When Is The Best Time To Buy A House? – 5 Tips To Decide

Are you thinking about buying a house? It can be hard to decide whether to buy a house now or wait until all your financing options are in order. In this post, you will learn when is the best time to buy a house for your situation.

Owning a home has always been considered a great and safe investment. Whether you are a first-time homebuyer or someone looking for their dream home, home-buying is a financially sound and sensible process.

Many of my peers are buying houses, and I have to admit that I’m also considering it. Even though I’m living very cheap currently, I don’t want to live in this house forever. A new home is part of my plans in life but the more pressing question is when do I do my home purchase? 

If you are considering buying a house, do you buy a house now or wait? When is the best time to start the buying process? What factors should you consider when buying a home? Is there a homebuyer education we can study and learn the basics of buying a new home?

Purchasing a house is a major investment, which I believe people are underestimating. That’s why you should dive in and understand all the paperwork you need to go through before making your rent-to-buy decision.

When Is The Best Time To Buy A House?

You will have to look at these 5 tips to decide.

1. Your Current Financial Health

When you’re considering buying a house, the current state of your finances is very important because of two reasons:

  • Do you have cash for a down payment? In the Netherlands, your current down payment would be around 10% of the value of the house. It means that you can’t get any mortgage for more than your house currently is worth.
  • Can you afford the mortgage? It’s an obvious and very important question to ask; can you afford the mortgage? If you take a fixed-rate mortgage, your payments will stay the same over the mortgage term. However, if you’re taking an adjustable-rate mortgage, you should consider if you can still afford the payments when the interest rates go up in the future.

To be sure that you can pay the mortgage, plan some scenarios over the upcoming few years and see if you can still pay your mortgage. Go to #2 to read this in more detail!

If your initial interest rate is lower, but you’re having an adjustable-rate mortgage, please think about it twice before you take this mortgage.

What if the interest goes up 5% in the upcoming years? If you need to find a creative way to finance your mortgage, don’t do it!

If you’re having a hard time getting together the down payment for a house, there are several ways you can do so:

Usually, when applying for a mortgage, they will also check your credit scores. Make sure your credit report is mortgage-ready, as this will determine your interest rate. Check your credit score once in a while before starting the process. Having a good credit score and credit history will help you reach good mortgage rates for your monthly payment once approved.

Man Holding Cash In Wallet MSN
Image Credit: serezniy/DepositPhotos.

Credit Sesame is one way to help you. It is a personal finance tool that helps you with your credit. It also gives recommendations for you to manage your debts well. You may check our full Credit Sesame review for more details of the platform.

Try Credit Sesame Today!

2. Your Future Finances

Besides your current finances, it’s also important to look at your future finances.

Are you thinking about changing jobs, adjusting your family situation, or changing your income? Think it through before you apply and get a home loan in order to buy a house.

It might be a good idea to wait until your financial situation has stabilized. Especially for borrowers who will have a monthly mortgage payment to consider, your financial situation should be solid and stable for the time being. 

In addition, an emergency fund can come in handy in case of unforeseen events. If you need some kind of surgery or you’re laid off, an emergency fund will save you!

Your emergency fund should entail a few months’ worth of living expenses in cash. It is recommended to start building your emergency fund before you buy a home.

This emergency fund will not only come in handy before you buy the house, but it’s also ideal to have once you are a homeowner. It will cover unexpected repair costs and similar expenses that you did not think about.

[Related Read: 7 Dave Ramsey Baby Steps For Financial Freedom [Make It Work]]

3. The Current Market

Market conditions can be quite important. This very much answers your question: Can I afford my first home? Is there a loan program that suits my financial status? 

What market conditions can do:

  • In this case, interest rates are extremely low. It may be a good time to buy a house because your monthly payments will be lower than when the interest rates are higher.
  • If there is more demand than supply, housing prices will rise. This will mitigate the effect of lower interest rates.
  • If property values are declining, which is currently not the case, it might be a good time to wait. If you wait a couple of months, you could end up getting a discount on your house.

It is very hard to predict what the property market or the interest rates will do, however, it’s still a factor worth considering.

[Related Read: A Simplified Look At The Savings Rate]

4. You Are Responsible

Being a homeowner comes with all different kinds of responsibilities.

You have to take care of any maintenance and repairs that have to be done around the house. You have to take action yourself instead of calling someone who takes care of everything that needs to be done around the house.

Some people don’t mind taking over the chores in the house and taking responsibility for them. Others would rather not deal with these kinds of things and don’t want to think about it.

Consider what kind of person you are. When buying a house, you should consider the utilities and expenses that come with homeownership and how it affects you personally.

[Related Read: Frugal Vs. Cheap – Where Are You At?]

5. Duration Of Stay

When you’re planning to buy a house, you have to be committed to your home. There are high costs associated with buying your house, so you should keep those in mind.

In the Netherlands, you pay an average of 10% of the value of your house in extra costs, like real estate agent costs, notary costs, and mortgage fees. This money needs to come from your own savings.

Couple Man and Woman Sitting on Couch in Living Room Home House with Air Conditioning MSN
Image Credit: AllaSerebrina/Depositphotos.

This means that when you buy a house of $150,000, a total of $15,000 needs to come from your savings account. You cannot take a higher mortgage for this amount.

With these kinds of costs, it’s challenging to make money on a home unless you decide to live in it for a while.

You should at least live in the house for 3-5 years, but longer is recommended. When you stay in your home for a longer period of time, the initial costs will be spread out over a longer period of time.

I would advise staying in your house for at least 3-5 years, and the longer the better!

Conclusion – When Is The Best Time To Buy A House?

