I was talking on the phone with my 32-year-old daughter Amy recently, and she told me she’d had the realization that she was the only one in her friend group who hadn’t bought a house yet.
“I’m starting to feel self-conscious and left out,” she admitted. “Should I buy a house? Am I wasting my money on rent? Is now even a good time to buy?”
Apparently, my daughter was suffering from FOMO-H, or the fear of missing out on a house. There are probably a lot of renters like her who are starting to feel like maybe they should jump into the homebuying process. And just as many who are already actively searching but have missed out on a house they wanted due to bad timing or a lack of resources, preparedness, inventory or luck.
If you fit in either of these categories, let this mother familiar with the industry tell you what I told her:
First, it’s easy to compare yourself to others – but don’t. Comparison is the thief of joy. Buying a house is based on very individual factors, such as your income, job security, savings, relationship status, desire to relocate, level of responsibility, family support, etc. The best time to buy a house is when it’s the right time for you. Period.
Second, decide if buying a home now is a realistic option for you given your circumstances, the market and interest rates. For help in determining this, I suggest seeking advice from several trusted sources: family and friends who are homeowners (you know, the people you envy); experts in the field, such as loan officers, financial advisors and real estate agents; and different homebuying websites (like the one you’re on now!) with resources such as our Buy Now vs. Wait calculator.
In doing this, you may discover that you’re more ready than you thought. But if it’s determined this isn’t the optimal time for you to buy a house, don’t be discouraged. It’s still the ideal time for you to get ready for homeownership.
Instead of feeling like you’re missing out, use this pre-homebuying time productively by preparing for your homebuying journey. Taking these steps will put you in a better position to pounce when the time is right, and it’ll make the wait seem shorter because you’ll feel that you are actively working towards your goal.
You may already be a good saver, but if your near-future goal is to buy a house, put saving money into overdrive. Create a budget and see where you can trim the fat. Don’t make unsustainable cuts, but saving more aggressively for a little while may help you bank enough to enter the homebuying process with financial confidence. By the same token, don’t let down payment misconceptions keep you from starting the homebuying process! You may be able to put down less than you think – as little as 3% of the purchase price of a home, if you choose a conventional loan with private mortgage insurance.
You’re entitled to free copies of your credit report once a year. (Order them at AnnualCreditReport.com.) Make sure they’re accurate. If you’ve canceled a credit card or have already paid an outstanding bill that’s still appearing on your report, get it corrected. Also, take note of your credit score. Most lenders of conventional loans want borrowers to have a credit score of at least 620. If your score isn’t as high as you’d like, start taking steps now to improve your credit score.
If you’ve always paid in cash, thinking the lack of credit card debt would benefit you, I’m sorry to say it doesn’t (at least in terms of getting a loan). It may make you “credit invisible,” meaning there’s no credit history to see, i.e., no proof of consistent loan repayment. Lenders want to see evidence of debt repayment so they can feel better about lending you money. If they can see that you pay your bills, you appear less risky. To fix this, apply for a credit card or two – and use them responsibly, paying the full balance on time each month.
Scout out neighborhoods. Look at listings. Educate yourself on how much a home typically sells for in your targeted areas. This will help you to spot a good deal when you see one, and you’ll have a better understanding of how much you may need for a down payment.
Ask your friends, family or co-workers about their homebuying journeys. Find out if they have any tips or advice for you. Get recommendations for real estate agents that specialize in your area of choice. Same for loan officers. Be a sponge and sop up the knowledge.
Do this for 2 reasons: It will give you an advantage over other buyers who aren’t preapproved because sellers will know you are a viable buyer who can act quickly. And getting preapproved will establish a relationship with a lender.
Remember not to give up hope. Every homeowner was once in your shoes. Continue doing all the right things and you will eventually have the literal keys to your dream.
One last thing: Call your mother. I’m sure she’d appreciate it.
The views, information, or opinions expressed in this article are solely those of the author and do not necessarily represent the views of Citizens State Bank and its affiliates, and Citizens State Bank is not responsible for and does not verify the accuracy of any information contained in this article or items hyperlinked within. This is for informational purposes and is no way intended to provide legal advice.