With market volatility raging on throughout the month of May and inflation showing no signs of slowing down, it may seem like a poor choice to purchase a home during these times – but that’s not true.
Timing the housing market and waiting for the perfect moment to buy your next home or property can be a very tedious exercise in futility. Sometimes you need to buy a home in the current economic climate – whatever climate that may be.
But as the United States faces an inflation rate that currently sits at 8.1% after reaching a 41-year high of 8.4 percent in March, here are the five best tips for buying a home during this time:
1 – TAKE STEPS TO IMPROVE YOUR FINANCIAL WELL-BEING
Higher inflation translates into higher interest rates. Staying on top of your credit report ensures that you stay above that all-important credit score of 740 that allows you to access the best mortgage rates.
Think about the feasibility of setting aside more money for your down payment. One of the single best ways to protect against inflation when purchasing a home is to increase the size of the down payment – after all, the more you have invested initially the less you’ll have to pay off.
2 – ADJUST YOUR BUDGET
The market can change on a whim – and luckily, your budget can as well if you’re savvy enough.
With the looming higher rate in the back of your mind, determine what your absolute maximum monthly mortgage payment will be – and work backwards from there. With a solid ceiling to work with, you now know which homes are just not financially possible at this time.
3 – BE FLEXIBLE WITH YOUR MORTGAGE
A 30-year mortgage isn’t the best mortgage for everybody, which is why looking at other mortgage options could be extremely beneficial.
If you’re not planning on keeping the home for an extended period of time, an adjustable-rate mortgage could save you a lot of money. Although the rates for these mortgages can vary based on market conditions, their rates during the first few years of the loan period are traditionally very low – and that’s exactly where you can save money.
4 – CONSIDER CASTING A WIDER NET
Tighter financial times should open your eyes – not close them – to homes you may have not previously considered. Whether it’s house hunting at a lower price range, different neighborhoods, or even being open to different styles of homes, casting a wider net during your home search will only make things easier in addition to lightening the financial burden.
If casting a wider net isn’t your cup of tea, the inverse of this tip works as well. Eliminating higher-priced homes in your search, or homes that need a lot of capital invested (such as the fixer-upper of your dreams that would require a lot of renovation) also helps alleviate financial stress.
5 – DON’T BE AFRAID TO PULL THE TRIGGER NOW ON BUYING
With the extreme volatility currently flowing through the U.S. economy, you can argue that every day you wait to buy your home is risking further inflation and devaluing of your money. Remember: rent rates are going up just as much as mortgage rates, so if you want to get ahead of potentially even more turbulent inflation, don’t be afraid to move quick and jump on the home that you could see yourself living in for years to come.
Your wallet will thank you for it later.
Trading Economics – https://tradingeconomics.com/united-states/inflation-cpi
Money.com – https://money.com/tips-buying-house-when-high-inflation/
This article is intended to be accurate, but the information is not guaranteed. Please reach out to us directly if you have any specific real estate or mortgage questions or would like help from a local professional. The article was provided by Sparkling Marketing, Inc. with information from resources like CNBC, Money.com, Mortgage News Daily,Trading Economics