by Maurie Backman | April 16, 2021
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More homes may hit the market soon, but should you plan to buy?
There's a reason buyers have been struggling to purchase homes this year -- housing inventory has sat at a record low. At the end of February, there were just 1.03 million homes for sale -- a whopping 29.5% drop from a year prior.
But there may be better news on the horizon. Now that spring is here, we could see an uptick in listings as more sellers decide to put their homes on the market. After all, spring has historically been the strongest season for property listings. But does that mean you should plan to buy a home this spring?
Because mortgage rates are still pretty competitive, you may be motivated to try to buy a home in the coming months, especially if inventory opens up. But before you make that call, here are a few important questions to ask yourself.
Unless you're sitting on a giant pile of cash, you'll need a mortgage to buy a home. But lenders have been tightening their requirements to get a home loan, so you'll need to make sure you're a strong candidate before applying. That means having a good credit score, a low level of existing debt, and a stable job.
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You may be shocked to learn that today's home prices are a lot higher than they were a year ago. In fact, neighborhoods you once may have been able to afford may now be completely out of your price range.
Before you decide whether to buy a home this spring, crunch some numbers with a mortgage calculator. Look to see how much house you can afford based on your income and the funds you have available for a down payment. Then, compare that number to what homes in your ideal neighborhood are going for. You may discover that now's not a good time to break into the market due to where home prices are at.
You may have a steady paycheck today, but are you confident that you'll stay fully employed for the rest of the year? While things have improved with the U.S. economy, hundreds of thousands of new jobless claims are still coming in each week as additional workers lose their jobs. If your company's finances have taken a hit during the pandemic, or you're in an industry that's been impacted by pandemic-related restrictions, like hospitality, then you may want to hold off on buying a home. If you end up one of the millions of Americans dealing with income loss, a new mortgage can make your financial situation worse.
It's too soon to know whether this spring will produce the inventory boom that usually comes around this time of the year. But even if housing inventory does pick up, that doesn't necessarily mean it's a good time for you to buy a home. Consider the above questions carefully before diving in so you don't make a decision you regret.
If you think you are ready, check out our guide on how to buy a house to help prepare you for the home buying process.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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