The Questions To Ask Before Buying A House In The Real Estate Property Market

The housing market in most of this country has been highly competitive for quite some time. There are way more people looking to buy a new home than those looking to sell. Many buyers and sellers find themselves in situations with multiple offers and homes selling for seemingly unbelievable prices. This has left many would-be homebuyers wondering if now is a good time to be buying a house. Keep reading for six questions to ask yourself before jumping into the real estate market.

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Am I Willing to Live Here For At Least Five Years?

Are you willing and able to live in the house for at least five years? Extra credit if you can handle five years here. Having a house that meets your needs and is in a location you like will make owning a home much more palatable when inevitable home repairs come up or if house prices drop.

Under normal circumstances (we are not in a normal housing market at the moment), it will usually take a few years to recoup the cost of buying and selling a home. So, the longer your time frame, the greater your odds of making money if or when you decide to sell your home.

Will My Cost of Housing Be Less Than 28% Of My Gross Income?

For most people, spending more than 28% of gross income on housing will leave you house poor. There are exceptions. For example, someone buying a duplex or multi-unit property or having a roommate could help make homeownership more affordable. Also, in many scenarios, the self-employed appear much poorer on a mortgage application than in real life.

Your mortgage broker can likely get you a mortgage at 43% of your gross income, but that won’t leave much money to enjoy life or even do things like eating after taxes.

Explore Florida Homes with Pools

Florida offers an array of homes with enticing pool features. If you’re exploring the possibility of buying a house, take a moment to check out these Florida properties with pools. A pool not only enhances the aesthetics of a property but also adds significant value. Beyond the financial aspect, it transforms your backyard into a personal oasis, providing both relaxation and entertainment.

As you explore these options, ensure they align with your broader considerations before entering the real estate market. Reflect on your willingness to commit to the property for an extended period, considering both your current and future needs. Evaluate how a pool fits into your lifestyle and whether it complements your vision for a dream home.

Financial readiness is crucial, so assess your ability to make a 20% down payment, especially in a market where such factors can impact the competitiveness of your offer. Additionally, consider the responsibilities associated with pool ownership, from maintenance to potential fluctuations in property value.

Beyond the initial allure, factor in the responsibilities associated with pool ownership, from maintenance to potential fluctuations in property value. While these Florida properties with pools present exciting opportunities, a well-informed approach ensures that your decision aligns with your aspirations, turning your real estate venture into a source of joy for years to come.

Can You Afford a 20% Down Payment?

I’m not saying you have to put 20% down but having the ability to do so shows that you are likely in a position to afford to own a home. Side note, in the current market, the larger your down payment, the more competitive your offer will be (assuming many of you are buying a home with multiple offers).

Can You Handle the Value of Your Home Going Down?

I purchased my first home way back in 2007, right before the worst of the financial crisis. My house was likely underwater (worth less than I paid) for a good five years. While it wasn’t fun, I liked where I lived and was able to weather the storm. On a happier side note, my mortgage is less than half what it was when I purchased the home, thanks to lower interest rates.

Honestly, I wasn’t happy to see my house value decline, but there wasn’t much I could do about it at the time. Thankfully, I kept the house, and it is now worth more than double what I originally paid for it.

Do You Need to Buy a House Now?

Depending on your situation, now may be a perfect time. For others, buying now may be a terrible decision. In many real estate markets, the supply of houses for sale is far outstripped by demand. You may be buying at relatively high values, but on the flip side, I would expect mortgage rates to be higher in 5 years than they are today.

While I know being patient isn’t fun, don’t rush out and get in a bidding war for a house you aren’t sure you want. However, if your dream home comes on the market and you can afford it, don’t lose out on it just because you aren’t getting it for a dream price.

How Much Work Will the House Need?

Home prices are up, and so is the cost of remodeling your home. The supply chain issues make it harder to get items, and all the best contractors are busy. Just be cautious before you take on a house with a larger project than you can handle or that your budget can bear. The prices you see on HGTV to redo a home are likely far less than you will find in the real world.

As a fiduciary financial planner, I think owning a home is a smart long-term financial move. There are better ways (in my opinion) to build wealth, so not owning a home doesn’t mean you can’t be building wealth over time.