When is the best time to buy a house?
As a real estate investor for over 20 years, I have bought houses through many cycles. I bought houses when interest rates were in the 7s in the early 2000s. I bought a house with a 2.3% interest rate.
I bought houses before the 2008 housing market collapsed. I bought houses before the COVID housing scarcity pandemic. I sold houses after houses went up 40% between 2019-2023. I’ve been through the cycles. I’ve seen it all. I experienced it.
I know what it’s like when my net worth drops 40% in a year. I know what it’s like when my net worth increases 40% in a year.
So I want to address the questions I’ve been asked so many time in the last 24 years. All of the questions are around: when is the best time to buy a house?
- The news says house prices are going up, should I buy a house?
- I hear house prices will decrease, should I buy a house?
- I think interest rates will go up, should I buy a house now or later.
- I hear interest rates will decrease. Should I buy a house now or later.
So let’s get into figuring out when is the best time to buy a house.
Table of Contents
Should I Buy a House When Interest Rates Are Increasing? Should I Buy A House When Interest Rates Are Decreasing?
When should I buy a house? Should you be worried about rising mortgage interest rates right now? When rates decrease, should buyers wait until they are lower?
Should buyers feel a sense of urgency to lock in a rate and purchase sooner versus later?
Buying a house is a big decision. Don’t worry about timing the market. It only leads to regret or luck.
When the time is right for you to buy a house, buy one.
Don’t let headlines influence when you buy a house.
Instead, buy a house when you can easily afford the payments for the life of the mortgage, regardless of interest rate and house price.
I am Anxious About Whether To Buy Now, Or Later
There is no reason to panic. Emotion should be taken out of buying a house. It’s a math problem. Shop for houses when you are ready.
Plus, with so many people getting divorced and houses being left to heirs, there are always opportunities to buy a house at a discount.
How To Get A Lower Mortgage Interest Rate And Pay Less When Buying A Home
The one thing no one tells you about when getting a mortgage is the word mortgage translates in Latin to “until death.” But it doesn’t need to!
Mortgage brokers and real estate agents are incented to get you the largest loan possible. Don’t let that happen.
Plus, on a shorter mortgage, you can do a lesser downpayment and take on PMI because you will build equity so quickly the PMI will go away within a couple of years.
On the house we live in, instead of a large downpayment, I paid a lot of points. In 2 years the PMI was gone and the lower interest rate quickly paid down the principal. I even had the seller contribute towards me paying points.
Keep Interest Rates In Perspective
Historically speaking, rate are still much lower than they were in years/decades past, but financing a home is still relatively affordable.
In the year 2000, I was a mortgage broker. Clients were excited that we could refinance their rates from 10-12% to 7-9%.
Recently mortgage interest rates were priced less than inflation. That isn’t sustainable.
When should you buy a house? When can you afford a shorter mortgage?
I am 42 and have paid off 8 houses. The trick? Buy a house you can afford on a 15-year mortgage.
Don’t buy the most house you are approved for, instead, buy a house that makes you happy because you aren’t holding the mortgage for the rest of your life.
So When Is The Best Time To Buy a House?
I am beating a dead horse hear, but I am doing it on purpose. The best time to buy a house is when you are ready to and when you can afford it. People get so hung up on interest rates and house prices. Both go up and down.
The experts can’t predict when or in what direction they go, but fake gurus seem to think they can. Buy a house that you can afford.
Owning a home is a long-term purchase. It spans many cycles. Betting on interest rates or house prices is solely focused on the short term.
If you care about the short term, then rent. If you care about the long term, buy. Buying a house is a long-term commitment.
When To Buy A House: When You Are Ready
The path to successful real estate investment doesn’t involve attempting to time the market or succumbing to emotion-driven decisions.
Rather, it’s about understanding the math, being aware of unique opportunities like divorces and inheritances, and always aiming to make financially sustainable choices.
Remember, when interest rates are low, this may not always be the case.
Above all, it’s crucial to buy a house that not only fits within your budget but also makes you happy.
After all, a home is more than just an investment; it’s a place where you create lifelong memories.