The Best Time to Buy a Home

Recently, I was in a conversation in which someone stated that they and their spouse had set a goal to buy a home within a year. When I asked why a year, the reason was given "because house prices are so low". Another person in the conversation immediately launched into a complexity of theories about the perfect time to buy a house, based on market analysis and economic direction. It was a confusing spurt of information to the listeners.

Wondering when is absolutely the best time to buy a house? I will tell you.

Gather 'round.

Lean in close.

Closer.

The best time to buy a house is... when... you... are... ready.

TAH-DAH!

Yes, it doesn't really matter what the market is doing. (Did you hear that? That was the sound of a group of Type A personalities consulting their calculators and bookmarked news sites.) If you are ready, it doesn't matter if the market is high. If you are not ready, it will not matter if prices are low; it will only make it a better deal for someone else later when the bank resells your foreclosed property.

What is "ready"?

• You have a steady income.
• You are planning to stay in the house for several years (or forever-ish).
• You have no debt (or very little and will be paid off within a year).
• You have an Emergency Safety Net that can carry you for several months.
• If married, you have a healthy marriage.
• You can afford the type of mortgage I will mention tomorrow.
  

Where I live, there are a few billboard ads along the freeway sponsored by homebuilders. One in particular hosts a photo of a pleasant-looking fellow in his mid-50's wearing wire-rimmed glasses slightly settled on his nose and a knowing-but-loving smile. Above this man's face is the phrase "Dad says it's time to buy."

What is Dad's experience in real estate? More importantly, what is Dad's role in your finances? I cringe knowing there are a lot of young, unexperienced families out there with well-meaning parents asking them "Why don't you buy a house while prices are so low?" without taking into consideration that their adult kids' available funds may also be "so low" at this particular point of their journey through life. It isn't fair or ethical to pressure someone to do anything based on external circumstances (house prices) when the internal commitments (saving, budgeting, avoiding debt) are not yet in place.

For years, LDS Church leaders have counseled us often from the pulpit to live within our means and buy a modest home.

President Gordon B. Hinckley:

"When I was a young man, my father counseled me to build a modest home, sufficient for the needs of my family, and make it beautiful and attractive and pleasant and secure. He counseled me to pay off the mortgage as quickly as I could so that, come what may, there would be a roof over the heads of my wife and children. I was reared on that kind of doctrine. I urge you as members of this Church to get free of debt where possible and to have a little laid aside against a rainy day." (The Times in Which We Live, General Conference, October 2001)

Some people allow "within your means" to be defined by banks who are eager to lend money. A lender may state with a smile and a handshake that you are qualified to buy a home priced at one gajillion dollars! (Well, maybe not that high.) The bank doesn't take into account that you give 10% of your income to a church. They also don't take into account that your savings account is for emergencies and not for making routine house payments. They do not take into account that you may add children to your family. They also do not take into account that you want money leftover each month to contribute toward retirement funds or eat food on a daily basis.

Tomorrow, I'll cover the best mortgage to take on when buying a home. Then, you'll know if you are ready.