I’m tired of my cramped living conditions, my nosy neighbors, and their obnoxious pets. And Covid-19 is making everything exponentially worse, so when do I know the time is right to move on? Should I buy a house in Washington County, Minnesota?
If you’re asking yourself these questions, you’re one of the tens of millions of uncertain homebuyers wondering whether you can pull off a home purchase during this pandemic. Below you’ll find the most important indicators that investors use to determine whether the answer is yes. Read on to discover for yourself whether this year it’s finally the right time for you.
1. What’s Your Credit Score?
Though perfect credit is no longer a requirement for mortgage approval, your odds of receiving approval rise with higher credit scores. With a credit score of at least 680, your odds of a pre-approval for a 2- or 3- bedroom home are high. Even with a 580 credit score, you qualify for a Federal Housing Administration loan with payments as low as 3.5%.
2. Do You Have the Down Payment?
When you’re buying a house, expect a few up-front costs. The costliest is your down payment. If this is your first home, you can find the other most common costs in a first-time buyers guide.
Down payments vary in accordance with your mortgage type.
- 3% to 20% for conventional loans
- 3.5% for 203k loans
- 3.5% for FHA loans
- 15% to 30% for jumbo loans
Only two types of mortgages offer zero down financing. In other words, a 0% down payment. They include VA loans and USDA rural home loans.
3. Can You Pay the Mortgage?
No, the question isn’t, “Will you pay the mortgage?” The question is, “Do you have statements that show you’re financially stable enough to cover the mortgage?” Most banks require at least 2 years of paperwork to back those claims, including a solid 2+ year employment history.
4. But When Should I Buy a House?
Do I buy a house this year? Should I wait till next year? When do I know the time is right?
Well, if made it through the sections above without answering, “no,” you’re on the home stretch. Now you need to answer a few final questions.
Do you plan to move again? Yes, buying a house is cost-effective. But only if you plan to stay for at least 3 years. Otherwise, renting is less expensive.
Are you prepared for repairs? Repairs can cost up to 10% of the price of your home each year if you purchase a fixer-upper. One of the most tips to find affordable homes is to look for used homes that have been built in the last 7 years. Around the 10-year mark, modern homes are more likely to need maintenance.
Are you ready to invest? A house is an investment. As such, you must be prepared both mentally and financially. It takes grit and strategic thinking to come out on top.
Is now the right time to buy a house? If you answered yes to all the above, then your answer is yes!
By now you’ve answered the questions that have been plaguing you, should I buy a house or not? If it’s not the right time, don’t worry. You can re-evaluate your situation for 6 months or a year from now.
If you’re ready to pull the trigger and find the home you’ve always wanted in Cottage Grove or elsewhere in Washington County, MN contact your local realty agent today. So long and good luck!