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As rising mortgage rates continue to take a toll on housing affordability, more consumers are questioning whether now is the right time to buy a house. According to Fannie Mae, consumer sentiment toward housing is at its lowest level in a decade, but there are several factors at play that determine the best time to purchase a home.

Mortgage Rates and Price Trends

The 30-year fixed-rate mortgage went back up over 5% during the week ending Aug. 11, but recent data from Freddie Mac suggests that the housing market is beginning to stabilize. 

Home price growth remained strong for the second quarter of 2022, according to the National Association of REALTORS®, with a double-digit home price appreciation seen in 80% of the markets. Monthly mortgage payments for a single-family home that quarter increased to $1,810 compared to $1,213 a year ago, and the qualifying median family income rose to $86,880 compared to $58,224 last year.

aerial view of neighborhood

Many would-be homebuyers have been priced out of certain markets; however, scaling back your budget and knowing mortgage rates, the qualifying income, and the down payment requirement could help you figure out what you can afford and where. Plus, there’s the option to refinance your mortgage down the road if interest rates drop.

The Rental Market

Renting can be more affordable than purchasing a home, but buying a home is almost always cheaper over the long run and enables homeowners to build valuable equity. 

However, we’ve been dealing with an unpredictable period of high inflation, which has contributed to higher rents nationwide. The median rental price in the U.S. has passed $2,000 per month for the first time and is rising at its fastest pace in more than three decades.

If you purchase a home with a fixed-rate mortgage, that means that if home prices and interest rates go up, your mortgage payment will stay the same every month. On the other hand, renters are at the mercy of their landlords or property management companies.

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Renting Vs Buying a House: Why It Might Be Better to Rent

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When deciding if it makes better financial sense to buy a house, it’s important to compare the overall cost of renting versus buying a home. While your monthly mortgage payment may be lower, there are other costs associated with homeownership.

The Best Time to Buy a Home Depends on Your Financial Situation and Readiness

new house keys in door

Current economic conditions and the state of your local housing market should weigh on your decision to buy a home, but whether or not it’s a good time to buy a house also depends on your financial situation and readiness.

Are you prepared for the responsibility of homeownership? Do you have enough stable income to cover monthly principal and interest payments on your mortgage? You also need to make sure you have enough savings to make the minimum down payment and that your credit score and debt-to-income ratio satisfy your mortgage lender’s basic requirements.

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11 First-Time Home Buyer Mistakes To Avoid

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Josephine Nesbit

Josephine Nesbit is a real estate and finance writer from New England and is currently based out of the Midwest. She has experience writing about real estate market trends, mortgages, real estate investing, debt, saving money, student loans and more. Her work has appeared in several publications, including Fox Business, GOBankingRates, Bankrate and U.S. News & World Report. When she’s not working on her freelance writing business, she’s outside spending time with her three young children. You can visit her website here or connect with her on LinkedIn to learn more about her.