Homeownership 101: When Is the Right Time to Buy a House?

The 1950s dream of white-picket fences and suburban idyllicism might be long gone, but the goal of homeownership is still alive and well in America. In fact, one recent study showed that more than 80% of millennials wish to own at least one home in their lifetime. 

A house gives you the opportunity to create a space entirely your own. No more begging landlords for a kitchen backsplash update or permission to paint your bedroom bright green. As a homeowner, you’re able to make all the big decisions entirely on your own. 

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An Exciting Investment

Beyond creative freedom, purchasing a home also comes with financial benefits. Real estate has long been considered an attractive long-term investment strategy as home prices tend to increase over time. 

The current national average appreciation rate sits at a clean 14.5% year over year – so although there’s no guarantee that a house would increase in value, it’s considered a fairly safe investment.

7 Factors to Consider Before Buying a House

Buying a house is a big, personal decision – and one that includes risks. What if the house has unknown structural flaws and ends up losing value? What if you lose your job and can’t make a mortgage payment?

The stress of working through all of the “what-ifs” can make the process exhausting. The best way to tackle your doubts and make a clear-headed decision? Work through each contributing factor to see if the stars are truly aligned. 

1. Long-term plans

Think about how long you would want to live in one place. If you love the city you currently live in and fully intend to continue building a life there, then that may line up well with a home purchase. 

On the other hand, if you feel like you might want to explore living in a different place a year or two from now, it’s probably not the best time to invest in a home. 

2. Job security

Another big factor to consider is whether your job offers strong financial security. If you feel comfortable that you and your company are a good fit moving forward, that’s a great place to be as you consider buying a home. 

If you’ve just started a new position or are feeling as though a career change might be on the horizon, it’s probably time to table the house-purchase talk for a while. 

3. Housing market

The housing market has been the talk of the town in recent years – especially since the covid-19 pandemic flipped the market on its head. People across the country searched through thin inventory for homes, driving prices to record highs.

As mortgage rates fluctuate, many are speculating that housing prices appear to finally be ready to even out – but the National Association of Realtors’ 2022 report seems to refute that sentiment. 

If you’ve got a large down payment and lots of patience (and a fairy godmother wouldn’t hurt), it could work for you to buy now. If not, it may be worth riding out the waves until the market cools off. 

This seller’s market will likely change, and you don’t want to regret purchasing a home you don’t love for much more than it’s actually worth.

4. Windfalls

A surprise windfall could make the difference between renting or buying your next home. Whether it’s a lottery win or an unexpected inheritance, if you’ve got extra dough burning a hole in your pocket, a house is a great option. 

Of course, we always recommend you start off paying down debts like student loans or credit cards before taking on another big, long-term purchase. If you’re not used to managing a large amount of money, it may also be a good idea to connect with a financial advisor to help you get started on the right foot. 

5. Salary

It’s always better to live below your means than above it. That said, it’s important to note that just because you can qualify for a larger home loan doesn’t always mean you should go for it. Make sure your salary can support both your mortgage payment and your lifestyle, while also leaving room for any home maintenance emergencies. 

Remember, as the owner of your house, you’re solely responsible for repairing any damage or replacing big-ticket items like furnaces and water heaters. 

Ask yourself if your salary can comfortably support all those expenses. If not, it may be best to wait for that pay raise or find a new, higher-paying job before you take the leap. 

6. Savings

With low market inventory, you may be tempted to dip into your emergency fund to keep up in those bidding wars. But remember those emergency repairs we mentioned earlier? Yeah, those bad boys usually pop up at the worst of times. 

You’ve spent years building up that emergency savings account as your built-in backup plan – don’t blow it all in one day on the shiny new light fixtures and carpeted family room. If purchasing a house is going to set you back to ground zero for savings, you’re probably better off waiting a while longer before you dive in. 

7. Family plans

Are you dreaming of tiny feet running around the kitchen table every night? 

Starting a family is a bit of a double-edged sword for homebuyers. On the one hand, you want your own place before you have kids – a place you can really make your own. 

On the other hand, you know that kids are expensive – costing almost $15,000 per year for a middle class, two-parent household (and that price tag is only climbing). Plus, you want to have some extra money around in case of medical emergencies or something like a nationwide formula shortage.

Take a look at your finances with your partner. Can your budget and savings support both a child and a new house? If not, which would you rather go after first?

How to Know if Now is Right for You

It’s important to consider each of the above factors carefully – you need each of these seven areas to line up in order to move forward confidently as a homebuyer. 

If now isn’t right for you, be patient and check back again in six months. There’s no rush! Time is your friend here. The longer you give yourself upfront, the longer you’ll have to create a financial plan, adjust your spending habits and figure out exactly what you need to reach your goals. 

Save for Your First Home with Lasso

With Lasso, you can create custom financial goals to start saving and investing toward homeownership. Then, connect directly (and anonymously) with a financial advisor to take your gameplan to the next level. Download the free Lasso app today to get started. 


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