Can You Still Afford a Home?

by c21commonweath_ldowling 1. April 2020 10:42

So far, 2020 has been a big year for residential real estate. The statistics show an increase of over 7% in existing home sales. According to Zillow, the median home value in the United States is growing. With this in mind, is right now a good time to buy a house?

Why Buy a House?

For most households, most of the time, buying a home is a smart move. If you want to see some reasons why, check out our article “6 Benefits of Owning a Home.” Although it’s generally understood that owning a home is a good thing, many people believe the goal is out of reach for them, especially as real estate prices continue to rise.

Price Isn't the Only Concern

If you're thinking of buying a home right now, price increases aren’t good news. However, there are other factors that determine your buying power. A real estate professional would caution you that the price of a home is less important than your overall cost. Factors such as the interest rate and terms of your loan may have a significant impact on your monthly payment.

How Much Should You Spend?

How much can you afford to spend on a new property? There is no simple answer to the question, especially because it differs based on each individual’s situation. For instance, do you have kids? How stable is your employment? The conventional wisdom states that you should spend no more than 30% of your take-home pay on housing.

Even if home prices keep rising, the low interest rates we’re seeing today mean that most working households can still buy a home. If your income is stable, you plan to stay in one place for at least a few years, and you can afford the monthly payment, buying a home is probably a smart move for you.

Get Professional Advice From a Realtor

The best move you can make to figure out exactly which houses you can afford is to speak with a real estate professional. The experts understand the local market better than anyone. Contact a realtor today and see if buying a home makes sense for you.