Chances are you have at least one regret in your back pocket, a "why didn't I buy back in 2019" moment.
But here's the reality: If you didn't, the only thing you can do is not make the mistake going forward. And rather than rushing out and buying something you can't afford out of desperation, slow down and consider where you're at, where the market is at, and make a plan based off the facts.
To get a better idea of when you should go for it (and when you shouldn't), we talked with an expert at Realtor.com.
In an ideal world, homebuyers should have enough money saved to cover a 20% down payment, an extra 3% to 6% for closing costs, and money left over for things like furniture, home maintenance, and emergency repairs.
That means if you want to buy a $300,000 home, you'll need around $80,000 in the bank ($60,000 for a down payment; $9,000 to $18,000 for closing costs; and extra cash for things like a new couch or an emergency repair).
4.You're already pre-approved for a mortgage and can act fast.
5.Your mortgage payment is less than what you pay for rent. (That said, times are a-changin'.)
6.You're sick of giving money to your landlord and want to build equity.
Every time you pay your rent, you're giving your money to someone else, while every mortgage payment gets you one step closer to complete home ownership. That's why Trapasso notes that "Some people believe [paying rent is] putting money into the hands of a landlord instead of yourself because you’re not building wealth through home equity."
Even in times where interest rates and home costs are high, she says that "Homeownership is the American Dream and has helped millions of Americans build wealth over time."
7.Your credit score is in the low-to-mid-600s (or higher).
8.You plan to be in your home for at least five years.
Signs you should rent:
9.You don't have enough cash to cover the 20% down payment and the closing costs.
If you can't afford a 20% down payment, you'll need to get private mortgage insurance, which increases your monthly cost and will make you pay more money over time. And don't forget to budget money for the closing costs, which Trapasso says "can run from 3% to 6% of the purchase price of the home."
If you're not there yet, keep renting and start saving. "If you’re renting, you may want to move further out if you don’t have to commute to work as much, downsize into a smaller apartment, or even find a roommate to cut down on costs," says Trapasso.
10.Buying a home will make you house poor.
11.Interest rates remain high.
12.You aren't sold on the area and like to move around a lot.
If you're not totally in love with the community or the area, and tend to move around a lot, Trapasso says, "Renting makes a lot more sense than buying. You want to stay in a home for at least five years, traditionally, before selling."
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