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When is the Best Time to Buy a House?

best time to buy a house

The best time to buy a house is during the winter season, according to a recent analysis. While it can be useful to nail down when homebuyers could generally get the best bang for their buck, that doesn’t always mean it’s the right time for you to buy a home.

When is the best time to buy a house?

The best time to buy a house is during the winter, according to an analysis from ATTOM Data Solutions, a real estate research firm. More specifically, the best month to buy a house is December.

“While retail stores offer discounts during the holiday season, so does the housing market,” said Todd Teta, chief product and technology officer for ATTOM Data Solutions. “We found that only three days out of the entire year (looking at home sales that span six years), which all fall during the month of December, are the only time homebuyers realized somewhat of a discount.”

The three dates that have historically provided median-home prices below estimated market values are Dec. 26, Dec. 31 and Dec. 4.

The day after Christmas has the biggest discount, making it the best time to buy a house. While the median value clocked in at $196,000, the median sales price came in 0.3% lower, at $195,500. In the winter months, there’s usually less buyer competition, which can motivate sellers to negotiate to sell their home more quickly.

While you might snag a better deal this time of the year, winter isn’t a prime homebuying season. That means you’ll see fewer homes on the market — and have fewer options to choose from.

When is the worst time to buy a house?

It’s no secret that home prices heat up with the weather as more sellers take advantage of more foot traffic. And while you may find more options on the market in the spring and summer, June is the worst time to buy a house, ATTOM Data reported.

“That’s not too surprising given the fact that summer months tend to bring the biggest premiums because the weather is nicer, kids are out of school, etc., which makes it a prime time to move,” Teta said.

The most expensive dates during that month to buy a home are June 17, June 28, June 24 and June 19. June 17 and June 28 are tied for having the highest premium amount, which is 9.2% above the estimated market value, according to ATTOM Data.

A more expensive home can mean a more expensive mortgage loan, so be mindful of when exactly you’re putting an offer on a house.

When should you buy a house?

You might be asking yourself, “When should I buy a house?” Well, that depends on your individual circumstances.

The best time to buy a house also depends on local market conditions. In markets where competition is fierce in California and Florida, you may not see much of a price break in the winter, for example.

If your finances are solid and you have a mortgage preapproval in hand, pursuing homeownership sooner rather than later makes sense. But if your income isn’t stable or you’re not quite ready for the commitment that comes with buying a home, waiting might serve you better in the long run.

Check out our list of homebuying questions to answer before you decide to move forward, especially if you’re a first-time homebuyer.

5 reasons why you should wait to buy a house

If one or more of the following scenarios describes your current reality, it may not be the best time to buy a house.

Your emergency fund is nonexistent

No matter your homeownership status, you need an emergency fund. The often-cited rule of thumb is to stash three to six months’ worth of living expenses into a savings account. Aside from your base emergency fund, it’s also wise to have cash set aside for home maintenance and repair needs that will arise. Plan on saving at least 1% of your home’s purchase price annually for those expenses.

You need a larger down payment.

Depending on the mortgage program you’re pursuing, you may qualify for a loan with no down payment or with as little as 3% down. The more money you put down, though, the better your mortgage rate and monthly payment may be.

Putting down 20% or more for a conventional loan means you’ll avoid private mortgage insurance. For a loan backed by the Federal Housing Administration, you can eliminate mortgage insurance premiums after 11 years by making a 10% down payment.

Your budget would be overstretched.

Mortgage lenders want to know that you can comfortably manage a mortgage, which is why your debt-to-income (DTI) ratio is key in determining whether you can qualify for a loan. Your DTI ratio is the relationship between your monthly debt obligations — including your new mortgage payment — and your gross monthly income. If your ratio is too high, that means you’re at a higher risk of defaulting on your mortgage payments. Aim for a DTI ratio of 43% or lower.

Your credit score and history need work.

A track record of late payments and maxed-out credit cards can take away from your creditworthiness as a prospective homebuyer. Before you apply for a mortgage, do the work to clean up your credit reports and boost your credit score. To access the best mortgage rates, aim for a 740 credit score or higher.

Look for errors and items to improve by pulling one free credit report from each of the major credit bureaus: Equifax, Experian and TransUnion — something you can do once a year at AnnualCreditReport.com.

The homes on the market don’t meet your needs.

There are only three months’ worth of homes for sale nationally, and housing inventory is trending lower, according to data from the National Association of Realtors. Don’t feel pressured to buy just because you’re in the middle of your local housing market’s homebuying season, or you come across headlines proclaiming that now’s a good time to buy a house.

If your immediate needs aren’t being met by any of the homes that fall within your budget, it might be better to wait. Work with a real estate agent who can keep tabs on homes that come on the market that meet your needs. When you find one you love, act quickly to make an offer.

 

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