Every time you look at real estate headlines these days, you see that housing prices have dropped a little more. Interest rates have been going down, too, making houses cheaper than they have been in a long time.
Of course, cheap is a relative term: it’s become harder for many prospective home owners to get a mortgage. But if your credit is good and your income/job situation seems stable, you might just be considering buying a house.
There are a few factors worth considering before making the leap, though. The eight tips below will give you a head start on making the decision.
1. Depending on your area, you might be looking at a fixer-upper with the amount of money a mortgage will give you. Are you able to handle the repair work or afford to have it done for you?
2. How long are you planning to stay in this particular house? If you expect that you will need to move, buy a larger house, or otherwise sell in less than five years, you may want to wait; even if prices stop dropping, you can lose money on the sale because you won’t build up any equity.
3. Exactly what do you want in a home? You’re in a buyer’s market right now; you can afford to be choosy about the qualities of your home.
4. Are you willing to look at opportunities other than buying a home outright? While renting-to-own remains common, there are plenty of other opportunities as both individual sellers and lenders look to sell properties due to foreclosure. If you’re willing to take over a mortgage or pick up a foreclosure, you can grab a real deal.
5. How close to bottom do you think your local housing market has reached? No one is entirely sure when housing prices will stop dropping, and buying when they’re still on the way down can put you in the uncomfortable position of owing more on your home than it’s worth — a position that a lot of home owners are already in.
6. Will your short-term savings be enough to cover your closing costs, necessary repairs, moving expenses and all the other costs that go along with purchasing a home? If not, can you find the funds elsewhere? It’s worthwhile to have those funds lined up long before you decide on a house so that you can afford to move quickly when you find the right property.
7. Will your long-term savings be enough to cover the mortgage/utilities and other living expenses for up to six months if you were to lose your job? There are few things worse for your financial situation and credit score than buying a home and getting behind on your payments (or at worst, face foreclosure) because you unexpectedly lose your job and have difficulty finding another one.
8. What homeowners’ programs and perks do you qualify for? There are tax breaks, special loans and more for certain categories of buyers — find out if you qualify for any before you go house-shopping. It will give you a chance at a wider variety of homes.