A lot of Americans dreams of being able to buy a house they can call their own. This remains to be one of the top goals a lot of people have. There is nothing like being able to come home to a place of your own and creating memories with your family. The security that you feel knowing that you have your own house is a truly special feeling.
However, that feeling will have to wait for a lot of people since getting a house is no cakewalk. Home prices are no joke ranging from 6-figures and up. The problem is that not a lot of Americans have this much cash at the time when they want to buy a home. Unless you received a big inheritance or earning 6-figures every month, home purchase remains to be out of reach.
This challenge for consumers is where lenders come in and help. If you want to buy a house but you cannot afford to pay for the full price, lenders can help. They offer mortgage loans that are quite specific and tailor-made for people who want to get a house. The idea is very simple – borrow money from a lender and pay them back in installments with interest.
As simple as that sounds, there are a few things you need to remember before getting a house like the interest rate. USA Today shares that mortgage rates could hover around 3.68% in 2020. They mentioned that this is a big improvement from last year. That being said, it might be a good time to get that first house for your family.
What to consider before you buy a house
There are a lot of financial considerations you have to look at before you buy your first house. However, there are also non-monetary factors you need to think about before plunging into a new role as homeowners.
The house that you need
It might surprise you to know that buying a house has a lot to do in the beginning in finding that middle line between what you want and what you actually need. You might have an idea of the type of house you want but as time goes by, your needs, lifestyle, and even certain situations in life could change what you actually need.
When you were younger, your ideal house could be a big one with many rooms and a sprawling garden at the back for social events. You can imagine your family and children growing up in a nice community where you invite your neighbors for weekend bbq and get together. Having a pool might also be part of that dream home where you see your children and their friends having the time of their lives.
This, however, might not be applicable to what you need at present since there could have been a lot of changes from the time you dreamed of your own house. The market could be different, your personal situation could have changed as well. This is why you need to make sure that the house you are buying leans more on what you need rather than want.
Your career path
If you are looking to buy a house, you also need to consider your career and the path you want to take with it. As soon as you graduate, the first thing on your list is to look for a job in the industry you have chosen. Some might go into putting up a business of their own and that is fine. The challenge for a lot of fresh graduates is that they have a lot of student loans that they need to start earning as quickly as possible.
Now that you have a career path, this is is something you need to put in the equation of house hunting. The main reason for this is that buying a house is seen as a long-term decision. You are tied down to a specific address for a good part of your life. As you pay down the mortgage and connect with your community, you are in that location for a good number of years.
The challenge starts when your career constantly requires you to work in different areas of the country for extended periods of time. There might even be instances when you would be asked to spend months in a different country. It is also possible that the industry you want to pursue is in another state. If you have already bought a house, this could prevent you from moving around too much. This is why you need to factor in your career path when looking for a house.
Future family plans
If you want to buy a house, another important factor to consider is your plans for the future, especially about family. Marriage and having children can have a significant change in the way you see your future activities. Even as Pew Research shares that marriage has declined and divorce has gone up, you still need to look into the future. What you decide on now might not be relevant tomorrow when you start building and having a family of your own.
You might be planning to have a big family in the future but the house you bought is so small and might not fit everyone comfortably. It could also be the other way around where you bought a big house but end up not wanting kids after all. You need to have a firm plan for the future before deciding if you will buy that house or not.
Benefits of low mortgage rates
There are indeed a few reasons why this is a good time to buy a home for you and your family. The low-interest rates will give you the chance to lock in that rate until you pay off your loan. This can mean big savings over the life of the loan. If you get a fixed-rate loan, your rate will not change even if the market rate goes up.
If you already have a mortgage loan, refinancing your current one might be a good idea to do this year. That is if your current rate is a lot higher than what you can get now. You could get huge savings on your monthly mortgage payments. Keep in mind though that there could be upfront costs when you refinance so factor that in as well.
Challenges in the market
Just as there are benefits of a low-interest rate when you decide to buy a house, there are also a few things to look out for. One is that home prices might go up for a few reasons. The influx of people looking for a house because of the low rates could drive the supply up. The simple economics of supply and demand comes into play.
There are also a number of people who might not be too keen on moving especially if they were able to get their homes at a much lower rate prior to the recession. This could further drive the supply low and home prices up. It might be challenging to find the house that you want and at a price that you can afford even at a low rate.
There is no denying the fact that low-interest rates make this year a good time to buy a house and save money along the way. Just remember that there are a few challenges ahead of you and it is important to plan ahead of this big purchase as well.