The 2023 real estate market is eclipsed by higher interest rates, strong home values and swirling fears over economic uncertainty. Savvy consumers watching national trends and headlines question if it’s time to buy…or time to wait. Here are 4 questions to ask to help you decipher if 2023 is your year. Personal circumstances drive property purchases. A buyer may want to break free from their cramped living quarters, downsize or relocate. While no real estate advisor can dictate your reasons for buying, they can put a dollar-and-cents value that crush or confirm future plans. For example, the idea of buying a home to pick paint colors, drive some nails in the wall or get a back yard for your pup to run wild sounds appealing to many renters. But take the time to assess your current housing expenses compared to prospective ones. If you find that your expenses soar to 40% or more of your gross income, whereas your rental is 25% or less, you may be better off renting another year or two. However, if a path towards purchasing presents itself where your expenses can be at or below one third of your gross income, it may be your year. The need to downsize, upsize or move for a job are life circumstances that can’t be reasoned away by overly generalized market commentary. In fact, these are the very reasons there is always a buy-and-sell market. If your legitimate reasons don't negatively impact your budget, 2023 may be the year of the move. Bottom line: The only way to know if buying property makes sense this year is to know your reasons for purchasing and run them against the numbers. Currently, there are excellent first-time home buyer programs. These programs provide free down payment and closing cost assistance if you qualify. Yes, you read that right! FREE. "Buying a home in today’s market isn’t as challenging as many make it seem," commented Alicia O'Brien, Senior Mortgage Consultant with Prosperity Home Mortgage. "We have solutions to help make homeownership more affordable, and we put a focus on helping our borrower’s offers stand out." It was reported that over 2,000 buyer assistance programs exist in the U.S. – the average benefit being between $10,000 and $12,000. And in our recent experiences, we’ve had clients receive over $15,000 in grant money at closing. Unfortunately, recent surveys suggest that less than half of non-homeowners are aware of down payment assistance. These grants - along with second mortgages and other products on the market - may shift the numbers in a direction that would make it hard to find a reason for a first-time home buyer NOT to buy this year. Bottom line: First-time buyers should consider down payment assistance programs which make homeownership financially compelling in 2023. In a time where the cost of goods and services has risen sharply, household budgets are squeezed. Every home has maintenance items that - left undone - can cause extensive, costly damage. Our home maintenance checklist gives all the details on items prospective homebuyers need to account for in their annual budget long after the deal is done. Furthermore, depending on the age of a home’s major systems, budgeting for repair or replacement of roofs, heating & cooling, siding, windows and more may be needed. Bottom line: A home is not a one-and-done investment. If you can’t afford to maintain it, you can’t afford to buy it this year. This question can lead people one of two ways. First, it can eliminate the possibility of buying if your debt is too high compared to your actual income.
Lenders will only take on so much risk when doling out loans. If you are already spread thin due to credit card debt, car payments and non-deferred student loans, it may be impossible to add on a mortgage payment as well. However, selling your current home to cash out equity can create an opportunity to use your home proceeds to pay down existing, high interest-bearing debt. Getting off the 25% credit card interest merry-go-round could end up putting you in a better financial situation – especially if your mortgage payment is already too high according to Dave Ramsey, an eight-time national bestselling author and personal finance expert. Bottom line: Avoid or eliminate non-appreciating debt before you buy. These questions serve as the starting point to making sound decisions. But as the saying goes, never make a mistake alone. Always seek the guidance of a trusted advisor who can help you decipher if 2023 is the year to buy or the year to wait. Never want to miss a post? For more useful real estate tips & tricks, subscribe to our mailing list or contact us with any real estate questions. Authored By: Kat Medaries, REALTOR® MT Realty Advisors of Long & Foster Real Estate Village of Midlothian Sales, 1100 Jefferson Green Circle, Midlothian, VA 23113 Licensed to sell in the Commonwealth of VA | Equal Housing Opportunity For informational purposes only. Not intended as legal, financial or credit counseling advice. Seek the assistance of a professional should you require.
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