If you haven’t bought a home for sale in Whatcom County yet, you probably have it in the back of your mind as a “to do” in the near future. With home prices on the rise, interest rates on the rise and rents on the rise, financially it just makes sense. However, everyone has a different time in life when buying “makes sense”. For some, it is very early on in life, while others may wait until later. There are a few determining factors that you should keep in mind. After all, buying Whatcom County real estate is a huge financial decision and investment. You want to purchase knowing that you won’t regret that decision later on. So what are the factors that should be kept in mind? Read on!
This is obviously the first factor. However, this factor is multi-faceted. There are several aspects that determine whether you are financially ready to buy real estate in Whatcom County:
- Down Payment: While the amount varies based on the house price and the loan you have, you will need some cash to put down. While the typical 30 year conventional loan is 20% of the home price, some loans let you put as little as 5% down. There are also several down payment assistance programs and you’ll likely be pleasantly surprised to learn that you qualify. However, I strongly urge you NOT to drain your entire life savings for the down payment. After all, once you become a home owner, you are responsible for any repairs so you will want a cushion to tap into for emergencies.
- Monthly Mortgage: How much you can afford is based on your income and your debt. High income is great, but high debt is not. Shop around for lenders to find out what you qualify for, but you should try and pay off debt before you apply for a loan. If your work is not steady, you may want to stick with renting before buying Whatcom County real estate.
- Credit score: Speaking of debt, the better your credit, the better your chances of getting a great loan. If you have no credit, go get some. If you have bad credit, pull your report to see what you need to clean up.
Local housing markets vary and they work like stocks. They go through highs, lows and even some bubbles if you remember 2006. Currently the United States in general is doing well and is considered in a Seller’s Market in most of the U.S. Whatcom County real estate prices are up and the demand is high. In fact, the demand for housing out weighs the actual supply which means that real estate in Whatcom County should be stable. Meaning, we are not in a housing bubble. Regardless, you want to make sure the current conditions are beneficial for YOU! It is really hard to time the market but you want to consider the economic conditions as much as possible. Here is what you should look at:
- Inventory: If your market is in favor of the buyer (homes have been sitting and there is a lot of inventory), you should be able to get a great price on a home with minimal competition. If your local market is a seller’s market? Well, that is a different story. It goes back to supply and demand: The available goods will be low and what is available will be priced higher.
- Interest rates: Interest rates can impact the price you pay on your real estate in Whatcom County. Home loan interest rates are still considered historically low, however they are on the rise. If your budget is strict, you may want to get in on a home sooner rather than later.
- Renting vs. Buying: There are certain markets where rent is astronomical. Like Seattle for example. People are throwing away what could be a mortgage payment for an 800 sqft apartment in the city. Look at the prices in your area and compare mortgage payments to rent payments. Regardless, your rent payment is going towards someone’s equity so it may as well be your own.
What is your plan? Are you where you want to be? Or do you intend on moving or making a big life change in the next couple years? If you aren’t sure you won’t be in a home for at least 5 years (the amount experts say make a worthwhile investment), perhaps it is best to hold off. Unless of course you intend on using the property as an investment. For more information on buying or selling real estate in Whatcom County, give me a call at 360-410-0848.