a great deal on a house. They get some room to breathe now that they don’t have a mortgage anymore. Win-win.
That said, let’s take a look at one reason why it may not be a good time to buy.
Why it’s Not a Good Time to Buy a House: School is in Session
Now that Labor Day has passed, most of the United States school systems are back in session. That means families are hunkered down for at least the next few months. They don’t want to uproot their kids and make them move in the middle of a school semester.
That means fewer homes are on the market right now. You may struggle to find your dream home, especially if you have specific needs such as wanting to be in a particular part of town.
Is it a good time to buy a house? It depends on your situation, but for many people we do recommend exploring it. For some personalized advice, give us a call at (562) 924-7884 and we’ll see how we can help.
On a Conventional 30-year Fixed rate purchase with loan amount $489,000 (at 95% LTV i.e. 5% down payment from borrower) at an interest rate of 3.375% with 0 % discount point (Annual Percentage Rate – 3.5918%), you will be required to make 360 equal monthly payment of $1652.67 (which includes principal and interest only, so your actual payment will be higher).