Knowing the right time to buy a home is just as important in the process of buying a home as knowing what house you are going to buy, where you are going to buy it and how you are going to buy this home .

Why is the factor "when" so important?

As in most financial projects, timing can be paramount, and double for the installation of a dream house. Pricing, interest rate levels, the month of the year and your personal cash flow situation can all determine the timing of the purchase.

There is also a zen factor in the purchase of a home.

For a prepared home buyer, there is often a vibration in the time of buying a home – conditions such as money and opportunities are optimal, the seller of an attractive property is willing to sell at a good price and the personal life of the buyer (that is to say for example) is in a place where it is time to pull the trigger of a new residence, and not next month, not even next week.

The reality also dictates when to buy a new home. For example, your employer has transferred you to several countries and you start your new job in two weeks. In this scenario, the moment to buy is really the present moment, or you can not have a place to call home for a while.

Let's look closely at the problem "When to buy a house" and analyze the elements that determine the "timing factor" when signing the dotted line of the mortgage mortgage.

The best times to buy a house

Many factors come into play in the question of when to buy a home talk. The following factors are among the most critical and should be evaluated first.

1. At the beginning of the year

The calendar is a good barometer of the best time to buy a house.

In general, prices are cheaper at the end of the year, especially in December. This is mainly due to the fact that stocks available on the market come from owners who must sell and are more willing to negotiate.

This could mean an owner whose business is transferring it to another state, and the owner must act quickly. Or, the owner is short of money and can not afford to wait until the busy spring season.

Here's what to remember in the end-of-year calendar issue: people selling their homes in November and December, in the middle of the holiday season, often sell because they have to. Buyers can take advantage of this scenario and conclude a better deal on the price of a house later in the year.

Waiting for January and February can also play in favor of the buyer.

The data shows that home prices in the United States cost about 8.4% less in the first two months of the year than they are in July and August, in the middle of the summer sales period. This scenario also falls in the "must sell" as opposed to "want to sell" the equation of the home seller.

2. When interest rates are low

In recent years, the Federal Reserve has continued its policy of raising interest rates in order to keep inflation low and the stability of the economy.

By early 2019, interest rates on 30-year fixed mortgages had gone from 4.5% to 5.0%, according to the lending institution. Only two years ago, when interest rates were much lower, homebuyers could purchase a fixed rate mortgage with a term of less than 4% over 30 years.

This disparity is important and here is why.

Consider a $ 300,000 home, purchased with a down payment of $ 60,000, at an interest rate of 5.0% (usually when mortgage rates are in effect at the beginning of 2019.) With a mortgage of 240,000 USD, the average monthly payment on the property would be $ 1,288.37, 360 monthly payments amounted to $ 463,813.88. More importantly, the total interest paid over the life of the loan would be $ 223,813.88.

But what if you can get the same mortgage at an interest rate of 4.0%, as many buyers got it two or three years ago when the rates were lower?

In this case, the monthly mortgage payment would be $ 1,145.80, while the total payment of principal and interest on the 360 ​​month mortgage would be $ 412,486.82. The total interest paid on the loan would be $ 172,486.82, which would represent a total saving of more than $ 50,000 on your mortgage interest payments.

That is why it is important to closely monitor interest rates. All things being equal, and with good credit, a savvy home buyer strikes when rates are low and can save a bundle on the transaction.

3. When your financial situation is optimal

The best time to buy a new home can also be when you have the money, that your credit score is solid and that you do not have a lot of important debts.

This could be the case in several scenarios:

  • You have just finished paying off your student loans and you have extra money for a home.
  • You have just received a big raise or a bonus and you have more money for a good down payment.
  • You have just got married and between two spousal incomes, you have more money to buy a new home.
  • You have just sold your 20-year-old home (for example) and with a lot of cash, you have plenty of money to buy a new home without having to resort to a large mortgage.
  • You have just finished paying your children's school fees and you have more money to buy a house.
  • You have just received a great family heirloom and you have the money to buy a house.
  • Of course, there are no absolutes in the aforementioned cases, the personal financial situation of each being unique.

    However, take-away remains valid: the more money you have, the more it's time to buy a new home without relying too much on a large, high-interest mortgage.

    4. When stocks are high

    Another good time to buy a home is when there are many homes available on the market, and home sellers need to be price competitive to be able to sell their homes and discard them from the market.

    House inventories are generally the heaviest in the spring and summer, when many families put their homes on the market because of the intense pedestrian traffic and because buyers want to move in before Labor Day and prepare their children for the future. 39; school.

    Data show that the highest month for home inventory for sale is May, followed by April and June. The months with the lowest stocks are December, November and January, in that order.

    Again, you may be able to hit a lot during the winter months because homeowners are more likely to have to sell their home. But the data shows that there are more houses on the market and more price competition in the spring and summer.

    5. When the economy is going well

    It is useful to look at key economic indicators such as housing starts and unemployment figures in the United States to determine the best time to buy a home.

    Besides the likely fact that since the economy is doing well, you must be doing well, other factors come into play when you study the economy. This is notably the case of two key indicators:

  • New construction. When the construction of new homes is strong, there are more houses to buy and an abundant supply almost always reduces the pressure on house prices. It's a good time to act if you have the money and are ready to buy a new home.
  • Income and employment figure. When consumer confidence is high, consumer income is on the rise and employment close to peaks, buyers generally have more money to buy a new home and more credit, which translates into a decline in mortgage interest payments. This could be a good time to buy a house too – when you have money.
  • Buy a house when it suits you

    Again, there are no strict rules here, but only the likely (but unsecured) trends, deadlines and trends that, combined, make it a good time to buy a home.

    Take advantage of the factors listed above and see if they do not elicit something deep inside you, a big American home buyer, and see if you can not get a good plan for the house of your dreams.