Should I Buy a House Now or Wait for the Dip?

Should I Buy a House in 2022?

What Can I Afford
It's essential to understand how much home you can afford before getting too far into the buying process. Taking stock of your finances and creating a realistic budget for your next home purchase are the first steps to deciding if you should buy a house now or wait.

Many financial advisors recommend using the 28/36 rule to help establish a reasonable budget. This rule asserts that your total house payment (including your mortgage payment, taxes, and insurance) should not exceed 28% of your gross monthly income. It also assumes that your total debt (credit cards, car payments, student loans, and house) should not exceed 36% of your total gross monthly income.

A Realistic Debt to Income Ratio For You
While the 28/36 rule is a great starting point, it's a bit conservative when deciding if you should buy a house now or wait. Most mortgage lenders allow you to qualify with a back-end debt to income (DTI) ratio between 45 and 50% (excluding other factors).

You don't want to stretch your budget too thin and overextend yourself. When buying a house in 2022, you should shoot for a debt-to-income ratio of around 40%. At Cake, we can go up to 50%.

Calculate Your Payment
If you are still having trouble establishing a budget, also consider using one of our home affordability calculators to help determine the proper payment or home price you should target for your budget. When asking yourself, “Should I buy a house now or wait,” our calculators give a great view of what you can afford in this housing market.

Liquid Assets For Your Home Needs
While price is a major factor of affordability, make sure also to consider other factors such as liquidity both before and after your purchase. Here are a few other questions you should ask yourself:

* Will I have any money left over for emergencies after my down payment?
* Do I have enough money left over to keep up with maintenance for the home?
* How long do I see myself living in this house? A year? Five years? Ten?
* What will I have to sacrifice if I buy a new house in 2022?

Should I Buy a House Now with Cake or Wait?

The bottom line is that you may be eager to buy a home now, but it won't matter too much if you can't afford it. On the other hand, if you find homes that do not overextend your budget, buying a house now and taking advantage of low-interest rates is a great option. Our new technology will allow you to fill out a mortgage application and see what you qualify for without even running your credit.