When you purchase a home, it’s not only about finding a house you like based on the price range you want against your monthly income. Affordability is certainly a factor and the certainty that you can pay off your loan amount is very important, but you also need to consider, especially for first-time buyers, that homeownership is a responsibility that you are undertaking for you and your family. 

So you need to make sure that when you do find a home, you should have understood the fees, payments, and borrower’s responsibilities you will be doing as part of your mortgage loan. 

These home buying tips will help you prepare for what you should expect when making this big decision. Home loans are a tedious process but are an essential one in the home buying process. There are a lot of loan options for you out there, you just need to find the best assistance programs that fit you and you may qualify before purchasing a home you want.

House-hunting for you and your family can be an enjoyable and worthwhile journey. But always remember it doesn’t stop there. Creating a perfect home is as important as the journey to get there. 

Have you decided to buy a house now or wait?

7 thoughts on “When Is The Best Time To Buy A House? – 5 Tips To Decide”

  1. I would actually say that 3-5 years is too short.

    Number one reason for buying a home should be that you need/want a nice place to live 😛

    You should not consider your home “an investment”, unless you are actually able to buy one and live in it, for the same cost that you currently have renting one (I assume) 😉 Very few people can actually do that, unless you currently rent in an over-priced area…

    When you consider buying a home (instead of renting) you should start with comparing the your savings rate before and after the purchase. If you can keep the same savings rate (and here you’re allowed to include the mortgage repayments in your savings rate), then I’d say GO for it! – But be sure to buy a “future-proof” home. One you can stay in for 10 years+.
    In Denmark, the average home owner move after only 7 years. Typically this is of course due to the young people first buying an apartment in the city. Then they get married and have kids, all within 5-7 years, and now want to move to a house in the suburbs 😛

    So if you have a job in the city, and plan to have kids within the next 5-10 years, I’d say you could probably skip that apartment, and go straight to the house in the suburbs. It’s simply more future proof! 😉

    Then there’s the 3 most important things to consider, when buying real estate: Location, location, location!
    – This is both in terms of the area (is it up-and-coming, already up-there, or going down?). You should strive to buy a house in an up-and-coming area of course, as here’s the best chance to make a bargain. Buy a decent house with a nice and sturdy “frame” – anything inside can be fixed/changed/altered – but you can’t move it to a different location 😉
    But also in terms of your commute!
    If you work in the city and live in the city (which often tends to be the case for young people), you’re probably used to a short commute. Moving (too far) out of the city will most likely extend your commute, which most youngsters tend to underestimate. I _HATE_ spending time in traffic. Anything above 30min by car between my home and my job is simply unacceptable to me. It’s wasted time that I will NEVER get back.
    Of those two variables, jobs tend to change more than your home, so make sure your new home is in an area with decent job options as well 😉

  2. Great post! 🙂
    I always tell people that if you cannot afford a $200-300 emergency on top of paying your mortgage, it’s not time to buy a house. You are also going to want to plan to be in your home for 5-7 years unless you are in an up and coming area with high appreciation.

  3. Hi Nick, thanks for your reply and your extensive information!

    Currently with the low-interest rates, you can actually buy a house for lower costs as renting. The private renting market in the Netherlands is crazy, it’s way too overpriced if you want to live in a city. That’s why buying is attractive atm even with higher housing prices. Only when you’re living with roommates you have affordable prices, that’s what I’m currently doing.

    Your tip about comparing the savings rate before and after buying the house is one I will certainly use!
    Over the past 5 years I’ve moved 3x, so 3-5 years living in a house is okay for me. I prefer being flexible and being able to change my job over staying in the same house. That’s the main reason I’m not sure yet to buy or rent.
    How long are you living in your house currently? I can imagine it’s hard to always find a job in the same area!

    I’m the same like you, I love having short commutes and hate being stuck in traffic. When I started my current job I moved within 2 weeks, because the commutes were just too long (2 hours one way).
    How long are you currently commuting? I’m currently around 20 minutes most of the time, it’s only crossing the city. I love that I have this extra hour a day to do whatever I like.

    Some very good points to think about and to evaluate on, for sure!

  4. We’ve lived in our current house for a close to 2 years now. Before that, we lived for 7 years in a small townhouse in the outskirts of the city. We’ve now moved a little further away from the city (but close to a few larger commercial areas). You can compare it to living north of Amsterdam (we live north of copenhagen). There are office “parks” (I work in IT) both north, south and east from where i live with more than 80.000 jobs within a 10km radius, so I’m fairly sure I can stay where we live now – and have plenty of job opportunies 🙂 You can compare our current location to living like 15km north of Amsterdam center (only it would be Copenhagen here 😛 )

    I currently have anywhere between 15-25mins by car, depending on the amount of traffic – but I’m planning to ditch my car (eventually) and instead buy a 4-wheeled bike like this one mypodride.com <- check it out! I can't wait!

  5. Thanks FOGO! Having $200-$300 additional emergency is a good tip, perhaps you can even set it aside the first year of owning your house so that you have a house emergency fund for when things go down.
    & 5-7 years is noted, it’s also mentioned by Nick, so when I’ll be making the buy decision I’ll be sure to be at least 5 years somewhere. Also, let’s be real, moving is a pain!

    I’m going to write more about real estate as I’m planning to dive deeper into it, so any tips along the way are very much welcome!

  6. I am more than happy to give tips. 🙂 Just DM me or email me and let me know. Planning a few posts in May about real estate/financing as well.

  7. That is a great area to live in, 80.000 jobs within a 10km radius is amazing! I can imagine that you want to work there.

    Also I’m convinced that life without a car is very much possible. That podride looks amazing, that’s so convenient, now I want one too! Show me some pictures and be sure to write a post about it when you get it!

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