High mortgage rates and housing costs are causing many people to wonder just when the right time is to buy a home.
Bestselling author and personal finance radio host Dave Ramsey says it's a good time to do it, provided that a few things are taken care of first.
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Interested potential home buyers in 2023 have been smartly curious about whether market conditions are conducive to getting in the game.
The question is about whether now is the time. This is particularly important considering the fast speed at which home prices have been rising since 2021.
Ramsey has said that if you find a house, he wants you to make the move and that you consider yourself stuck with the current interest rate.
His blunt words reflect precisely the controversy that has people conflicted about rising costs.
"Just refinance and dump the old mortgage that you had at 6% or 7% or wherever it lands right now," Ramsey said.
Are you ready to make the move?
Ramsey says that the first step is making sure you have a plan that involves being debt-free and you also have three to six months saved up for an emergency fund.
"With a full emergency fund and no debt draining your monthly budget, an unexpected repair will just be an inconvenience — not the end of the world," wrote Ramsey's co-host Rachel Cruze on Ramsey Solutions.
Of course, another major consideration is to be sure you are in the perfect place in your life plan.
Succinctly put, that means that you are planning to stay where you are for a while.
"It doesn't make sense to buy a house if you plan to move sometime in the next year," Cruze explained. "Buying and selling a house is an expensive process, so you'll want to live in that area for the next 5-7 years. (This is one of the reasons I recommend waiting at least a year after getting married before you buy a house.)"
If you're a buyer, you will pay 2% to 6% of your mortgage amount in closing costs in addition to your downpayment.
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The mortgage rate situation
Mortgage rates are now at their lowest level since August, according to Freddie Mac.
"The 30-year fixed-rate mortgage averaged near 7% this week, down from nearly 7.80 percent just six weeks ago," said Sam Khater, Freddie Mac's chief economist, in a Dec. 7 statement.
And that has led to a lot of movement in the market, particularly with regard to refinancing.
"The fall in rates fueled a mortgage loan refinancing frenzy, the Mortgage Bankers Association (MBA) said. "Its Refinance Index jumped by 14 percent from the previous week and was 10 percent higher than the same week one year ago," Newsweek reported.
So, if you are ready to buy a home, Ramsey suggests a few other considerations. If these are in order, make the decision.
"Make sure you are ready to buy. Figure out how much house you can afford. Save for a down payment. Get preapproved for a mortgage. Find the right real estate agent," Ramsey said.
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