Buying a home is one of the most exciting and nerveracking decisions most people will make in their lifetime. It is also likely to be the single largest purchase most people will ever make.
With all the stress of buying a home, it’s no wonder you’re questioning when is the best time to buy a home. There are many factors to look at when answering that question, and it varies widely from situation to situation.
Time of Year
The time of year actually does have a rather interesting effect on how much you’ll likely end up paying for your home. The top key influencer here is the classic principle of supply and demand.
As soon as the flower buds start popping – realtors, buyers, and sellers all come out of hibernation and the deals start flying. Spring is the worst time of year to try to get a good deal, but one of the best times if finding the perfect home is more of a priority. This is because the selection of homes (supply) dramatically increases.
The best time of year to get a great deal on homes is in winter. Many real estate professionals consider the holiday season excellent because there are fewer buyers, and sellers tend to feel much more generous.
Winter was found to be the best season to get great a value. The National Association of Realtors found that the average sales price of existing homes over the last 5 years drops 15 percent in the winter months compared to the spike in the summer months.
A lot of people fear the D-word and that’s because many lenders require a downpayment of 20 percent. If you can’t muster that kind of money you have two options.
First, give up your home buying dreams. Or second, and much more inviting, is finding a government sponsored loan program. The FHA loan program allows you to put down as little as 3.5 percent and the VA loan program doesn’t require any down payment! You can talk with your loan specialist and they’ll be able to help find the best program for you.
One of the first things a lender will look at in order to evaluate your eligibility, is your credit score. You will be required to have a minimum credit score depending on what lender and what loan program you use.
The lender will also look at your credit report to make sure it doesn’t raise any red flags.
Obviously each loan program is different, but there are some fairly universal red flags. Most programs will not allow a bankruptcy within the last 2-5 years. However the VA and FHA loan programs will look at some extenuating circumstances when it comes to considering bankruptcy and foreclosures. Most loan programs don’t like to see any 30 day late payments with the last 12 months. Collections and judgements usually need to show as paid in full and will require a letter of explanation for the circumstances around the collection.
There are many more factors to consider when deciding when to buy a home, but with the help of your loan specialist and your realtor, you should be able to decide when and what works best for you.