After you save up enough money to buy a house, it’s easy to rush out and start looking. But don’t be so hasty. Choosing the right timing can help you get the best deal on a home. Since this is probably one of the largest investments you’ll make in your lifetime, it’s worth knowing the right timing to save the most money.
Buy When Other Buyers Don’t Buy
Spring and summer are the most common times to buy a house. This is when the market is ‘hopping’ and sellers have their pick of bidders. Buyers typically pay more for a house during this time because sellers can choose the highest bidder. In fact, many bidding wars start during this season, as buyers will do what they have to do get the house they want.
If you wait until fall or even winter, you may have your pick of houses and pay less for them. Sellers often ask as much as 8% less during the ‘slow season’ especially if they are in a rush to sell the home. Not only will you pay less for a home, you’ll also have less competition, which can mean lower stress levels.
Know Your Market
Because seasons vary throughout the country, each area has a ‘busy’ season and a ‘slow’ season. Talk with a local realtor about the best time to buy a home in your area. For example, if you live in a state with moderate temperatures year-round, there may not be a ‘slow’ season based on the weather. But, typically, any area has a slowdown during the holidays, as people are pre-occupied with family gatherings and traditions rather than buying a home.
The home’s area also plays a role in the best time to buy a home. An area hit hard with declining values, for example, may have many foreclosed homes that you can pick up for a much lower price. This could happen during any time of the year – you just need to be in tune with what’s going on in the market to determine the best time to buy a home in that area.
What do you Need?
Your needs determine the best time to buy a home as well. First-time home buyers typically get the best deals in January. By this point, sellers typically will do anything to get their home off their hands. First-time homebuyers often find the best deals during this time. But because it can take some time to find a home, we recommend starting the process in November or earlier to find the perfect home.
If you already own a home, but have specific reasons for moving, you may need to buy a home during even the peak season. In fact, if you are looking for something specific, searching during May or June will yield the best results as it’s the most popular time for sellers to list their homes.
What are Interest Rates?
If you need to borrow money to buy a home, the mortgage interest rates also play a factor. Even if you get a great deal on a home, a high interest rate can make it expensive to buy the home. Wait until the interest rates fall low enough to make the mortgage affordable.
If interest rates are low, but you don’t qualify for the lowest rates available today, you may want to wait until you fix your financial situation. Is your credit score high enough to get you a great interest rate? Do you have enough money saved for a down payment? Is your income consistent? Lenders look at all of these factors when qualifying you for a loan. Even if you qualify for a loan, but it’s not one with a great rate, it may pay to fix the situation and apply again to get a lower interest rate.
The best time to buy a home is when all of the pieces of the puzzle come together for you. Generally, fall and winter months provide the lowest sales prices, but they also offer the lowest inventory. If you need something specific, you may have to bite the bullet and pay a little more for a home during the spring months. But you must have your financial life in order before you buy a home if you want the lowest interest rate possible at the time, making home ownership as affordable as possible.Click to See the Latest Mortgage Rates»