IS IT GOOD TO BUY A HOME DURING INFLATION?

If you're a first-time homebuyer, the current post-Covid-19 economy may leave you wondering about your dream of owning a home. Rising house prices and inflation increase the basic cost of living.  Is now really the time to get a mortgage to buy your first home?

According to experts, first-time homebuyers still enjoy some advantages in today's housing marketif they choose to buy.

While getting a mortgage may not make sense for all first-time homebuyers right now, here's how to better understand what's going on in the housing market and tips for getting the most out of your home search despite the inflationary market.

When a first-time homebuyer says that they are unsure about a home loan.  You might ask yourself: “Is your rental fee now falling?”.  This question will give you an estimate of your predictable monthly mortgage payment and help you hedge against rising prices elsewhere in the economy.

Landlords typically have a net worth 40 times greater than a tenant.  When you buy, even if you have to start small steps - this is still a path to your wealth building.

I- How does spending money on your first home help you build wealth?

Every time you make a mortgage payment, you're essentially accumulating a bit of equity in your home, as long as there are no housing problems (legal or home quality). Every month you pay the rent, you just build up your equity.

Your net worth increases as the value of your home increases.  In the current market situation, housing supply is tight and interest rates are low, causing home prices to continue to rise, which adds to your future net worth and resale value.

When it comes to sharing these benefits with first-time homebuyers, however, some remain concerned about their ability to pay their monthly mortgage interest.

If you are in the same situation as above, you can learn about interest rate data from the past time.  From there, you have a basis to consider buying a better home.  Real estate market reports show that house prices in May 2022 were up from a year ago.

Besides, first-time homebuyers also have to think about starting to live somewhere temporarily before they can live where they want to be.  Few of us are lucky enough to buy the home of our dreams on our first outing.  So instead of thinking about getting everything you want right away, now you can prepare step by step with seeking information first. You can work with a reliable broker to achieve a balance between size, price, features and neighborhood area.

II- Is inflation good for mortgages?

Even if you're ready to find an attractive home, you may still worry about interest rates starting to rise: “Will I be able to afford my first home if house prices continue to rise?”

Experts say that although interest rates will rise, mortgage rates will remain at historic lows.  Fixed mortgage rates have increased recently, but are still at a 10-year low.

Lower interest rates mean lower monthly payments and a fixed interest rate that doesn't change over the loan term.

But what does today's interest rate mean for your mortgage's monthly payment? 

III- Is now really the time to get a mortgage to buy your first home?

Even if the interest rate data is one thing that shows the chances of buying your first home in today's stormy housing market, it's not the right decision for all first-time homebuyers.  Here are some criteria you can use to help gauge whether your desire to buy is turning into a wise financial and emotional decision.

1- You might consider buying a home now, if…

- A mortgage payment will be less than the rental fee 

You need to do the math to determine if renting versus buying a home makes sense for your current situation.  A rent versus purchase spreadsheet can help you figure out the numbers.

- You have accumulated an amount to pay in advance

This means you've done your research and know how much you want to invest in buying a home, the types of mortgages you can get and how much has been saved in the bank.

- You prepare yourself for patience

During the complex home sales process, you will probably need to make several negotiating offers before one of your offers is accepted.  Therefore, you need to be mentally prepared to not feel rushed or pressured.  This will save you money from overspending and keep you sane when buying a home.

2- You might consider waiting to buy a home, if…

Renting is still a big deal to consider in your life situation.

If renting can save you money compared to buying a home, consider saving the difference between your rent and your mortgage each month.

Are you under pressure because your down payment amount on your home is low which means high interest rates on your monthly mortgage?  If you want to pay the bank a little more in advance, you're better off building your savings and researching payment assistance programs.

You can use the extra time to improve your financial flow.  Pay off other credit cards and build up your own emergency savings.  These things can help you get a better interest rate on a home loan in the future.

If buying a home and owning a home is stressful at present.

If your personality trait is constantly worrying, losing sleep at night about buying a home in a fast-paced market and then paying that mortgage every month, then you might want to reconsider of making yourself a homeowner at the present time.  However, there is no need to ignore the dream of owning a home, you can take advantage of this time to research information in advance, prepare a methodical plan for buying a home in the future.

IS IT GOOD TO BUY A HOME DURING INFLATION?

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• real estate
• property