If you’re thinking of buying a home in 2023, you’re probably wondering whether you should do it now or wait for 2024. Even though the heat is coming off the housing market, you shouldn’t take the decision to purchase a new house lightly.
Here are some key factors to consider while you’re weighing out your options and deciding whether you should move on with your purchase. Let’s dive in.
Review your credit score
One of the vital things to consider is your credit score. Make sure you first review your credit report and credit score to ensure you’re a suitable home buyer. Ideally, your credit score should be over 740, but now you may want to consider if you need to get it up to 760 or even 780+ to get the best interest rate. This will improve your chances of loan approval and ensure the best deal on your mortgage.
Make sure you have enough for a down payment AND closing costs
Another critical thing you should consider is that you saved a fair amount of money for a down payment. 3-3.5% is typically (unless you are using a VA loan) is the minimum down payment needed. Be careful to think this is the only money you need to close on a home. You’ll also need to come up with some closing costs (lender fees, underwriting, prepayments etc). These costs could easily be 1.5-2% of your loan value. Being ready for the initial up front costs is important.
Consider your plans for the future
Something you should consider before you make the jump into the real estate market is your plans for the future. Are you planning on settling down or moving again soon? I used to tell buyers to have a minimum 3 years where they will stay in the home or own the home (turn it into a rental). In today’s market, you should expect to own the home for at least 5 years to make it through any type of slowdown/down market.
Consider the inventory in your area
If the inventory in your area is on the rise more than seasonally expected, then it’d be best for you to wait it out and buy a house later. Stay up to date with the situation on the market in your area to make sure you make the right call.
Understand your financial situation
Whether you should buy a house now or wait until next year mostly depends on your financial situation. If you don’t feel financially ready to purchase a home, reach out to an expert to understand the ins and outs of buying. Educate yourself completely, you may be surprised.
Take some time to get your finances in order, improve your credit score, get that raise at work, and qualify for the best possible loan. That’s how you’ll be able to navigate this process more comfortably and eventually find your dream home.
Consider your local market carefully
A critical factor to consider is your local market. While the overall real estate market in the USA moves somewhat similarly, every market is very different. During the Great Recession, Fort Collins did pretty well comparatively. Make sure that you understand the economics, population growth/contraction and overall real estate market of each market you’re considering.
Find a reliable real estate expert
In today’s housing market, a reliable real estate agent makes all the difference. Make sure you find someone trustworthy who knows their craft and has enough experience to guide you through the house-buying process.
Let’s face it, buying a house is a huge step and an important decision. So, regardless of the state of the market, you shouldn’t rush it. Whether you should do it now or wait depends on many different factors. Look at your credit score and financial situation, consider your local market and inventory. Take your time, weigh out your options, and make sure you make a well-informed decision.
If you need any help along the way, we’ve got your back! We can guide you through this overwhelming process and advise you depending on your situation. We’re a team of passionate and professional real estate agents focused on helping home buyers find their dream homes. Northern Colorado real estate is our life, and we’d be happy to help you with all your real estate needs here!