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Consider whether it's the right time for you to buy

Buying a home is a big financial decision. Now that you’ve looked at your finances and estimated how much you can afford to pay for a home, consider whether now is the right time for you to buy.

What to do now

Compare your estimate for the home price you can afford to the prices of homes in your target area

  • Real estate websites can help you find general prices for the neighborhoods you are interested in.
  • If the typical home price in your target neighborhoods is more than you can afford, you may want to explore options in other neighborhoods or adjust your search criteria.

Explore the financial tradeoffs of renting vs. buying

If you’re currently renting, or moving to a new area, a calculator like the New York Times’ free “Is It Better to Rent or Buy?” calculator can help you assess the financial tradeoffs of renting versus buying based on your financial situation and the length of time you expect to be in your new home.

  • Calculators necessarily make assumptions about future economic conditions, such as the rate of home price growth. These assumptions can have a big impact on the calculator’s results. Try several different scenarios to see the range of possible outcomes.
  • Some people choose to rent first when moving to a new area, so they can get more information about potential neighborhoods before buying.

Understand the risks and responsibilities of homeownership

Homeownership can be rewarding and a good way to build wealth. But there are risks and responsibilities associated with owning property. When you rent, your landlord is responsible for the property and takes on the risks. When you buy, you take on these risks and responsibilities:

  • Your home value could decline, and you could lose equity or even owe more than your home is worth.
  • If something important breaks – for example, the furnace quits working, or the roof starts to leak – you will have to pay for expensive repairs to get it fixed right away.
  • If something else breaks – for example, a cracked window, a broken dishwasher, or a clogged toilet – you will need to spend the time to fix it yourself or pay for a professional.

What to know

Your decision isn’t final

You’re still early in the home-buying process. You don’t have to decide once and for all whether now is the right time for you to buy. At each step of the process, you make a tentative decision based on the information you have available to keep moving forward, wait for a better time, or stop. As you get more precise information about home prices and loan costs, you can continue to reevaluate whether the value you get from buying is worth the price you have to pay.

If what you can afford to pay for a home isn’t enough to get the type of home you want in a neighborhood you enjoy, you may want to consider:

  • Cutting back your optional monthly spending so you can afford a higher monthly payment.
  • Waiting to buy until you can save enough for a higher down payment.
  • Renting in or near the neighborhood you’re interested in.

Keep an open mind

Depending on your location and how long you expect to live in the home, buying or renting might be the right financial choice for you right now.

How to avoid pitfalls

In some situations, it may be better to rent

Is your current employment short-term or unstable?

  • Owning a home is a big financial commitment. If you’re not confident that you can continue earning a similar income for the foreseeable future, it might make more sense to keep renting.

Is there a chance you might move within the next few years?

  • Renters have more flexibility. It can be risky and expensive to buy if you end up needing to move again within a few years. You pay real estate agent commissions, taxes, and other transaction costs to sell your home and buy a new one. If prices decline, you may not be able to sell your home at all.

Visit our sources page to learn more about the facts and numbers we reference.

The process and forms described on this page reflect mortgage regulations that apply to most mortgages.