If you’re planning to buy a house, get ready for an exciting, scary, exhilarating, and anxiety-inducing ride. Buying a home can be the beginning of a wonderful new chapter in your life – or it can be an enormously costly mistake that you regret for many years to come. The best way to make sure it’s the former is by knowing that you are actually and in fact ready to make that big purchase. To help you out, then, we offer these 4 signs you should buy a house this summer in New Jersey.
1. You’re Financially Stable and Have Money in the Bank
One of the most obvious signs that you should buy a house this summer in New Jersey is this: you are financially stable with a stable income and money in the bank. This point has been driven painfully home to many of us by all the uncertainties surrounding COVID-19.
Financial experts now say that you should feel about buying a house only if “your income is secure for at least the next few years.” As important as that is, though, you will need more.
You will also have to “demonstrate a history of stable employment in the past. Lenders will ask to see at least two years of tax returns or pay stubs as proof of income. Lenders also like to see the money you will use for a down payment deposited in a bank account for at least 60 days. It tells them you have the money to finance your mortgage.”
2. You Plan to Stay Put for Several Years
Another sign that you should buy a house in New Jersey this summer involves your long-term plans. Do you, that is, plan to live there for five or more years?
When you buy a house, you are making a long-term investment, so you should be ready to settle in for the long haul. “[t]he median length of homeownership in the U.S. is 13 years and the typical tenure has been going up over the last decade.”
If you don’t plan to live in the area for a few (or several) years, it may not be the time for you to buy a house. You may be ahead financially to rent instead. “You can use a rent vs buy calculator to compare the cost of renting versus the cost of buying a home in your area to see if and when a home purchase is more economical than renting.” Or you can simply consult a New Jersey agent at 855-966-DEAL.
3. You Know How Much You Can Spend on a Home
Also, if you know exactly how much you can afford to spend on a home, then it may be time for you to buy a house. And calculating what you can afford goes well beyond the monthly mortgage payments.
“Knowing how much house you can afford means having a clear idea of not only how large your monthly payments will be, but also closing costs, insurance, and taxes. Compare how your current housing costs relate to a new mortgage payment, whether you’re upgrading to a new home or a renter looking for your first home.”
Most financial experts recommend using the 28/36 rule for determining affordability. This rule states that you should spend no more than 28% of your gross monthly income on your mortgage payment, and what you spend on your total debt should amount to no more than 36% of your monthly gross income.
4. You Want to Get in Before Prices and Interests Increase
Finally, there are some things going on in the real estate market that will help you determine whether you should buy a house this summer in New Jersey. These are the still-rising home prices and interest rates that have been very low but are now going up – and your desire to buy before they climb too high.
“Home values.” according to industry insiders, “are a huge reason to buy a home, especially if you plan to stay long-term. The market is hot and values are high. And with more buyers than there are homes for sale, it seems that they won’t be plummeting anytime soon. . . . These rising home prices are why homeownership is the most powerful wealth-building tool in the country. It’s a reason to buy, not wait.”
In addition, mortgage interest rates recently hit historic lows, but they are beginning to creep upward. And the consensus among industry watchers is that this increase will only continue. So this summer will be a good time to buy while rates are still low and before they go up more. Remember, only a slight increase in your interest rates could cost you thousands more over the life of the loan.
And You Need a Good Agent . . .
Even if all the signs indicate that you should buy a house this summer in New Jersey, there’s one thing you likely still need. And that is an experienced {market_city] agent. With the current low inventory and keen buyer competition, you’ll need a good agent to help get your offer accepted without overpaying. So if you’re ready to buy a house this summer, contact us today at 855-966-DEAL.