Buying A Home

What Time of Year Is the Best to Purchase a House?

Things can get ever worse for buyers if there are fewer homes for sale during the peak season. It’s supply and demand theory that everyone learns in Economics 101. More buyers and homes available for sale equates to a seller’s market where buyers will get pinched for more money.

But, if you can wait until after the summer move cycle, you can typically negotiate a better deal on buying a home, which the RealtyTrac survey showed. Even if there are not more homes for sale, if the number of homes for say stays constant but there are fewer buyers because of the season, supply and demand imply that the market will favor buyers, all other things remaining constant.

That’s why October is the best month to buy a house. Sellers may find themselves in a sense of desperation, as fewer buyers are available for the same amount of homes for sale.

Best Time of Year to Get Approved for a Mortgage

The best time of year to get approved for a mortgage is when you can afford it. That sounds a little obvious, but it’s not timed to a specific month of the year. Instead, it depends on your finances.

In today’s market, you need a down payment. While you may find a few loan programs and lenders who allow for less than the standard 20% down payment, you’ll still need quite a heft amount saved for a down payment. Even if you find a lender who only requires a 10% down payment, that equates to almost $19,000 for our average new home price in America that we used in our earlier example.

If the down payment was just 5%, you’re still talking about almost $10,000. The best time of year to look for a mortgage is when you’ve saved for a down payment. The down payment is on top of your fully funded emergency fund too. Don’t skimp on the personal finance necessities like saving for retirement, buying insurance, or having a fully funded emergency fund a three to six months worth of living expenses.

Another time to apply for a mortgage is when your credit score is at its highest. You should apply for a mortgage after cleaning up any issues with your credit report. Do you have errors that you need to challenge on your credit report? Has it been years since you even looked at yours?

Now is the time to start looking at your credit report and boosting your credit score before you need to apply for a mortgage. It takes time to raise a credit score through paying off debts, paying on time, and fixing errors. You’ll want to start really focusing on these areas of your personal finance life well before you look to buy a house.

You should also look to shore up your budget before you buy a house. Do you need to make adjustments to your monthly budget for things like home maintenance, insurance, property taxes, homeowner association fees, and the host of other costs that go with homeownership? Some of these costs may surprise renters who transition into first-time homeowners.

Owning a home is a great endeavor. It’s still considered a large part of the American Dream. But, it takes planning. With a little forethought, you can save a lot of money and successfully negotiate the challenge and thrill of home ownership.

If you want to save a lot of money while buying your next home, it can pay to consider the law of supply and demand. As a buyer, consider waiting for the least desirable moving months during the year if possible to help you negotiate the largest discount possible.

About the author

Hank Coleman

Hank Coleman is the publisher or the popular personal finance blog, Money Q&A. He’s also a freelance journalist specializing in retirement planning, investing, and personal finance. You can also find him on Twitter @MoneyQandA.

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