Should You Buy a Home Now or Wait?

Should you buy a home now or wait?  With the current buyer's market, low interest rate and the $8,000 tax incentive, almost every Realtor will tell you right now is a great time to buy.  What they might not add is --- provided you are ready. 

A lender may also tell you they can qualify you a loan, but that in itself does not make you ready.  Being ready means you have enough money saved for a down payment,  have reviewed your credit, debts and assets and have enough reserves:

Before you start looking at properties, consider the following:

Down Payment:  Even if you qualify for down payment assistance, you should still have money saved because there is always the possibility that the program may run out of funds before you close.  You might also decide to live in a different area that no longer qualifies for assistance.  How much of a down payment is required will depend on your credit score and the type of loan you qualify for.  I will talk about the different types of loans available and the qualifying criterias in a future blog.

Credits & Debts:  Do you know what your credit score is?  Do you know how much debts you currently have?  Do you have a budget? Do you know what your current monthly expenses are?  Do you need to work on reducing some of those expenses to bring your debt to income to a more comfortable level? 

Reservers:  While a lender may tell you that reserves are not required for your loan, it is important for you to have reserves in case of an emergency or unexpected expenses.  How much reserves you need will depend on your current situation,  If your debt to income ratio is low, then a mimum of three months of expenses is fine.  On the other hand, if your debt to income is high then I would recommend a larger reserve.

Being ready does not simply mean being able to qualify for a loan.  We all  have seen the effects of this with the recent mortgage mess.  Ultimately the answer to the question of  should you buy a home now or wait, really depends on your existing financial situation.