By Joseph Bock
Whether you’re single or married, have a family or no kids, young or old, there are several factors to consider when to buy a new home in the North Huntingdon-Irwin and Pittsburgh areas.
Evaluate Your Current Financial Status
Before you decide to purchase a home, evaluate your personal situation carefully. Make sure you're buying a new home that is the right time for you. Take these personal key factors into consideration before you buy a home:
- Credit score: check your FICO score. If it’s above 760, you can get a better mortgage rate than a borrower with a FICO score under 760. If your score is low, you may want to wait until you can raise it. You can keep your FICO score high by reducing your debt you owe and make on-time payments.
- Your income: can you afford the down payment and monthly mortgage payments, property tax, utility costs, and home insurance — in addition to potential repairs and maintenance? Most experts suggest to keep your overall housing costs to 30% of your income or less. If you cannot afford this, you may want to wait until your income increases or consider moving into a community with lower housing prices.
- Length of stay: do you plan to stay in that new home for awhile? A good rule of thumb is to stay at least five years to recoup your initial costs. By this time, your home would have (hopefully) appreciated in value where you could cover the cost of a sale (closing costs, taxes, moving costs, real estate agent commission, etc.).
Wait Until the Holidays
The cost of a new home tends to be more affordable towards the end of the year, especially around the holidays in November and December. Houses on the market at this time typically indicate that the homeowner has to sell and may be more amenable to negotiate a price.
Keep in mind that because the owner has to sell at this time, this doesn’t mean there are any issues with the home. It could simply mean that the owner is being transferred to a new job out of state or may be downsizing and wants to purchase a new home as well.
Buy a House During the Busy Season
On the contrary, if you purchase a new home during the traditional busy season in the Pittsburgh housing market, from late spring to September, there are more homes to choose from. The prices will be higher, of course, but you will most certainly be guaranteed to find a better selection.
Keep an Eye on Low Interest Rates
Depending on which lender you are considering, 30-year fixed mortgage interest rates rose to between 4.5% and 5.0% earlier in the year. But if you purchased a home in 2017, you were able to get a 30-year fixed-rate mortgage for under 4%.
What does this mean?
If you purchase a $300,000 home today and paid $60,000 for a down payment, with an interest rate of roughly 5%, your monthly payments would be $1,288.37. Over 360 monthly payments, this amounts to $463,813.88. Total interest paid over the entire course of the loan would be $223,813.88.
Two years ago, if you borrowed the same amount when the interest rates hovered at about 4%, your monthly mortgage payment would have been $1,145.80, while the total mortgage would be $412,486.82. The total interest you’re paying over the course of the loan would be $172,486.82.
That’s a total savings of over $50,000. If you can wait until the interest rates are lower, you can save yourself a lot of money.
Protect Your Home With Homeowners Insurance
Finally, remember, after closing on your new home, be sure to protect yourself and your new house with affordable home insurance. Contact us today to learn how Bock Agency can help with your homeowners policy. We offer home insurance tailored to your needs in North Huntingdon, Pennsylvania including the Greensburg, Irwin, N. Huntingdon, Pittsburgh, and Trafford areas. Request a homeowners insurance quote today.