Is It Better to Buy at the End of the Year?
There’s always some chatter in the home buying business about when the best time to buy a house really is. There are always seasonal issues. For example, most sales occur during the summer months when kids are out of school and others want to move closer to the new school. At the same time, those with no children and no need for schools can buy and sell anytime they want. But one of the most popular questions is whether or not buying at the end of the year is the best time to buy. Why is that?
There can be several reasons. Property taxes might be one. If someone decides to escrow for taxes and insurance then the amounts collected for escrow accounts are relatively low. There are a couple of months of taxes and insurance needed for ‘reserves’ plus the amounts needed for the remainder of the year. If someone buys in December, there’s three months total. One for December and two for escrow accounts.
Note that different lenders can have different requirements for escrow accounts. Some do not collect any additional months other than the month in which the property was purchased. Of course, this only applies for those who choose to have escrow accounts. Buyers who put down 20-25% or more can opt out of escrow accounts.
Even those who do have a 20%+ down payment they can still opt in to have monthly taxes and insurance ‘escrowed’ just for the convenience of not having to come up with additional funds to pay for annual taxes but instead contribute a little each month and the lender will pay taxes and insurance on behalf of the buyers. When I bought my first home for example, I chose to have escrow accounts, even though my first mortgage was at 80% of the value of the home.
Okay, again, is it better to buy at the end of the year? My thoughts are that it’s the best time to buy when you’re ready. If you’re thinking of selling in the summertime but want to wait until the end of the year it’s very possible, and in today’s environment, very likely home values will be even higher and not to mention the volatility of interest rates.
If you’re ready to buy and you’ve got all your financial ducks in a row, it’s probably time to make the move.
Written by David Reed for www.RealtyTimes.com Copyright © 2022 Realty Times All Rights Reserved. Reed is from Austin, Texas and is the author of The Real Estate Investor’s Guide to Financing, Your Guide to VA Loans and Decoding the New Mortgage Market. A Senior Loan Officer and Mortgage Executive for more than 20 years, he has also appeared on CNN, CNBC, Fox Business, Fox and Friends and the Today In New York show.
